An Rbv on Corporate Strategy

A RESOURCE-BASED VIEW ON CORPORATE STRATEGY

INTRODUCTION

In this paper we will present different contributions that scholars have made to the field of strategic management, specifically on the model of resource-based view (RBV) for competitive advantage. This will help us understand the different views on performance within the resource-based view model, and how they relate to the position school in strategic management.

In the first section, we will discuss how different RBV scholars view performance differences among firms. In the second section, we will compare the RBV School with the Industrial Organization’s (IO) and Porter’s approach, and analyze their similarities and differences. Finally, we will derive our conclusions.

PERFORMANCE DIFFERENTIALS AMONG FIRMS

The RBV model is the ‘inside out’ model whereby the firm’s primary objective is to attain a sustainable competitive advantage that affords above-normal performance (Conner, 1991).

The focus of attention is the firm and its resources; firms are considered as bundles of resources including tangible and intangible resources. Although not altogether excluding the external environment, the primary emphasis shared among the various streams in RBV is that firm specific resources ultimately explain performance variability among firms. While the emphasis on firm specific resources include both the tangibles and intangibles, the various streams of RBV share the assumption that not all the resources can be sources of sustainable competitive advantage and superior firm performance.

The Cornerstones of Competitive Advantage

Resource-based model underlies competitive advantage, when all the four conditions (Heterogeneity, Ex post limits to competition, Imperfect mobility, Ex ante limits to competition) explained further below are met, which makes possible for a firm to sustain above-normal returns.

a.Resource heterogeneity - Resources and capabilities of firms which are underlying production are...