5. Knott, A. M. (2003, Oct). The organizational routines factor market paradox Flashcards
What is the resource-based view (RBV) of strategy?
The RBV of strategy claims that unique resources and capabilities create a competitive advantage, which relies on an isolating mechanism such as the tacitness of organizational routines.
What is the paradox between the RBV and the existence of franchises?
The paradox lies in the fact that the isolating mechanism of the RBV, which is the tacitness of the routines, is not enough to prevent the diffusion of routines throughout the industry, thus challenging the RBV.
What are franchises?
Franchises are hybrid organizations that combine elements of both markets and hierarchies. They involve the franchisor providing a successful organizational routine that is then implemented by local entrepreneurs in new geographic markets.
Why do local entrepreneurs pay a premium for the superior routine provided by the franchisor?
Local entrepreneurs pay a premium for the superior routine provided by the franchisor because they recognize the value of the routine and expect it to improve the expected value of their own organizational routine.
What is viscous knowledge?
Viscous knowledge is information that is transferable within a franchise but difficult to transfer outside of it.
How do franchises protect information?
Franchisors may deliberately protect information by controlling and enforcing routines and incentives.
How do independents differ from franchisees?
Independents have different levels of competence in obtaining information and different abilities to interpret it, compared to franchisees who have paid for the routine. They also have different incentives.
What is the paradox of explicit yet valuable routines?
The paradox of explicit yet valuable routines is that while it is possible to explicitly define a routine, it can still hold great value. This means that the value of a routine does not come from its tacitness, but from the hard work put in by the franchisor to extract the inherent value contained within it.
What is the isolating mechanism for routines?
The isolating mechanism for routines is a property of the management holding the resources, not the resource itself. This means that the value of a routine does not come from its tacitness, but from the hard work put in by the franchisor to extract the inherent value contained within it.
