Wednesday, March 2, 2011

What is Resource Based View in Strategic Management?

Almost all business management courses have a module that includes study of strategic management. Our homework helps experts have expertise in the field of strategic management. There are different perspectives and approaches to field of strategic management. This blog post would discuss in detail what resource based view of strategic management is.

This perspective stresses and based on the perspective that resources of the company whether tangible or intangible like brand name, assets, cash, customer loyalty, research and development capabilities are an important and main aspect while forming or pursuing a unique strategic position for a company. This concept of strategic management rather than being driven by the environment is internally resource driven and in this perspective of strategic management the organization is viewed as a collection of capabilities and competences. Organizations leverage new actives from its existing core competencies.

According to Barney (1991) analysis of the impact of a firm’s environment on its competitive position is based on two assumptions. First, firms within an industry or a strategic group are identical in terms of strategic relevant sources they control and the strategies they pursue and second, these models assume that should resources heterogeneity develop in an industry or group will be very short lived because the resources that firms use to implement their strategies are highly mobile i.e. they can be bought or sold in factor markets (Barney, 1991).

Resource based view assumes that companies within an industry or group may be heterogeneous with respect to the strategic resources they control and these are not perfectly mobile, thus heterogeneity can be long lasting (Barney, 1991). Simply, it is suggested that firm resources may be heterogeneous and immobile.

According to Daft (1983), "firm resources include all assets, capabilities, organisational processes, firm attributes, information, knowledge, etc. controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness". According to Barney (1991), firm resources that hold the potential for sustained competitive advantage must have four attributes which are valuable, rare, In-imitable, and non-substitutable.

So in resource based view of the firm, strategy of the firm is basically dependent on firms’ resources. This view again as the market based view is focus on some important aspects but at the same time ignores some other basic aspects of strategy formulation for a company. So resource based view of the firm is also not a balanced view.

We hope that this blog post is useful for the students and practitioners of the field of strategic management. Please email us to if you need any strategic management help regarding the module of strategic management.