Company Performance: The Resource-Based View Model

The resource-based view (RBV) is a model that shows resources as key to superior company performance. If a resource shows Value, Rareness, Imitability, Organization (VRIO) attributes, the resource enables the firm to gain and sustain competitive advantage. The Resource-Based View (RBV) is an economic tool used to regulate the strategic resources available to a firm. These resources can be exploited by the firm in order to achieve sustainable competitive advantage. Barney (1991) described this theory, although it was Wernerfelt (1984) who make it known to the world the concept of resource position barriers being roughly analogous to entry barriers in the positioning school (see Porter, 1980). RBV proposed that firms are heterogenous because

Heterogeneous. The first assumption is that skills, capabilities and other resources that organizations possess vary from one company to another. If organizations would have equal amount and mix of resources, they could not employ different strategies to outcompete each other. What one company would do, the other could simply pursue and no competitive advantage could be performed. This is the scenario of perfect competition, yet real world markets are far from perfectly competitive and some companies, which are exposed to the equal external and competitive forces (same external conditions), are capable to implement different strategies and outperform each other. Therefore, RBV assumes that companies obtain competitive advantage by using their different bundles of resources. The competition between Apple Inc. and Samsung Electronics is a good example of how two companies that operate in the same industry and thus, are exposed to the same external forces, can obtain different organizational performance due to the contrast in resources. Apple competes with Samsung in tablets and smartphones markets, where Apple trade its products at much higher prices and, as a result, reaps higher profit margins. Why Samsung does not pursue the same strategy? Simply because Samsung does not have equal brand reputation or is able to design user-friendly products like Apple

The resource based view of the firm suggests that an organization’s human capital management practices can provide significantly to sustaining competitive advantage by creating specific knowledge, skills and culture within the firm that are difficult to imitate (Afiouni, 2007; Mata et al., 1995). In other words, by creating resource diversity (increasing knowledge and skills) and/or resource immobility (a culture that people want to work in), sustainable competitive advantage can be formed and maintained.

In conclusion, to remain their survival and competitiveness in the complex environments and in order to develop human capital resource diversity and immobility, an organization must capable of human capital management practices, organizational processes, knowledge management practices and systems, educational opportunity (both formal and informal) and social interaction (i.e., community building) practices in place (Afiouni, 2007; Barney, 1991; Mata et al., 1995; Schafer,