Firm Resources and Sustained Competive Advantages

Summary of Barney’s “Firm Resources and Sustained Competitive Advantage”

Core Idea / Focus

• Resource-based view (RBV) is used to explain and explore sources of firm competitive advantage. Specifically, Barney develops a framework identifying the factors that can allow resource heterogeneity and immobility to create sustained competitive advantage[1] (see Figure 1 below)

Figure 1

Strengths

• Provides an overview of where this work fits in relative to other strategy models (e.g., SWOT analysis) and addresses a few key concepts and assumptions to compare and contrast RBV with traditional strategy theory

➢ Two implicit assumptions of traditional theory include: 1) homogeneity among firms (in terms of resources controlled and strategies pursued), and 2) high mobility of resources (presumably enabling high imitability of strategies)

➢ The resource-based view relaxes these assumptions

• Does a good job defining the terminology and key concepts identified in his framework (i.e., all the terms in Figure 1 are defined and, where appropriate, linkages to existing literature are identified)

• Identifies opportunities for future research to test the causal relationships identified in his framework; Barney specifically develops 3 examples of how the framework might be applied to firm resources: 1) strategic planning (formal and informal), 2) information processing systems (particularly those systems deeply embedded in the firm’s formal and informal decision-making processes), and 3) positive reputation.

• Barney concludes by establishing some linkages between RBV (and his framework) and other concerns and theories of economics and strategy (e.g., social welfare concerns, organization theory and behavior); he also contrasts his framework with the population ecology perspective (i.e., managers do matter in his framework).

Open Questions

• Barney’s paper is interesting and raises a...