RESOURCE-BASED VIEW OF ENTREPRENEURSHIP

Fahim akhtar

Resource-based view

The resource-based view (RBV) as a basis for the competitive advantage of a firm lies primarily in the application of a bundle of valuable tangible or intangible resources at the firm's disposal

Competitive advantage

A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.

Resource

Features of resources• Valuable. Because they exploit same

environment opportunity • Rare. In a sense that there are not enough for

all competitors. • Inimitable. So that competitors may not

merely copy them • Non substitutable with other sources

Formula within theory• Buy or acquire cheaply ----- transform or deploy ( the

resources)• Implement the strategy -------sell dearly

Types of resources • Financial resources • Physical resources• Human resources• Organizational resources• Technological resources• Reputational resources

Financial resources

• Credit held • Capacity to borrow • Ability to liquidate

Financial resources • Are financial resources valuable ?• Are financial resources rare?• Are financial resources imperfectly imitable?• Are financial resources non substitutable with

other resources?

Physical resources

Human resources

• Knowledge• Training • Experience• Judgment, insight, creativity, vision• Relationship capital

Organizational resources

• Firms structure, routine and systems

Technological resources

• Process, system and physical transformation• Lab, R & D facilities, testing and quality control

Reputational resources• Quality of management• Use of corporate resources• Firm’s financial soundness• Firm’s value as innovation• Quality of product and services• Innovativeness• The ability to attract, retain top people

CA stands for competitive advantage

Advantages of resourced based theory

• Neo- Classical Theory• Industrial organization theory• The transaction cost approach

Neo- Classical TheoryNeo-classical theory deals with the human factor.

Elton Mayo pioneered the human relations to improve levels of productivity and satisfaction

Industrial Organization theory• The Theory of Industrial Organization is the first primary

text to treat the new industrial organization• Modern theory of monopoly, addressing single product

and multi product pricing, static and inter temporal price discrimination, quality choice, reputation, and vertical restraints

The transaction cost approachThe transaction cost approach to the theory of

the firm was created by Ronald Coase. Transaction cost refers to the cost of providing for some good or service through the market rather than having it provided from within the firm.