RBV

Question 1

What’s the main DV of the RBV

Answer 1

DV = competitive advantage (distinct from firm performance)

Question 2

Evolution of RBV research?

Answer 2

o	Penrose (1959) firms are a bundle of resources that, when exploited, may contribute to their competitive position
o	Wernerfelt (1984) first formal conceptualization of RBV
o	Prahalad & Hamel (1990) argued that management’s imperative is to create radical new products, which was enabled by the exploitation of the firm’s core competences
o	Barney (1991) (incorporated time) argued that resources (i.e., assets, capabilities, processes, attributes, information, knowledge, etc.) were the source of value creation within firms.

Question 3

Key assumptions of RBV

Answer 3

Resources are heterogeneously distributed among firms

Resources are imperfectly mobile (i.e., resource endowments can persist over time)

Note: Ignores context/industry

Question 4

Wernerfelt (1984)

Answer 4

• 1st to formalizes RBV
• Resource: anything that could be thought of as a strength or weakness of a given firm
• Discusses resource position barriers

Question 5

Priem & Butler (2001)

Answer 5

Critique of the RBV:
• Resource values may change as the competitive environment changes (thus resource value is determined outside the firm)
• RBV assumes unchanging market demand
• You only know if resources are valuable when you can look at firm performance
• RBV definition of resources assumes nearly anything associated with the firm can be a resource

Question 6

Barney (1991)

Answer 6

Firms exploit resources that are:
• Valuable (i.e., enable firm to exploit opportunity or neutralize a threat)
• Rare (i.e., controlled by a small # of firms)
• Imitable (i.e., firms can’t easily buy the resource or make it themselves)
• Non-substitutable (i.e., firms can’t easily obtain same benefits from another resource)

-later he added that firms structure must be able to exploit the resources

When assets/resources/capabilities meet these criteria, they may lead to a sustainable competitive advantage

Question 7

Barney (2001) 10-year Retrospective

Answer 7

When he wrote the 1991 paper, he could have positioned it against neoclassical economics or evolutionary economics. He chose SCP (Porter, 1980).

Compare RBV to neoclassical (i.e., price theory)
o RBV assumes that not all resources are elastic in supply (i.e., path dependence) some resources take a long time to develop
o RBV assumes that it is not always clear how to develop those capabilities in the short term (i.e., causal ambiguity)
o RBV assumes some resources and capabilities cannot be bought and sold (i.e., social complexity, tacit knowledge

Compare RBV to Evolutionary Econ (Nelson & Winter, 1982)
o Variation, selection, and retention
 Firms vary in the routines they develop to conduct business, over time, some of these routines are revealed to be superior, and may lead to competitive advantage. Those that have inferior routines, change, or they do not survive
 Both assume that firm resources (i.e., capabilities/routines) are heterogeneous and may generate superior rents

Key Findings from neoclassical approach? building on path dependent, causally ambiguous, complex, intangible assets outperforms tangible asset approaches

Key findings from evolutionary sense (e.g., Teece, 1997) - focused on firm capabilities and how resources change over time