Gaining Competitive Advantage through Resource Based View

Abstract

Resource based view concept of strategic management can be traced back to the pioneeringworks of Edith Penrose. Incontrast to other frame works like porters five force model which is based onexternal environment analysis and formulating a strategy, resource based view have internal perspectiveof looking at internal resources and capabilities. This paradigm is basedon the foundation that diverse,difficult to resources and capabilities provide the basis of competitive advantage. Resource based valueparadigm has enthused a great deal of interest among scholars in strategic management.A companycannotcreateeconomicvalue due to mere possession of resources, but due to effective and innovativemanagement of resources. In other words the internal resources of the firm should be configured in sucha way that it will provide a competitive advantage. The Resource Based View is the focal point throughwhich internal analysis is conducted.The resource based view has two critical assumptions. The firstassumption is resource heterogeneity that is various companies’ posses’ different types of resources andhave different capabilities, even though they may be operating in a same industry, producing similarproducts and selling the products to similar customer groups. The second assumption is resourcemobility. As per this assumption resources may not be moved from one companyto its rival and viceversa. And it will be very costly for the company to acquire the resource and it will not be worth compared to the benefit gained from that resource.