What Is the Relevance of the Resource-Based View of the Firm

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The Answer is The resource-based view of the firm is an attempt to bring attention to the importance of a corporation's resources in strategic management. For much of the 1980s, Porter's concepts of industry analysis and competitive strategy dominated the field of strategic management to such an extent that many felt that industry structure alone seemed to determine a firm's profit potential. Unfortunately, this emphasis on the industry tended to ignore a firm's core skills and competencies. What good is the knowledge that a niche in the market exists that can be reached through a focused differentiation competitive strategy if a corporation doesn't have the resources to implement such a strategy? Experts on the resource-based view suggest that differences in performance among companies may be explained best not through differences in industry structure identified by industry analysis, but through differences in corporate assets and resources and their application. The resource-based view of the firm is compatible with the traditional concepts of SWOT and distinctive competence, popular in the field since the 1960s. The only danger with the resource-based approach is that analysts may put too much emphasis on internal factors and not enough on external factors. Nevertheless, the idea that the durability and imitability of corporate resources determine competitive advance is a very useful one.

What Is the Relevance of the Resource-Based View of the Firm

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