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MJF7 Strategy concepts overview (2): Resource based view of the firm

MJF7 Strategy concepts overview (2): Resource based view of the firm. 1. Limitation of the I/O based strategy theory. Monopoly rent vs. efficiency rent Strategic group concept. 2. Firm specific resources.

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MJF7 Strategy concepts overview (2): Resource based view of the firm

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  1. MJF7Strategy concepts overview (2):Resource based view of the firm

  2. 1. Limitation of the I/O based strategy theory • Monopoly rent vs. efficiency rent • Strategic group concept

  3. 2. Firm specific resources • The source of sustainable competitive advantage lies in the unique firm resources, but not in the external environment.

  4. 3. Historical view of theories of distinctive competence • General managers (Harvard school) • Decision makes and administrator • Institutional leaders (Selznick) • Visionary and structure builder • Ricardian economics • The economic consequences of owning land.

  5. 4. Endogenous environment analysis: VRIIO framework • Tangible and intangible resources • Capability = a combination of resources • Value chain: a means to identify capabilities

  6. 4-1. Resource analysis criteria:VRIIO • Criteria to evaluate firm resources Valuable Rare Inimitable Imperfectly substitutable Organizational arrangement to execute strategies

  7. 4-2.The question of “Value” • “Do a firm’s resources and capabilities enable the firm to respond to environmental threats and opportunities?” • Neutralizing threats and exploiting opportunities. • Increasing revenues or decreasing costs. • Firm resources that make it difficult for a firm to do the above are weaknesses of the firm. • The value of the same set of resources change.

  8. 4-3. “Rareness” • “How many competing firms already possess particular valuable resources and capabilities?” • Valuable, but common resources will be sources of only competitive parity.

  9. 4-4. “Inimitability” • “Do firms without a resource or capability face a cost disadvantage in duplicating it compared to firms that already posses it?” • Duplication cost

  10. 4-4. “Inimitability” (continued) • Unique historical conditions • time compression diseconomies • first mover’s advantage • path dependence • Causal ambiguity • Social complexity • Patents

  11. 4-5. “Imperfect substitutability” • “ Do firms without a resource or capability face a cost disadvantage in creating a substitute compared to the firm that already possess it?” • Different resources with the same effect

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