The ‘resource-based view’ of strategy?

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I have just come back from an academic mini-conference looking at the resource-based view of strategy [RBV]. Though this has been around for about 20 years, and increasingly dominates business-school research and teaching on strategy, it does not seem to touch the real world too much. Central to the idea is that only resources that are ‘valuable, rare, hard to imitate and embedded in organizational routines’ can contribute to competitive advantage [the VRIO criteria – don’t blame me, I didn’t make this up!]. My question is – does anyone out there in the real world actually use this concept? If so, I’d love to hear how you do it. When, for example, did anyone in a large strategy consulting firm go to a client and tell them “You know what you really need? – a VRIO analysis on your strategic resources” .. or perhaps I’m wrong and this kind of work goes on all the time?

Don’t get me wrong – I have no problem with the idea that resources are important. This is central to my own strategy dynamics approach, but these VRIO things seem way too abstract to be usable. The good news is that our little conference did seem to find some ways to operationalize the RBV and make it useful.

Comments

  1. Jamal  July 19, 2008

    I think “VRIO” or “VRIN” or whatever we call it, is only a test to check whether certain capabilities can be considered as core competencies.
    It is the job of strategist to discover the sources of competitive advantage based on capabilities and resources.
    I dont understand what you mean by operationalizing the RBV.

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  2. Kim Warren  July 20, 2008

    Hi Jamal – the problem people seem to find is that resources and capabilities are so ambiguous and abstract that management teams can’t work out what’s what, and certainly can’t answer in any meaningful way to what degree any of them is VRIO. So I am still not aware of a single real case in which a corporate strategy professional or consultant has done anything substantive at all with RBV. Would be great to hear of examples.

    Having been a practising strategist for many years, I would not have a clue how to use RBV to discover sources of competitive advantage – but maybe I’m just dumb. The discussion on operationalising RBV concerned working out how we might specify these things in concrete and unambiguous terms so someone can actually measure them.

    BTW – ‘core competences’ do at least have the merit of having a clear definition in their original description – see The Core Competence of the Corporation, G Hamel, CK Prahalad, Harvard Business Review, 1990, May-June. It does *not* just mean a rather importance competence – though that’s how many people now use the term – but refers to specific technical abilities lying deep in an organisation on which multiple products are based.

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  3. Jamal  July 29, 2008

    Hello sir, The whole issue of “resources, capabilities and core competencies” and discovering the sources of competitive advntage from strategy point of view, seems to be a valuable area to conduct a research in.
    I decided to concentrate my MBA research project on these issues. How do you think I should develop these concerns into a researchable topic. I’m thinking about an empirical study.

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