that this should not be achieved in a manner that would
jeopardise the company’s superior returns (Conner 1991).
The RBV makes two main assumptions in analysing
SCA:
– Resource differentiation may exist between companies of
the same industry
– The resources in question may be immobile and thus
heterogeneity may be long lived (Barney 1991).
The RBV advances that the possession of unique positions in terms of resources that are valuable to production
and distribution is key to an organisation’s capacity to reach
and sustain profitable market positions (Conner 1991). This
advantageous position will stem from the focus on
costly-to-copy attributes of the firm as sources of economic
rent and thus as the fundamental drivers of performance and
SCA (Conner 1991). The attainment of above normal returns
or rents is achievable through valuable resources that are
scarce (Chaharbaghi and Lynch 1999). The resource-based
view defines a firm as composed of groups of resources. It
also claims that resource differentiation may exist between
different organisations and even more, that a firm has the
ability to maintain this differentiation over time as the theory
advances that resources are immobile as well as difficult to
imitate.
Fahy (2000) summarises the three key tenants of the
Resource-Based View below:
– SCA and superior performance
– Unique resources with key features that benefit the firm
– Strategic choices made by the firm.
3.2 The Relationship Between the RBV and SCA
According to Fahy (2000), the main area where the
resource-based view has made a significant impact is in the
framework of competitive advantage. Its key assumption is
that the achievement of sustainable competitive advantage is
the main focus of management activity. Once the firm is in
possession of SCA, it is able to reach economic rents.
Resource-based theories highlight rents as opposed to profits
when discussing sustainable competitive advantage driven
by a number of factors. Most importantly, it advances that
profit is a purely accounting, quantitative concept, which
does not allow the firm to evaluate the quality of its
resources. In addition, the value of the latter is based on
historical costs (Chaharbaghi and Lynch 1999).
The resource-based view focuses on the important role of
management in making strategic choices related to obtaining
and nurturing the right resources to enhance returns. This
consequently emphasises the manner in which companies
acquire and maintain competitive advantage, an area
addressed in detail in the RBV literature in general (Fahy
2000). It also proposes that the possession of certain key
resources is critical to building SCA. These resources are
described as having the characteristics of value, barriers to
duplication and appropriability. Peteraf expands on this by
proposing that the value of superior resources lies largely in
their restricted availability. They will likely generate a sustainable competitive advantage only if competitors cannot
easily replicate them (Peteraf 1993). An SCA can be
obtained not only if the firm possesses these resources but
also deploys them appropriately in its product-markets.
The below model by Fahy (2000) is a representation of
the resource-based model and summarises many of the discussion points raised above. It represents a snapshot of how
the main elements of the RBV, namely, key resources, SCA,
superior performance and management choices interact with
each other in the RBV framework (Fig. 1).
3.3 Understanding the Resource-Based View
(RBV) and Its Assumptions
The above classification of resources by Fahy appears to
suggest that “Capabilities” are also one kind of resource, as
he argues the “label resources is best adopted as a general,
all-embracing one” (Fahy 2000). As will be explained in the
coming sections, many subsequent authors make a clear
distinction between “resources” and “capabilities”. In light
of the Dynamic Capabilities (DC) Theory, which will be
further elaborated on, “Dynamic Capabilities” may be
defined as the organization’s ability to integrate, build and
reconfigure internal and external competencies to address
rapidly changing environments. This concept emphasizes the
DC as a set of processes that result in changes in the feature
set and current capabilities of an organization in order to
adapt the organization to cope with environmental changes.
(Tondolo and Bitencourt 2014).
3.4 The Characteristics of Advantage-Creating
Resources
As previously discussed, a key tenant of the resource-based
view is that resources do not all have the same value and
they do not all have the potential to generate SCA. Much of
RBV literature thus attempts to shed light on the characteristics of advantage-creating resources. Many over-lapping
views can be found on that topic. Barney (1991) proposes
that advantage-creating resources must meet four main criteria: value, rareness, inimitability, and non-substitutability,
while Grant (1991) puts forth the level of durability,
Towards an Understanding of the Sources of Sustainable …
301
jeopardise the company’s superior returns (Conner 1991).
The RBV makes two main assumptions in analysing
SCA:
– Resource differentiation may exist between companies of
the same industry
– The resources in question may be immobile and thus
heterogeneity may be long lived (Barney 1991).
The RBV advances that the possession of unique positions in terms of resources that are valuable to production
and distribution is key to an organisation’s capacity to reach
and sustain profitable market positions (Conner 1991). This
advantageous position will stem from the focus on
costly-to-copy attributes of the firm as sources of economic
rent and thus as the fundamental drivers of performance and
SCA (Conner 1991). The attainment of above normal returns
or rents is achievable through valuable resources that are
scarce (Chaharbaghi and Lynch 1999). The resource-based
view defines a firm as composed of groups of resources. It
also claims that resource differentiation may exist between
different organisations and even more, that a firm has the
ability to maintain this differentiation over time as the theory
advances that resources are immobile as well as difficult to
imitate.
Fahy (2000) summarises the three key tenants of the
Resource-Based View below:
– SCA and superior performance
– Unique resources with key features that benefit the firm
– Strategic choices made by the firm.
3.2 The Relationship Between the RBV and SCA
According to Fahy (2000), the main area where the
resource-based view has made a significant impact is in the
framework of competitive advantage. Its key assumption is
that the achievement of sustainable competitive advantage is
the main focus of management activity. Once the firm is in
possession of SCA, it is able to reach economic rents.
Resource-based theories highlight rents as opposed to profits
when discussing sustainable competitive advantage driven
by a number of factors. Most importantly, it advances that
profit is a purely accounting, quantitative concept, which
does not allow the firm to evaluate the quality of its
resources. In addition, the value of the latter is based on
historical costs (Chaharbaghi and Lynch 1999).
The resource-based view focuses on the important role of
management in making strategic choices related to obtaining
and nurturing the right resources to enhance returns. This
consequently emphasises the manner in which companies
acquire and maintain competitive advantage, an area
addressed in detail in the RBV literature in general (Fahy
2000). It also proposes that the possession of certain key
resources is critical to building SCA. These resources are
described as having the characteristics of value, barriers to
duplication and appropriability. Peteraf expands on this by
proposing that the value of superior resources lies largely in
their restricted availability. They will likely generate a sustainable competitive advantage only if competitors cannot
easily replicate them (Peteraf 1993). An SCA can be
obtained not only if the firm possesses these resources but
also deploys them appropriately in its product-markets.
The below model by Fahy (2000) is a representation of
the resource-based model and summarises many of the discussion points raised above. It represents a snapshot of how
the main elements of the RBV, namely, key resources, SCA,
superior performance and management choices interact with
each other in the RBV framework (Fig. 1).
3.3 Understanding the Resource-Based View
(RBV) and Its Assumptions
The above classification of resources by Fahy appears to
suggest that “Capabilities” are also one kind of resource, as
he argues the “label resources is best adopted as a general,
all-embracing one” (Fahy 2000). As will be explained in the
coming sections, many subsequent authors make a clear
distinction between “resources” and “capabilities”. In light
of the Dynamic Capabilities (DC) Theory, which will be
further elaborated on, “Dynamic Capabilities” may be
defined as the organization’s ability to integrate, build and
reconfigure internal and external competencies to address
rapidly changing environments. This concept emphasizes the
DC as a set of processes that result in changes in the feature
set and current capabilities of an organization in order to
adapt the organization to cope with environmental changes.
(Tondolo and Bitencourt 2014).
3.4 The Characteristics of Advantage-Creating
Resources
As previously discussed, a key tenant of the resource-based
view is that resources do not all have the same value and
they do not all have the potential to generate SCA. Much of
RBV literature thus attempts to shed light on the characteristics of advantage-creating resources. Many over-lapping
views can be found on that topic. Barney (1991) proposes
that advantage-creating resources must meet four main criteria: value, rareness, inimitability, and non-substitutability,
while Grant (1991) puts forth the level of durability,
Towards an Understanding of the Sources of Sustainable …
301