Firm Resources and Competitive Advantage

BARNEY – FIRM RESOURCES AND SUSTAINED COMPETITIVE ADVANTAGE

Article examines the link between firm resources and sustained competitive advantages

•there has been a lot of research and articles on internal analyses of organizational strengths and weaknesses and external analyses of opportunities and threats (SWOT) but they place little emphasis on the impact of idiosyncratic firm attributes on a firm’s competitive position

•all this has implicitly made 2 assumptions:

1. All firms within an industry are identical in terms of the strategically relevant resources they control and strategies they pursue.

2. That if there is heterogeneity in an industry or group, it is short lived because the resources that firms use to implement their strategies are highly mobile i.e. no unique, imitable

•Barney suggests two alternate assumptions known as the resource based view of the firm:

1. His model assumes that firms within an industry (or group) may be heterogeneous with respect to the strategic resources they control.

2. That these resources may not be perfectly mobile across firms, and thus heterogeneity can be long-lasting

Defining Key Concepts

Firm Resources – include all assets, capabilities, organizational processes, firm attributes, information, knowledge, etc. controlled by a firm that enable the firm to conceive of and implement strategies that improve efficiency and effectiveness.

Things such: •physical capital resources – physical technology, firm’s plant & equip., geographic location, and access to raw materials

•human capital resources – training experience, judgment, intelligence, relationships, and insight of individual managers

•organizational capital resources- firm’s formal reporting structure, its formal and informal planning, controlling, and coordinating systems

Competitive Advantage – when a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors....