Literature Review: Is the
Resource-Based View of the Firm Useful to Supply Chain Managers?
Chain management is undoubtedly the most prominent factor in the success of any
project whether it is concerned with the adaptability of the resources in an
organized way or not. Thus Resource-Based view comes into the scene, as this
theory has been for a long time proved quintessential in supplying the
appropriate amount of resources to determine how to cater competitive advantage
for the supply chain managers and other departments of a project as well. According
to Kamboj, Goyal, Rahman (2015), for a firm to achieve competitive advantage
over their rivals it is certainly important for them to understand the need of
the different types of resources required in order to overcome the resource
which their rivals pose and thus will aid them to overcome their rivals in
terms of ROI and market value.
per Hart, S (1995), Resource-Based View is a tool to calculate the sustainable
competitive advantage of a firm; as implied by Hart, S (1995), resources can be
a determining factor for a firm to identify whether they pose all the essential
resources such as; information, attributes, knowledge, firm assets and
capabilities et cetera which all are very critical to implement sustainable
performance of a firm. On the contrary as per Newbert, S (2007), Resource-Based
view certainly is not a sufficient tool to calculate the necessary measure or
resources needed for the successful implementation of sustainable competitive
advantage and in turn is definitely not applicable for the supply chain
managers. While there are a lot of debate over the topic of usefulness of
Resource-Based view for a firm it is evident that for any firm to perfectly
execute their project resource management and knowledge is a key factor which
can undoubtedly change the course of action of a firm if they possess just the
right kind of resources in order to get ahead of their competitors.
is also advocated by Barney, J (2012), that Resource-Based View is the prime
reason behind venturing out the importance of several internal factors which
are now considered more advantageous in the field of accumulating resources and
for gaining the competitive advantage for a firm rather than the conventional
believes that only external factors are responsible for achieving competitive
advantage by a firm. Thus Resource-Based view has certainly proved to be an
impeccable tool in the field of determining the success factor of a firm and
that of a certain project and all the departments involved in it such as
production, manufacturing, marketing and supply chain management.
Resource-Based View and the Strategy are absolutely not the same things; as
according to Gold, Seuring, Beske (2010), Resource-Based view acts more kind of
a tool to identify the necessary resources required by an firm or a specific
department of the firm in order to achieve competitive advantage and on the
other hand Strategy is a complete think tank which is designed to implement and
execute a specific project for a firm. While, these two are not the same things,
as per Gold, Seuring, Beske (2010), Resource-Based view proved to be
exceptionally helpful in designing of a strategy for a project and thus it is
certainly considered an added advantage by some of the scholars who think that
Resource-Based view can provide the necessary means for the supply-chain
managers to perform up to the mark.
Criticism of RBV
the Resource-Based view is defined as the most promising theory which has
enabled the firms to grasp an understanding of all the important kind of
resources a firm needs in order to achieve a sustainable competitive advantage.
These resources might be tangible, non-tangible, valuable and non-valuable,
rare and possess the capability to arrange and align these resources in such a
way so that the firm can take utmost advantage in their strategic management
to Barney, J (2001) Resource-Based view while is an exceptionally well-balanced
tool it does leaves some hinges open to criticize about which includes its
definition of competitive advantage for a firm or the actual reasoning of the
right resources and their value to the firm. All these aspects might bring about
a critically important criticism which may open certain loose holds in the
Resource-Based view theory.
of the major criticism on RBV was framed by Kraaijenbrink, Spender, Groen (2010),
in which he pointed out that by implying RBV all of the firms are considered as
a mere profit-maximizing entity and that all the factors and existing theories
of a firm are neglected according to the theory of RBV. This might be the
reason that most of the firms who are not able to cycle their profits to the
above average mark neglect the applicability of the Resource-Based view for
their firm as they are afraid that it may undermine their firm in the market
and that by implementing it they might attract unwanted competition into their
firm which is definitely not a good cause. Thus the critic falls for the
Resource-Based view as it treats every firm in a way which absolutely does not
describe every firm’s activity.
to Armstrong, C.E, Shimizu, K (2007), Resource-Based view is also implied to
project how important the resources are for the firm to gain competitive advantage
over their competitors and while not every firm is that considered about their
resource collection and management in such an organised way this projects the
RBV theory also fails to provide the managers of the firm with an optimum
reference as how to manage such resources in order to achieve competitive
advantage for the firm. Due to the lack of proper references based on the
implementing resources organization theory, Armstrong, C.E, Shimizu, K (2007),
advocated the fact that Resource-Based view might not be the perfect theory to
implement as it lacks general implications in terms of enough support to prove
its resource managerial cause.
per Colbert, B (2014), Resource-Based view is also subjective on the topic that
it only implies and works in case of bigger firms who works on several different
projects and thus possess much larger pool of resources to work out the best
way possible to use those resources in a certain way by the use Resource-Based
view to gain competitive advantage over the much smaller firms who generally
lacks all types resources required for them to conquer their competitors which
implies that Resource-Based view is not exactly a universal theory which is
applicable for all firms rather it discriminates the firms based on how big
their resource collection capability is
and thus unknowingly favour bigger firms.
the case, Resource-Based view is definitely an added advantage for the supply
chain managers as it provides them with just the right amount of knowledge to
organizes the resources of the firm in such a way that they can make the best
out of the limited resources and plan further ahead might give them a good
chance of overcoming their competitors in terms of return on investment and
per Carter, CR, Kosmol, Kaufmann (2017), most of the theories aimed to provides
managers a helping aid in sorting out the accurate techniques to include in
their in order to achieve competitive advantage there is one theory named as
the Practice-based view. This theory provides the managers with accurate and
specified set of techniques which is most of the time applicable in the attempt
of making a firm gain better results in the market than any of their
competitors and also focus importance on the techniques used by the common
public which is capable of withholding the difficult tasks of significantly
improving the performance of the firm in such a manner that they rise above all
their competitors. In addition to this, PBV is also commonly denoted as the
techniques which are commonly used by the firms to gain a better advantage and
to get a hold of things in a non-complex way and according to Bromiley, Rau
(2014), these techniques most of the time prove to be just as useful as the
technologically and logically sound complex techniques which are imposed
through the Resource-Based view theory. While the main aim of both these
theories somewhat same the implication complexity of RBV theory makes it a less
popular option among firms and managers as the techniques suggested in PBV
theory seems to work just fine are on the contrary are much easy to implement
and execute on a larger level.
to Liu, Prajogo, Oke (2016), PBV is the perfect source to extend the supply
chain managers with sufficient measures to make a direct impact to their performance
in the firm and thus aiding the performance of the firm as well. Now, in order
to accomplish this, a more modern version of PBV which is Supply Chain Practise
View (SCPV) is implemented which is a fusion of RBV and PBV with some added
improvised version of the usage of resource and supply chain management done by
the managers in order to elevate the firm’s performance and add much more
definition to the Resource-Based view in terms of supply chain managers.
per Beske (2012), with the more and more demand and role of supply chain
management techniques and their role in determining the performance of a firm
certainly depends on specific sets of management theories which are more
dynamic in their nature, thus the Dynamic Capabilities theory was evolved.
According to Beske (2012), Dynamic Capabilities provides the supply chain
manager with such management theories and approaches which are more dynamic
than the previous theories and thus bring with them more and increased option
of firm success in managing its performance ratio in a more suitable manner.
Although the Dynamic Capabilities theory provides a significant framework there
are still a lot of factors which need to be incorporated with that in order to
identify the performance of the supply chain management as just the application
of DC theory is certainly not enough to explain and manoeuvre the outcomes of
the measure to achieve sustainable competitive advantage for a firm.
most of the theories concerning to provide strategic management and resource
management in a sustainable way to the firms are somewhat contradictory to each
other in terms of their objectives, Resource-Based view does actually line up
with some other theories like Dynamic Capabilities in order to provide a more
wider sense of strategic management for the supply chain managers and provide
them with just the necessary tools and techniques to lay down the perfect plan
to sort out their resource managements to elevate the performance of the firm
in such a manner that it builds a very strong market value and also that it is
capable to achieve a sustainable competitive advantage over its competitors in
a more strategic way.
Utility of RBV
to Bohnenkamp (2013), resource-based view contradicts the five forces analysis of
Porter’s theory and argues that the firm consist of various different resources
and all these resources can be used for gaining competitive advantage. In other
words, resource-based view suggests that every firm possesses a unique set of
internal resources which should be used for acquiring a competitive edge in the
industry. There is vast applicability of resource-based view in supply chain
management as Bohnenkamp (2013),
suggests that resource-based view helps and contributes at every stage
of decision making during purchase year cycle. The view guides that the firm
should keep more strategically significant and vital operations inside while
less important activities can be outsourced. The activities done in-house using
firm’s resources will help in gaining a competitive advantage. By maintaining a
healthy relationship with the supplier and increasing cooperation, the firm can
also turn external factors in its favor. In the views of Abushaikha (2014), it
is important for the firms to identify the critical resources their usability,
sustainability, and rarity to be used in the process. Moreover, organizations
are required to identify activities which could be outsourced based on the
dependence of entire process on them. According to Abushaikha (2014), the
resource-based view becomes even more significant while doing supply-chain
management because the firm needs to decide whether to carry on entire process
that is from acquiring raw material to delivering a finished product to the
customers on their own or to outsource less important activities to save time
and resources. Resource-based view also helps the firm to take a decision on
whether to make or buy a certain item based on the internal resources
available. This is really significant as some of the items required could be
made internally and a lot of money and time can be saved while at the same time
quality of the work can also be continuously monitored and controlled.
to Abushaikha, (2014), the applicability of Resource-Based view on the supply
chain manager is a factor of the definition of resources which is presented by
the RBV theory in which all the resources of the firm are considered as
heterogeneous, which implies that the supply chain managers are always in
ambiguity of what resource to include and what not to include in order to
identify the best possible resources to determine the performance of the firm.
On the contrary, Resource-Based view while describing all the internal
resources responsible to shape the performance of the firm supplies the supply
chain managers a chance to keenly detect all the internal resources which might
be lacking from a firm and then can try to incorporate those effectively in the
firm’s strategic operations in order to elevate the performance of the firm in
a strategic manner following the RBV principle.
to Hoopes, D, Madsen, T.L, Walker (2003), Resource-Based view in addition with
other theories like Dynamic capabilities is certainly capable of lining the
interests of the supply chain managers in a way that it matches the interest of
the firm so that to achieve competitive advantage in such a way that the supply
chain managers have a complete control to work and change the strategy and
operation of the firm in order to address the matter of gaining sustainable
competitive advantage in the market which seems to be the main focus of every
other firm nowadays.
Applicability of RBV
Resource-Based View (RBV) is an administrative system used to decide the vital
assets with the possibility to convey relatively favorable position to a firm.
These assets can be used by the firm with a specific end goal to accomplish
manageable upper hand. And also provides with a possibility of sustained
the fact that, having heterogeneous and stable assets is basic in accomplishing
upper hand, it isn’t sufficient alone if the firm needs to manage it. Barney
(1991) has distinguished VRIN system that analyses if assets are significant,
uncommon, exorbitant to emulate and non-substitutable. The assets and
capacities that answer yes to every one of the inquiries are the managed upper
hands (Barney, J.B, Hesterly, W, 2010).
per Rechenthin (2014), VRIO is a business examination structure that structures
some portion of a company’s bigger vital plan. The essential vital process that
any firm experiences start with a dream articulation, and proceeds through
targets, inward and outer investigation, key decisions (both business-level and
corporate-level), and key execution. The firm will trust that this procedure
brings about an upper hand in the commercial center they work in. It falls into
the inward examination advance of these techniques, however, is utilized as a
structure in assessing pretty much all assets and capacities of a firm, paying
little mind to what period of the key model it falls under. It consists of the
four inquiry system to gain some information about an asset or capacity to
decide its potential: the topic of Value, the subject of Rarity, the topic of
Imitability (Ease/Difficulty to Imitate), and the topic of Organization
(capacity to abuse the asset or ability).
of Value. Assets are profitable on the off chance that they help associations
to expand the esteem offered to the clients. This is finished by expanding
separation or/and diminishing the expenses of the generation. The assets that
can’t meet this condition, prompt focused detriment.
of Rarity. Assets that must be procured by one or few organizations are viewed
as uncommon. At the point when more than few organizations have a similar asset
or capacity, it brings about aggressive equality.
of Imitability. An organization that has important and uncommon asset can
accomplish in any event impermanent upper hand. Be that as it may, the asset
should likewise be expensive to emulate or to substitute for an adversary, if
an organization needs to accomplish managed upper hand.
of Organization. The assets itself don’t give any favorable position for an
organization if it’s not sorted out to catch the incentive from them. Just the
firm that is competent to abuse the important, uncommon and imitable assets can
accomplish managed upper hand (Andjelkovic Pesic, Jankovic Milic, Stankovic,
to Galbreath (2015), Resource-based view (RBV) is a case of a hypothesis that
incorporates an administration point of view with a financial aspects
viewpoint. In that capacity, its test is to keep its contentions legitimately
reliable and clear, in spite of the danger of their getting to be plainly
entrapped, because of contending and conceivably clashing hypothetical impacts.
To address this difficulty, it is basic to comprehend the breaking points to
the space of RBV. Unless RBV is comprehended as an asset level and productivity
situated logical instrument, its commitment can’t be comprehended and
acknowledged completely. Fusing parts of a financial hypothesis that fall
outside this space won’t expand its energy and will just add to the perplexity.
Resource-Based view is definitely a confusing yet appealing theory which is
based on various factors and provides some rationale to aid the supply chain
manager in order to increase the performance of their firm in a strategic way.
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