Integrating resource-based theory in a practice-relevant form

Abstract

Purpose – This paper aims to address the limited development of techniques to analyze firms’ internal sources of competitive performance. It seeks to enhance the contribution of the widely diffused value-rarity-imitability-organisation (VRIO) model to practical strategy making. Design/methodology/approach – The paper draws on the resource-based literature to assemble an integrated set of steps that evaluate a firm’s resources and competence. Findings – The paper proposes an expanded version of the VRIO model that represents resource and competence as a conditional outcome from attributes and asymmetries present in the firm. It shows how the conditions convert asymmetries between weaknesses, missed opportunities, rigidities and resources. Research limitations/implications – By synthesising resource-based theory in a practice-relevant form, the paper delineates a concrete set of practices that relate to firms’ dynamic capability to manage resources and competence. Practical implications – The paper details an approach to resource and competence analysis that leads directly to decisions about how a firm can manage the resources in question. The model gives a central role to the conditions under which a firm’s attributes give rise to a resource or competence, and hence suggests active management of these conditions. Originality/value – The paper presents resource-based theory in a form that focuses on the doing of strategy, in contrast to the traditional focus of this literature.