Loading...

The link between the resource based theory and corporate politics

by Maxwell Olokundun (Author) Augusta Amaihian (Author) Fred Inelo (Author)

Term Paper 2014 9 Pages

Business economics - Business Management, Corporate Governance

Excerpt

Introduction

The main focus of the resource based theory of a firm is the acquisition of sustainable competitive advantage over other firms in the industry (Olalla, 1999). The uniqueness of a firm’s resources is considered as the basis for the strategic competitive edge achieved by the firm (Acedo, Barroso, and Galan, 2006). The concept of corporate politics also suggest that individuals express political behaviour targeted at acquiring power or a competitive edge over other individuals aimed at achieving personal or group interests within an organization (Vigoda, 2000). Thus this study seeks to explore a possible linkage between the themes of the resource based theory and the expression of political behaviours within a firm.

The concept of resources in an organization

Teece, Pisani, and Shuen (1997) define resources as firm-specific assets that are difficult if not impossible to imitate. Amit, and Schoemaker, (1993) also presented their definition of resources as stocks of available factors that are owned or controlled by the firm. According to Barney, (1991) a firm’s resources include all assets, capabilities, organizational processes, firm attributes, information, knowledge, controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness.

However Amit, and Schoemaker, (1993), define assets as a set of difficult to trade and imitate scarce, appropriable and specialized resources and capabilities that bestow the firm’s competitive advantage.

Thus as an interplay between the definition of resources presented by Barney, (1991), and the definition of assets as presented by Amit, and Schoemaker, (1993), this paper will adopt a definition of resources considered as all assets, capabilities, organizational processes, firm attributes, information, knowledge, controlled by a firm that enable the firm to conceive of and implement strategies that bestows on the firm a competitive advantage. It is important to state that this definition captures the essence of resources from the standpoint of the resource based theory of firm.

Resource based view as a theory

The resource- based theory of the firm propounded by Wernerfelt, (1984) is regarded as one of the theories of strategic management that is widely referenced particularly because of its practical relevance to contemporary management practices. The key theme of the resource- based view is the exploration of a firm’s resources geared towards gaining sustainable competitive advantage over other competing firms in the industry (Mahoney, and Pandian, 1992). Thus the philosophical ideology of the theory suggests that competitive advantage can only be achieved by the effective and efficient employment of all resources available to a firm (Mahoney, 2001).

The theoretical framework of the resource based view developed with a focus on identifying the inimitable attributes of a resource (Peteraf, 1993). From the philosophical stand point of the theory, if a firm’s resources can easily be imitated by competitors then sustainable competitive advantage cannot be achieved. Hence the theory emphasizes the pivotal role of a firm’s resources in the achievement of superior performance and competitive advantage over other firms or competitors in the industry (Miller, and Shamsie, 1996).

Main assumptions of the theory

The first assumption of the resource based theory suggests that all firms within an industry or a strategic group or cluster may be heterogeneous as regards the stock of resources available to them (Barney, 1991).

Secondly , the theory assumes that a firm’s resources may reflect heterogeneity persistently over a period of time based on the fact that the stock of resources employed to gain strategic edge are not perfectly transferable or mobile across competing firms (Black, and Boal, 1994). This implies that a firm’s resources cannot be traded in factor markets and are not easy to amass and replicate. Hence the uniqueness or distinctiveness of a firm’s resources is regarded as a pre-condition for the stock of resources to effectively gain competitive advantage.

Classification of resources

Grant, (1991) classified resources into three main groups namely: tangible, intangible, and personnel based. Tangible resources refer to physical assets such as financial resources, equipment, machinery buildings, land etc. Intangible resources refer to identifiable long term assets of a company which have no physical existence such as patented technology, computer software, data bases and trade secrets, knowledge, technical knowhow etc. Russo and forts (1997) presented their view on resources classifications as:

A) Physical assets and technologies and skills required to use them
B) Human resources and organizational capabilities.
C) The intangible resources of reputation and political acumen.

[...]

Details

Pages
9
Year
2014
ISBN (eBook)
9783656870937
ISBN (Book)
9783656870944
File size
513 KB
Language
English
Catalog Number
v286623
Grade
B

Authors

Share

Previous

Title: The link between the resource based theory and corporate politics