We can start with background of this idea. During the 1990s, the resource-based theory of the firm became the dominant paradigm in strategic planning. RBT(Resource Based View (Theory)) can be seen as a reaction against the positioning school and its somewhat prescriptive approach which focused managerial attention on external considerations, notably industry structure. The so-called positioning school had dominated the discipline throughout the 1980s. In contrast, the emergent resource-based view argued that the source of sustainable advantage derives from doing things in a superior manner; by developing superior capabilities and resources.
Jay Barney's article, "Firm Resources and Sustained Competitive Advantage" is seen as pivotal in the emergence of the resource-based view. The RBT is an interdisciplinary approach that represents a substantial shift in thinking. The resource-based view is interdisciplinary in that it was developed within the disciplines of economics, ethics, law, management, marketing, supply chain management and general business.
RBT focuses attention on an organisation's internal resources as a means of organising processes and obtaining a competitive advantage. Barney stated that for resources to hold potential as sources of sustainable competitive advantage, they should be valuable, rare, imperfectly imitable and not substitutable. The resource-based view suggests that organisations must develop unique, firm-specific core competencies that will allow them to outperform competitors by doing things differently.
Resource-based theory contends that the possession of strategic resources provides an organization with a golden opportunity to develop competitive advantages over its rivals. These competitive advantages in turn can help the organization enjoy strong profits. Firm resources and sustained competitive advantage. Resources means is so different. According to family resources are car and home. But according to this theory resources must be strategic resources. This table basically define this resource’s uniqueness with based on Southwest airlines’ example.
Strategic Resources
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Expansion
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VALUABLE resources aid in improving the organization’s effectiveness and efficiency while neutralizing the opportunities and threats of competitors.
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Although the airline industry is extremely competitive, Southwest Airlines’ turns a profit virtually every year. One key reason why is a legendary organizational culture that inspires employees to do their very best.
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RARE resources are those held by few or no other competitors.
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Southwest Airlines’ culture provides the firm with uniquely strong employee relations in an industry where strikes, layoffs, and poor morale are common.
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DIFFICULT-TO-IMITATE resources often involve legally protected intellectual property such as trademarks, patents, or copyrights. Other difficult-to-imitate resources, such as brand names, usually need time to develop fully.
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Southwest’s culture arose from its very humble beginnings and has evolved across hour decades. Because of this unusual history, other airlines could not replicate Southwest’s culture, regardless of how hard they might try.
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NONSUBSTITUTABLE resources exist when the resource combinations of other firms cannot duplicate the strategy provided by the resource bundle of a firm.
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The influence of Southwest’s organizational culture extends to how customers are treated by employees. Executives at other airlines would love to attract the customer loyalty that Southwest enjoys, but they have yet to find ways to inspire the kind of customer service that the Southwest culture encourages.
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For example, Culture is a type of intangible resource. Some of companies has this advantage because they has already job culture. In Germany, people working idea is so rule based. Work hard and go home. Or north Korea, They has work discipline. On the other hand water is tangible resource some countries live water problem and give huge budget to solve. But other countries live water wideness like equatorial countries. They sell fresh water and gain money. If we want to basically define resource types and related ideas, we can use these sentences;
The tangibility of a firm’s resource is an important consideration within resource-based theory. Tangible resources are resources that can have a physical presence. A firm’s property, plant, and equipment, as well as cash, are tangible resources.
In contrast, intangible resources are not physically present. The knowledge and skills of employees, a firm’s reputation, and a firm’s culture are intangible resources.
Capabilities are another key concept. Resources refer to what an organization owns, capabilities refer to what the organization can do. Capabilities often arise over time while the firm takes actions that build on its strategic resources.
Some firms develop a dynamic capability, where a company has a unique ability of creating new capabilities to keep pace with changes in its environment.
If so, these resources can provide not only a competitive advantage but also a sustained competitive advantage one that will endure over time and help the firm stay successful far into the future. Resources that do not have all four qualities can still be very useful, but they are unlikely to provide long-term advantages. A resource that is valuable and rare but that can be imitated, for example, might provide an edge in the short term, but competitors can overcome such an advantage eventually.
Resource-based theory can be confusing because the term resources is used in many ways within everyday common language. It is important to distinguish strategic resources from other resources. To most individuals, cash is an important resource. Tangible goods such as one’s car and home are also vital resources. When analysing organizations, however, common resources such as cash and vehicles are not considered to be strategic resources. Resources such as cash and vehicles are valuable, of course, but an organization’s competitors can readily acquire them. Thus, an organization cannot hope to create an enduring competitive advantage around common resources.
