Resource Based View | SCMT 4653

Summary

This video focuses on business strategy with an emphasis on the Resource-Based View (RBV), which explores how firms gain a competitive advantage through internal resources. It explains that resources must be valuable, rare, inimitable, and non-substitutable to provide a sustainable edge. The video discusses tangible and intangible resources, such as supply chain expertise, and how their effective management can lead to differential firm performance. RBV's application to supply chain management is highlighted as a key driver of business success, offering a blend of cost, service, and timeliness advantages.

Takeaways

• 📚 The Resource-Based View (RBV) is a business strategy framework that emphasizes the importance of internal firm resources and capabilities for achieving competitive advantage.
• 🔍 RBV was developed by scholars like Barney, Petr, and Wernerfelt, and it has evolved to adapt to changes in the business landscape.
• 🏭 RBV focuses on tangible and intangible resources, with tangible resources being physical assets like buildings and equipment, and intangible resources including skills, capabilities, and expertise.
• 🚚 In supply chain management, tangible resources might include distribution centers or fleets of trucks, while intangible resources could involve the know-how to efficiently leverage these assets.
• 💡 Heterogeneity and immobility are key assumptions of RBV, suggesting that resources vary between companies and are not easily transferable, leading to different firm performances.
• 📈 RBV resources must be valuable, rare, inimitable, and non-substitutable (VRI) to provide a competitive advantage, with the acronym 'VRI' helping to remember these attributes.
• 💼 Supply chain management is highlighted as a strategic resource within the RBV framework, being valuable, rare, inimitable, and non-substitutable.
• 🌟 The ability to efficiently and effectively manage supply chains is identified as a key driver of differential firm performance in the market.
• 🔑 Supply chain management expertise is considered an intangible resource that is not prevalent and cannot be easily moved from one company to another, making it a significant source of competitive advantage.
• 🚀 Companies that excel in supply chain management can offer customers a more valuable bundle of cost, service, and timeliness attributes, setting them apart from competitors.

Q & A

What is the Resource-Based View (RBV) in business strategy?

The Resource-Based View (RBV) is a business strategy framework that emphasizes the importance of a firm's internal resources and capabilities as the source of competitive advantage, rather than external factors.

Who are some of the scholars that developed the RBV?

RBV was developed by scholars such as Barney, Peter, and Wernerfelt.

What are the two types of resources that firms rely on according to RBV?

According to RBV, firms rely on both tangible and intangible resources.

What are tangible resources in the context of supply chain management?

Tangible resources in supply chain management include physical assets like distribution centers, trucks, and other infrastructure that can be purchased in an open market.

How do intangible resources differ from tangible resources?

Intangible resources, unlike tangible ones, do not have a physical presence. They include skills, capabilities, know-how, and process expertise that take time to develop and cannot be easily purchased.

What are the key assumptions of the RBV?

The RBV is based on two key assumptions: heterogeneity, which means resources differ from company to company, and immobility, which means resources cannot easily move from one company to another.

What does it mean for resources to be valuable, rare, inimitable, and non-substitutable in the RBV?

In the RBV, resources must be valuable if they help reduce costs or increase differentiation. They must be rare, meaning not widely available to competitors. Resources should be inimitable, making them difficult for competitors to copy. Lastly, they should be non-substitutable, meaning they cannot be easily replaced by other resources.

How does supply chain management fit within the RBV framework?

Supply chain management fits within the RBV framework because it involves the efficient and effective management of resources that are valuable, rare, inimitable, and non-substitutable, leading to competitive advantage.

Why is supply chain management considered a source of competitive advantage?

Supply chain management is considered a source of competitive advantage because it involves the orchestration of complex processes across different functions and organizations, which is an intangible resource that is difficult to replicate.

How can a firm's supply chain capabilities lead to differential firm performance?

A firm's supply chain capabilities can lead to differential firm performance by providing a more valuable bundle of cost, service, and timeliness attributes to customers, which is a result of efficiently and effectively managing supply chains.

What is the essence of competitive advantage according to the RBV?

The essence of competitive advantage according to the RBV is implementing a value-creating strategy that competitors are not using, which provides superior performance relative to other competitors in the same industry.

Outlines

00:00

📈 Introduction to Resource-Based View (RBV) in Business Strategy

This paragraph introduces the concept of the Resource-Based View (RBV) in business strategy, focusing on how it can explain differential firm performance. RBV, developed by scholars like Barney and Felton, suggests that a firm's competitive advantage comes from its internal resources and capabilities rather than external factors. The theory emphasizes that both tangible (like distribution centers or trucks) and intangible resources (like skills or expertise) are crucial, with the latter being more significant for long-term competitive advantage due to their development time and non-replicability. The paragraph also discusses the attributes that resources must have to provide a competitive edge: they must be valuable, rare, inimitable, and non-substitutable.

05:01

🚀 The Role of Supply Chain Management in Achieving Competitive Advantage

The second paragraph delves into how supply chain management (SCM) fits within the RBV framework and can be a significant source of competitive advantage. It explains that while tangible resources like distribution centers can provide short-term advantages, it's the intangible resources like SCM expertise that are harder to imitate and more valuable in the long run. The paragraph highlights that SCM, with its complex processes and coordination across various boundaries, is an intangible resource that is rare, inimitable, and non-substitutable. Effective SCM can lead to superior performance by providing customers with better cost, service, and timeliness, thus driving differential firm performance in the market.

Keywords

💡Resource-Based View (RBV)

The Resource-Based View (RBV) is a business strategy framework that emphasizes the importance of a firm's internal resources and capabilities as the primary source of competitive advantage. It is distinct from other theories that focus on external market factors. In the video, RBV is introduced as a foundational concept, with the assertion that a firm's success is derived from its ability to exploit unique internal resources. The video explains that RBV has evolved over time and is particularly relevant to supply chain management, where the efficient management of resources can lead to significant competitive advantages.

💡Differential Firm Performance

Differential firm performance refers to the varying levels of success achieved by different companies within the same industry. The video script discusses this concept in the context of exploring why one firm might outperform its competitors. It is central to understanding the RBV, as it seeks to explain the sources of these differences in performance, attributing them to the unique resources and capabilities that each firm possesses.

💡Tangible Resources

Tangible resources are physical assets that can be seen and touched, such as land, buildings, equipment, and capital. The video script mentions tangible resources in the context of supply chain management, giving examples like distribution centers and fleets of trucks. These resources can provide a competitive advantage, but this advantage is often short-lived because they can be easily acquired by competitors in an open market.

💡Intangible Resources

Intangible resources are non-physical assets such as skills, capabilities, know-how, or process expertise. The video contrasts these with tangible resources, highlighting that intangible resources are more difficult to replicate and take time to develop. They are central to the RBV concept as they often form the basis of sustainable competitive advantages. An example given in the script is the know-how to leverage distribution and transportation capabilities efficiently, which is an intangible resource that provides a long-term competitive edge.

💡Heterogeneity

Heterogeneity, in the context of RBV, refers to the idea that resources vary from one company to another. The video script explains that even firms in the same industry with similar external forces can have different internal resources, leading to different performance outcomes. Heterogeneity is a key assumption of RBV, suggesting that a firm's unique combination of resources is a source of its competitive advantage.

💡Immobility

Immobility, as discussed in the video, refers to the inability of resources to move easily from one company to another. This concept is closely tied to the idea that certain strategic resources are difficult for competitors to replicate, thus providing a sustainable advantage. The video uses the example of Apple's innovation capabilities, which are not easily transferred or copied by competitors due to the time and investment required to develop them.

💡Valuable

In the RBV framework, a resource is considered valuable if it helps a company reduce costs, increase differentiation, or combine these characteristics in a way that creates value for customers. The video script emphasizes that valuable resources are a key attribute for competitive advantage. An example from the script is any strategic resource that helps provide utility in a better, cheaper, or faster manner.

💡Rare

A resource must be rare, meaning it is not widely available to competitors, to contribute to a firm's competitive advantage. The video script explains that if a resource is common, it cannot drive differential firm performance. Rarity is one of the key attributes that the video highlights as necessary for a resource to be strategically valuable within the RBV model.

💡Inimitable

Inimitable resources are those that are difficult or costly for competitors to imitate. The video script discusses how supply chain processes with many steps across different boundaries are often inimitable, making them a source of sustained competitive advantage. The concept of inimitability is crucial in RBV as it prevents competitors from easily copying a firm's strategies or resources.

💡Non-Substitutable

Non-substitutable resources are those that cannot be easily replaced by other available resources, or at least it would be costly for a rival to find a substitute. The video script includes non-substitutability as one of the key attributes of resources that contribute to competitive advantage. It ensures that a firm's resources maintain their unique value and are not easily circumvented by competitors.

💡Supply Chain Management

Supply Chain Management (SCM) is the integration of key business processes from end-to-end across the company and its supply chain partners. The video script positions SCM as the ultimate source of competitive advantage within the RBV framework. It is highlighted as an intangible resource that is valuable, rare, inimitable, and non-substitutable. The video explains that effective SCM can lead to differential firm performance by providing customers with a superior bundle of cost, service, and timeliness attributes.

Highlights

Introduction to the resource-based view (RBV) as a business strategy with a focus on supply chain management.

Exploration of the question: What leads to differential firm performance?

Discussion on the two most relevant schools of thought for supply chain: RBV and the positioning approach.

Historical development of RBV by scholars like Barney and Felton.

Core concepts of RBV: Internal firm focus and exploitation of internal resources for competitive advantage.

Definition and importance of tangible resources in a supply chain context.

Definition and importance of intangible resources, such as skills and know-how.

Contrasting tangible and intangible resources with an example from the supply chain.

Key assumptions of RBV: Heterogeneity and immobility of firm resources.

Explanation of how heterogeneity leads to different internal resources and firm performance.

Discussion on the immobility of resources and its impact on competitive advantage.

The VEERAM acronym for remembering the attributes of resources for competitive advantage: valuable, rare, inimitable, and non-substitutable.

How supply chain management fits within the RBV framework as a source of competitive advantage.

The evolution of supply chain management from a functional to an integrated and holistic approach.

The rarity and inimitability of supply chain management expertise as an intangible resource.

The strategic importance of efficiently and effectively managed supply chains for differential firm performance.

Conclusion on the capability to manage supply chains as a driver of market differences.

Transcripts

[Music]

[Applause]

hello today we're going to begin talking

about a business strategy with specific

emphasis on the resource-based view

which is also referred to as rbv in this

lesson we're gonna look again at the

question of what leads to differential

firm performance why does one firm

outperform its competitors what makes

your company more successful than mine

although there are a number of schools

of thought regarding differential firm

performance there are two that I think

are most relevant for supply chain

thought there's the resource-based view

and the positioning approach in this

lesson we're gonna focus on the

resource-based view RB V was developed

by a number of scholars like Barney Petr

and Werner Felton over time it has

continued to evolve and adapt to the

ever-changing corporate landscape

originally RB V was based on a few core

concepts RB V has an internal firm focus

and advocates that competitive advantage

is derived from exploiting internal firm

resources and capabilities rather than

external factors resource based logic

suggests that firms rely on both

tangible and intangible resources that

are assumed to be heterogeneous and

immobile firm resources must also have

certain attributes in order to help

provide competitive advantage those

attributes are valuable rare inimitable

and non substitutable let's look at each

aspect of the RB V conceptual model in a

little more detail resource base logics

suggest that firms rely on both tangible

and intangible resources that are

assumed to be heterogeneous and a mobile

firm resources must also have certain

attributes in order to help provide a

competitive advantage those attributes

are valuable rare inimitable and non

substitutable let's look at each aspect

of the RB V conceptual model in a little

more detail resources can be tangible or

intangible although we all probably have

an intuitive sense of what that means

let's more specifically define these

terms give some examples and talk about

why they are each important tangible

resources refer to physical things that

we can see in touch like land buildings

equipment and capital in a supply chain

context tangible resources might include

a network of distribution centers or a

fleet of trucks these types of resources

can provide an advantage but that

advantage is often short term because

tangible resources can often be

purchased in an open market on the other

hand intangible resources have no

physical presence we cannot see or touch

intangible resources these are things

like skills capabilities know-how or

process expertise intangible resources

take time to develop and they cannot be

easily purchased on the open market let

me contrast tangible and intangible

resources with a supply chain example

any firm can purchase distribution

centers or a fleet of trucks all it

takes is cash to buy those tangible

resources however the know how to

leverage distribution and transportation

capabilities in the most efficient and

effective manner is an intangible

resource that takes time to develop that

type of intellectual expertise is the

main source of competitive advantage the

resource base view is also based on two

key assumptions they are heterogeneity

and in mobility the assumption that

resources are heterogeneous means that

resources differ from company to company

and that firms in the exact same

industry with the exact same external

forces can still have different internal

resources that lead to differential firm

performance for example Apple and

Samsung both compete in the tablet and

smartphone markets and they share the

same industry structure however the

companies have heterogeneous internal

resources that can explain their

performance differentials the assumption

that resources are immobile simply means

that resources cannot easily move from

one company to another in the short

in mobility also means that competitors

cannot quickly replicate their rivals

resources or their strategies for

example many companies would like to

have apples innovation capabilities but

that strategic resource takes a lot of

time and money to develop and it cannot

be quickly duplicated it is a mobile

according to our BV resources must also

have very specific characteristics in

order to create a competitive advantage

the acronym veeram helps me remember

that resources must be valuable rare

inimitable and non substitutable quite

simply resources are valuable if they

help a company reduce costs increase

differentiation or combine cost and

differentiation characteristics in a way

that creates value for customers in a

supply chain context any strategic

resources that help provide time place

form or possession utility and a better

cheaper or faster way are valuable

resources also need to be rare and by

that I mean resources cannot be widely

available to competitors because if

everyone has a resource then it is

impossible for it to drive differential

firm performance and competitive

advantage in our BV language resources

must be in imitable that is they must be

difficult or costly to imitate so

competitors cannot easily copy and

implement your strategic approach

typically supply chain processes with a

lot of different steps across functional

and organizational boundaries are some

of the most difficult intangible

resources to imitate because every step

in the process is unknown to competitors

or it's unclear which steps are most

important either way supply chain

know-how is tough to imitate finally in

addition to being valuable rare and

inimitable resources also need to be non

substitutable that means they cannot be

replaced by other readily available

resources or

a minimum it must be costly for a rival

to find a substitutable resource the

reason that resources need to be

valuable rare in imitable and non

substitutable is so that they can be

used towards competitive advantage

competitive advantage occurs when

companies implement a value creating

strategy the competitors are not using

this can provide superior performance

relative to other competitors in the

exact same industry that is the essence

of competitive advantage and the goal of

our BV logic but what is this high-level

strategic management concept have to be

with supply chain management that's a

fair question to ask quite simply in my

opinion supply chain management is the

ultimate source of competitive advantage

because it fits so well within the rbv

framework if you think about it

structurally supply chains have existed

for centuries we have always sourced raw

materials operationally transform them

into finished goods and logistically

move them to where they were needed when

they were needed

we've always depended on getting the

right products to the right place at the

right time

however it has just been over the past

few decades that we began to think about

supply chain management in an integrated

and holistic manner we are still

discovering all the benefits of

communicating collaborating and

coordinating about basic business

processes across functional corporate

and national boundaries this intricate

and nuanced know-how is definitely an

intangible resource that is valuable it

is rare it is inimitable and it is non

substitutable supply chain management

expertise is not prevalent and you

cannot just move it from one company to

another and yet if you do eventually

crack the code and manage supply chains

well companies can provide their

customers with a much more valuable

bundle of cost service and timeliness

attributes the capability to efficiently

and effectively manage supply chains is

a strategic resource that drives

differential firm performance so what

leads to differential firm performance

it's the capability to efficiently and

effectively manage supply chains as a

strategic resource that drives the

differences we see in the market

[Music]