The resource-based view of the firm

The resource-based view of the firm has generated significant attention in Strategic Management and other business disciplines. The underlying logic that is most widely accepted is that a firm’s competitive advantages are associated with the characteristics of the resources it possesses. In spite of its logical simplicity and substantial empirical support, this perspective offers only limited advice to managers regarding what they can do to develop competitive advantage. This paper offers a complementary view, called the resource creation system, based on the idea that firm resources (financial, human, physical, organizational, and knowledge based) are highly interdependent, in that the creation or utilization of resources in one of these areas influences other resource areas. Consequently, if a firm is weak in one resource area, that weakness will eventually lead to weaknesses in other areas. Furthermore, each resource area is linked to both internal and external stakeholders through the services they provide. In essence, resources are co-created through cooperative processes that link internal and external stakeholders. This perspective suggests that firms can increase their competitiveness over the long run by addressing their weakest resource areas. Furthermore, a firm can take advantage of strengths in one resource area to build other areas.