Resource-Based View Issues

Compare and contrast researchers’
views and opinions concerned with the
issue of the Resource-Base

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Resource based view is a model that focuses over analysing the internal resources in
order to determine most valuable capabilities that support an organisation to achieve competitive
advantage. This model is generally used VIRO analytical tool for determining the resources that
are rare, costly to imitate, valuable and organised. This report contains a detail description of
Resource based view along with its criticism and defence. In addition to this it also contains two
theories that are related with RBV such as Process based view and knowledge based view along
with their utilities as well as implications.
MAIN BODY
Resource based view refers to the managerial framework which is used by companies to
determine the strategical resources that have an ability to deal with competition prevailing in
market. This model generally focused toward performing an analysis over the resources that a
company have and then determining the most essential one that have an ability to enhance the
performance of company (Lioukas, Reuer, and Zollo, 2016). These resources can be assets,
organisational process, capabilities, firm attributes, knowledge and informations etc. which are
consider as input that facilitates organisation to perform its operations effectively.
Apart from this, resource based view analysis has a direct relation with the strategies that
are being formed by an organisation to achieve their set targets or goals. This framework focus
over determining the resources that are rare and essential to deal with the market demand which
can also be said to have comparative advantage. This further support company to formulate
strategy that support them in producing and offering product at lower possible price which also
creates value. Under resources based view, strategists usually focuses over formulating set of
actions that will exploit internal resources and capabilities in best possible manner so that
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external opportunities can be exploited effectively which help in achieving competitive
advantage.
A manager focus over evaluating a internal capabilities or resources through RBV
framework in order to determine the actions to be taken for dealing with threats that are present
in market so that it can maintain its market position. Therefore, it can be said that Resource
based view is not a strategy because it is a framework the perform evaluation over resources that
a company have and provide information that support in formulating strategy. The tactics
formulated through this evaluation help company to achieve sustainability as well as competitive
advantage at marketplace.
As per the view point of Backman, Verbeke and Schulz, (2017), resource based view is
an analysing the availability of resources with an aim to determine the way through which
resources can be used in effective and efficient manner in order to achieve competitive
advantage. By this evaluation company will be able to determine the area which it required to
focus more in order to deal with the external changes as well as competition in market. For
instance, Google is well known for its internal capabilities such as a diversified workforce which
belongs to different specialisation, culture or nationality. Therefore these technical expertise are
consider as most valuable resources of the company which work toward providing services that
create value among customer. This is the main reason that Google establish a monopoly in
market and doesn't have much competitors in market that can take up their position.
According to the Jurevicius Ovidijus (2013), RBV is an approach that help company to
achieve competitive advantage at marketplace. This model suggest that a company must look
inside in order to find the sources of competitive advantage despite of looking over the external
environment. Through RBV analysis it become much more easier to exploit the opportunities
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present in external environment. This help in identifying new ways of using existing resources
instead of acquiring new skills for different opportunities, as it help company in achieving higher
organisational performance.
As per the view point of (Barney and Mackey (2016), resource based view is consider as
a most essential part of an organisational operations as well as strategical formulation as it help
them in determining their strength that can be used to achieve market success. But apart from all
these the internal resources or capabilities of an organisation can only leads to its success when it
has four characteristics such as it must be rare, valuable, harder to imitate and organised in
effective manner. These characteristics of a resource can be better analysed using VRIO analysis
which basically focus over these four factors that are explained below:
Resources are more Valuable if they allow company to create value in front of customers
which is possible when a brand adopt either differentiation or low cost of production (Chen, and
Kodono, 2014). But the resources that are not able to create value among customers then it leads
to failure of brand at marketplace.
Resources that are acquired by one or two companies are consider as Rare, but when the
resources are being acquired by more then few companies then it results into competitive parity.
Resources must be harder to imitable for rivalry's as valuable and rare resources can only
support company to achieve competitive advantage. But when company have unique resources
that are very costly to copy by other competitors then it help them in achieving competitive
advantage.
The valuable, rare and costly to imitate resources are useless for an organisation until and
unless company doesn't know about the way to organise them and capture value from it.
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For example, VIRO analysis has been performed over Apple Incorporation and it has
been analysed that the mobile phone of Apple such as iPhone series create value among
customers by providing number of advantages within a single device. It includes highest
technology along with fast and easy usage. The technology used for creating iPhone is rare and
because of which it has unique design, quality and a status symbol among youngsters. The
iPhone is harder to imitate but there are some mobile phones which provide similar feature but
the quality is very costly and impossible to imitate (Mudambi and Puck, 2016). Apple has tried
its best to organise all its resources in an effective manner to maintain its brand name and create
value for its customers. Therefore it has the biggest competitive advantage because of its quality
of product, flawless design which allows company to deal in a huge and stable environment with
less competition.
Therefore, RBV is a positive aspect that support a company to analyse its internal
capability and then formulate actions according to them which support in achieving competitive
edge over marketplace. But apart from all these benefits RBV is also criticised because of
several reasons some of them are explained below:
As per the view point of (Gaiya, 2014), RBV has been criticised due to its failure to
provide a managerial implication or operational validity as it said that company must perform
VIRO analysis but actually it doesn't represent the ways through which it can be performed.
Therefore it sometimes miss leads the manager as they get fail to evaluate correct resources
which are more valuable to company. This in turn remove the focus of manager from the area
which are required to be consider or focused in order to improve their services.
But as according to (Progoulaki Theotokas, 2016) RBV model is based on the assumption
that a company can be profitable and only be able to achieve competitive advantage in market as
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long as it has an ability to exploit its internal resources but it is not necessary and valid argument
in all the cases. But the main critics related to this theory is that it ignores the analysis of
external environment or industry which might leads to failure of strategies that are being
formulate on the bases of internal analysis. Therefore, it must not suggest companies to stick
only over internal capabilities of a company to formulate strategies to deal with competition
rather it also focus on suggesting organisations to perform both internal as well as external
analysis and then formulate strategies to deal with environmental threat and competition.
As per the view point of (Knies and Leisink, 2014) RBV model has been criticised
because its applicability is very limited which is only applicable when the organisations operates
its work over larger area and maintain a huge range of unique as well as valuable resources.
Hence, the small scale businesses are beyond the bounds of resource based view because
sustainable competitive advantage can not be possible to achieve while using static resources. In
addition to this authors argues that the resources which a company required to generate
competitive advantage are those that are usually harder to acquire at first place. Therefore, as per
this model the firm which have VIRO resources can acquire as well as apply some other
resources, otherwise competitors get it easier to acquire the one.
According to the (Taylor and et. al., 2014) Resources based view is based on the fact that
it support a company to achieve competitive advantage at marketplace by determining the
internal capabilities that strengthen the company to achieve its competitive advantage. But when
it come to a real world it is not possible to achieve sustainability at marketplace just with the help
of resources that a company have currently. This because firm operates it business in a dynamic
environment where changes are made so frequently with the changing demand of customers or
technological development. Therefore, in order to remain competitive in market a company must
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required to change its internal capabilities or other resources for brining innovation that support a
company to achieve sustainability among other rivalry. For instance, Though Apple Inc. is an
organisation with VIRO resources which is the main reason behind its success and having
competitive advantage at workplace. But still the expectation of customers toward mobile
industry is increasing day by day which may leads the technology as well as skills of human
resource outdated. Apart from this the competition is also rising in front of Apple that is from
One Plus which is continuously offering the high quality mobile phone and influencing
customers to select it over Apple phones.
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(Source: VIRO Framework, 2019)
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Illustration 1: VIRO Framework

These all are the limitation which are being presented by authors regarding the use of
Resources based view model, but in order to avoid these consequences following actions for
defence can be taken:
As per the view point of (Imran 2016) RBV has been criticised about the fact that it
support in achieving competitive advantage by performing analysis over internal capabilities of
company and on the bases of which it formulate strategies to deal with competition. But apart
from this the internal capabilities are not enough to deal with competition because sometimes the
main threat is because of technological advancement which can only possible to determine
through market analysis. So, in order to deal with this critique, (Ramli and et. al., 2016) has
stated that company must perform external analysis in order to determine the threats as well as
competition that are present in external environment and may affect the operations performed by
a company. Once the external factors that are required to be consider by a company must be
identified then it go through the resource based view. This is because after identifying the threats
that are present in external environment company will be able to analyse and use the resources
that support them in dealing with those external risk. In addition to this information from
external analysis also support them in aligning their resources as well as strategies toward
minimizing the risk present in external environment.
According to (Cosenz and Noto, 2016), Though resources based view has been criticised
with the fact that it only focuses over determining the resources on which an organisation must
put emphases in order to deal with external risk factors. But despite of this resources are not only
the thing which help company to achieve sustainability when it operates its business in dynamic
environment where each day bring new risk in front of an organisation. But above all these
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critiques it has stated that though it not lead a company to achieve competitive advantage but it
provide a sense regarding the most valuable resources that somewhat contribute toward
strengthening and improving the organisational capabilities. Apart from this on the bases of these
resources company can add more and be able to deal with competitive prevailing in market.
For instance, Tesla is an automotive company which manufacture as well as market its
own car and is well known for its capabilities to bring innovational techniques in order to
develop a dream car for its customers. But despite of this as the technology is getting updated on
regular bases and number of players bring new model to create a competition or increase the
expectation. So in such case though the resource based model doesn't support company to
achieve competitive advantage in this dynamic market. But through this analysis it will be able to
determine what changes it required to make in current capability to deal with future goals like,
when technology get updated then in case company is required to work over bringing additional
machineries but its capabilities such as technical staff, marketing operations and other resources
will remain the same.
These are the defence that can be consider by a company before using resource based
view as it help them in formulating their strategies in an most effective manner. In addition to
this these defence will also support companies in using RBV model in a most beneficial manner
that support them in achieving competitive advantage. Apart from all these there are some
theories that are linked with resources based view that support in achieving the more benefits
from this model by affective the functioning of RBV in a positive manner. These theories are
explained below:
Knowledge based resources theory is about proving an understanding about the ways in
which the resources can be used more accurately to enhance productivity that support a company
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to achieve sustainability at marketplace. This theory consider an organisation as a body which
generate and distribute knowledge by integrating it from several sources.
As per the view point of Rusanen, Halinen and Jaakkola, (2014), knowledge based view
model support a company to create value in market by utilising the available resources in a most
efficient manner. But the ability to generate value is basically not depend upon the financial as
well as physical resources despite of this it depends on the intangible knowledge based
capabilities.
KBV is a model that focuses over developing an understanding regarding the fact that
competitive success is governed through capabilities that an organisation have to develop new
knowledge based asset which further contribute toward developing a core competencies. Apart
from it KBV model also state that the critical input in production as well as primary source
which support in providing the best output is knowledge.
As per the view point ofLi, Kothari and Terry, (2015) PBV or Process based view
model is a framework that focuses over improving the process in order to achieve competitive
advantage at marketplace. This model is neither a collection of activities nor bundled with
resources but these both are perceived as a system of process and activities that are enabled by
resources as well as capabilities. The main focus of this model is over coordination which brings
inter dependencies that in turn will support in improving the operations performed within the
organisation and hence provide better result.
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(Source: Process based view, 2019)
According to the (Dimitrova and Jasinschi, 2015) PBV is a model that work toward
analysing the resources that are required to perform activities so that needed capabilities as well
as resources can be allocated to the activities in order to achieve more reliable outcome. But the
primary focus of PBV model is over dependencies between activities in both terms that is
explicitly as well as implicitly so that proper coordination can be maintained among them. In
addition to this it also focuses over creating interdependency among activities so the actions must
not get disturbed in case of any absenteeism in activities.
Both the model are based on improving the internal capabilities of an organisation so that
they can improve their performance at market place. Following are the utilities of KBV and PBV
model:
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Illustration 2: Process based view

KBV model put more emphases toward developing the knowledge within the
organisation so that operation can be performed in an effective manner (Umbrico, Orlandini and
Mayer, 2015). In addition to this organisational learning or knowledge also support an
organisation to acquire, change or preserve its capabilities in order to enhance their performance.
On the other hand, PBV model is about aligning the capabilities as well as resources
according to the requirement of activities so that proper outcome could be extract. Apart from
this it also support in bringing coordination among activities so that processes could be able to
deliver best result that will support company to achieve competitive advantage.
Hence, from the above given utilities of Knowledge based view and process based view it
can be state that both the models focused over improving the performance of the company by
enhancing its internal capabilities. This further support companies to achieve sustainability and
competitive advantage in marketplace. Following are the application of these two models:
KBV focuses over improving the knowledge of people that are working within the
organisation so that actions can be performed within a planned and informative manner. For
instance, Google is an international brand that maintain a diversified workforce in order to
integrate knowledge of people that are belong to different specialisation. This will support them
in using the resources as well as performing actions in most effective manner so that goals can be
achieved. On the other hand PBV model focused toward improving the process by maintaining a
coordination among activities so that desired outcomes can be achieved. For instance, Amazon
focuses more over improving its process so that it be able to provide most satisfactory services to
its customers (Jiang, and et. al., 2017). This includes after receiving order from customer it
started aligning the resources for activities like checking the product, packaging, dispatching and
then shipping it to customer within the time it promised to them.
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CONCLUSION
From the above given report it can be concluded that resources are consider as an most
crucial factor of the business which support them to achieve competitive advantage at
marketplace. But all the resources are not be able to provide the same result so the most reliable
resources that help an organisation to develop the core competencies can be evaluated using
VRIO analysis. Further these resources can be used to provide services that create value among
customers and hence support in achieving competitive advantage.
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REFERENCES
Books & Journals
Lioukas, C. S., Reuer, J. J. and Zollo, M., 2016. Effects of information technology capabilities on
strategic alliances: Implications for the resource‐based view. Journal of Management
Studies. 53(2). pp.161-183.
Backman, C. A., Verbeke, A. and Schulz, R. A., 2017. The drivers of corporate climate change
strategies and public policy: a new resource-based view perspective. Business &
Society. 56(4). pp.545-575.
Barney, J. B. and Mackey, A., 2016. Text and metatext in the resource‐based view. Human
Resource Management Journal. 26(4). pp.369-378.
Chen, F. and Kodono, Y., 2014. Fuzzy VRIO and SWOT Analysis of Chery Automobile.
Journal of Advanced Computational Intelligence and Intelligent Informatics. 18(3).
pp.429-434.
Mudambi, R. and Puck, J., 2016. A global value chain analysis of the ‘regional
strategy’perspective. Journal of Management Studies. 53(6). pp.1076-1093.
Gaiya, A., 2014. The Resource Based View of the Firm and Sustained Competitive Advantage.
Knies, E. and Leisink, P., 2014. Linking people management and extra‐role behaviour: results of
a longitudinal study. Human Resource Management Journal. 24(1). pp.57-76.
Progoulaki, M. and Theotokas, I., 2016. Managing culturally diverse maritime human resources
as a shipping company’s core competency. Maritime Policy & Management. 43(7).
pp.860-873.
Taylor, I. J., and et. al., 2014. Workflows for e-Science: scientific workflows for grids. Springer
Publishing Company, Incorporated.
Imran, m., kureshi, n., zaheer, n. and atif, b., 2016. Impact of factors causing delays in Original
equipment manufacturer (oem) intensive capital projects-the case of pakistan public
sector. asbbs proceedings. 23(1). p.248.
Ramli, A. S., Ahmad, J. B. and Harith, N. M., 2016. Blue ocean strategy in Malaysian public
sector: An analysis of the four action framework. Advanced Science Letters. 22(5-6).
pp.1702-1706.
Cosenz, F. and Noto, G., 2016. Applying system dynamics modelling to strategic management: a
literature review. Systems Research and Behavioral Science. 33(6). pp.703-741.
Rusanen, H., Halinen, A. and Jaakkola, E., 2014. Accessing resources for service innovation–the
critical role of network relationships. Journal of Service Management. 25(1). pp.2-29.
Mukhtarov, F. and Gerlak, A. K., 2014. Epistemic forms of integrated water resources
management: towards knowledge versatility. Policy Sciences. 47(2). pp.101-120.
Umbrico, A., Orlandini, A. and Mayer, M. C., 2015, September. Enriching a temporal planner
with resources and a hierarchy-based heuristic. In Congress of the Italian Association
for Artificial Intelligence (pp. 410-423). Springer, Cham.
Li, P., Kothari, V. and Terry, B. S., 2015. Processing and analysis of small intestine pressure
signal based on empirical mode decomposition. Journal of Medical Devices. 9(2).
p.020925.
Dimitrova, N. and Jasinschi, R., Funai Electric Co Ltd, 2015. System for parental control in
video programs based on multimedia content information. U.S. Patent 8,949,878.
Jiang, W., Xie, C., Zhuang, M. and Tang, Y., 2017. Failure mode and effects analysis based on a
novel fuzzy evidential method. Applied Soft Computing. 57. pp.672-683.
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Online
Jurevicius Ovidijus. 2013. Resource Based View. [Online] Available
through<https://www.strategicmanagementinsight.com/topics/resource-based-
view.html>.
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