Creating Value The Resource-Based View and Competitive.pptVIP

Creating Value: The Resource-Based View The VRIO Model Marriott School – MBA 693R * Creating Value: The Resource-Based View and Competitive Advantage  MBA 693R Strategic Management Winter 2009 Mark H. Hansen Paul C. Godfrey The Theory Behind Internal Analysis The Resource-Based View ? developed to answer the question: Why do some firms achieve better economic performance than others? I/O Economics Industry Characteristics Profitability RBV Firm Characteristics Profitability The Resource-Based View Two Critical Assumptions of the RBV ? Resource Heterogeneity ? different firms may have different resources ? Resource Immobility ? it may be costly for firms without certain resources to acquire or develop them ? some resources may not spread from firm to firm easily The Resource-Based View ? heterogeneity of resources typically occurs as the result of ‘bundling’ several resources of a firm Resource Heterogeneity ? managers of a firm could take resources that seem homogeneous and ‘bundle’ them to create heterogeneous combinations ? heterogeneity could also be due to Ricardian-type resource endowments The Resource-Based View Resource Immobility ? resources may be immobile due to natural and/or intentionally created barriers to imitation ? costs of imitation ? imperfect imitability: the resource could be imitated but the cost of doing so would capitalize the full value of imitation inimitability: the resource cannot be imitated at any cost The VRIO Framework If a firm has resources that are: ? valuable, ? rare, and ? costly to imitate, and… ? the firm is organized to exploit these resources, then the firm can expect to enjoy a sustained competitive advantage. The VRIO Framework Valuable? Rare? Costly to Imitate? Exploited by Organization? Competitive Implications No Yes Yes Yes Yes Yes Yes Yes No No No Disadvantage Parity Temporary Advantage Sustained Advantage Economic Implications Below Normal Normal Above Normal Above Normal The VRIO Fra