Resource Based View

Abstract

Although the Resource Based View (RBV) stands to be the most widely accepted theory of strategy formulation, research still has a long way to go in terms of providing empirical support to the theory.

Abstractii

Introduction1

Discussion2

Defining Characteristics of RBV2

Personal View of Studies3

Main Pitfalls4

Suggestions for Future Research4

Conclusion5

References6

Resource Based View

Introduction

It is a tool for corporate strategy formulation, used to identify the strategic resources available for an organization. The fundamental principle of this technique is that the foundation for the formation of a competitive advantage of a company rests majorly in the implementation and usage of the combination of precious resources available to the firm. In order to transform a temporary competitive advantage, into a sustainable one underscores the need of keeping the nature of resources heterogeneous, while not keeping them perfectly mobile. In turn, this transforms into resources which are worthwhile and can neither be entirely imitated nor are replaceable unless huge amount of effort is invested. Provided that these conditions remain unchanged, the resources of a firm can help it in maintaining a sustainable existence, providing returns which are above average. The VIRO model is also a part of the Resource-Based view.

The resource based view is in complete contrast to the earlier followed Industrial Organization (I/O) model, also known as the Input/output Model, according to which the external environment of a firm has an impact on its performance. That view holds that it is the factors in the external environment that shape the strategy of a firm (and consequently its performance) and are reflected in its corporate strategy (Kraaijenbrink et al., 2010).

This research paper aims to demonstrate the key issues in the resources based view of a firm, by addressing the challenges faced. Support is provided by reviewed literature.

Discussion

Defining Characteristics of RBV

The defining characteristics of the Resource Based View refer to the Resource-Based Model of profits. The firm should make efforts to study the resources that it has available at its disposal. These resources would serve as the inputs into the firm's manufacturing process. Then it should determine its capabilities, which are the capacity it has to perform well, integrating all the available resources to achieve the maximum output that it can. Next, the firm should determine its potential competitive advantage and should take necessary steps to sustain it over the long run. This should be followed by locating out of an attractive industry which would present the firm with opportunities that it could use to its advantage. Next, it should select the best fit strategy and implement it. This would enable the firm to enjoy superior returns.

Therefore, it can be established that the very defining characteristic of the resource based view has to be the resources of the firm, since they are what translates into its skills (capabilities). Every company has an integrated set of distinctive resources that form the very foundation of its strategy formulation. Generally, any firm's resources may be classified into three basic categories: organizational capital, human capital, and physical ...