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Resource based competitiveness

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  • 1. Strategic DirectionEmerald Article: Resource-based competitiveness: managerial implicationsof the resource-based viewJim AndersénArticle information:To cite this document: Jim Andersén, (2010),"Resource-based competitiveness: managerial implications of the resource-based view",Strategic Direction, Vol. 26 Iss: 5 pp. 3 - 5Permanent link to this document:http://dx.doi.org/10.1108/02580541011035375Downloaded on: 07-12-2012References: This document contains references to 6 other documentsTo copy this document: permissions@emeraldinsight.comThis document has been downloaded 4123 times since 2010. *Access to this document was granted through an Emerald subscription provided by UNIVERSITY OF THE ARTS LONDONFor Authors:If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service.Information about how to choose which publication to write for and submission guidelines are available for all. Please visitwww.emeraldinsight.com/authors for more information.About Emerald www.emeraldinsight.comWith over forty years experience, Emerald Group Publishing is a leading independent publisher of global research with impact inbusiness, society, public policy and education. In total, Emerald publishes over 275 journals and more than 130 book series, aswell as an extensive range of online products and services. Emerald is both COUNTER 3 and TRANSFER compliant. The organization isa partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archivepreservation. *Related content and download information correct at time of download.
  • 2. ViewpointResource-based competitiveness: managerialimplications of the resource-based view ´Jim Andersen Introduction Strategic analysis is a key feature of strategic management. In strategic management research, there has been a shift from focusing on firms’ products to focusing on internal factors in terms of resources and capabilities (Barney, 1991). Thus, according to some scholars previous models such as isolated (product) market analysis and Porter’s (1980) five forces framework are obsolete to some extent. Instead, strategic analysis based on resource ´Jim Andersen is an and capability approaches is more suitable for today’s business environments. This paperAssistant Professor at the will address the practical implications of the resource-based view, and discuss howSwedish Business School ¨ companies can benefit from adapting a more resource-based approach in their strategicat Orebro University,¨ management practices.Orebro, Sweden. Diversification The rationale for resource-based diversification differs from diversification based on a traditional (product) market approach. In the marketing literature (see, for example, the discussions concerning the concept of ‘‘new service logic’’), companies are advised to take the need they satisfy among their customers as a point of departure when diversifying their business. Grant (1991) uses a rail-road building company as an example. If this company is to diversify according to the market-based logic, it would focus on the service it provides to the end-customer (i.e. transportation) and thereby diversify into other areas of the transportation industry by, for example, investing in the airline industry or the car rental industry. From resource-based rationale, however, this company would take its production capability as the point of departure (i.e. the production and logistics capabilities), and diversify into building, for example, oil and gas pipelines (Grant, 1991). Thus, resource-influenced diversification is based on resource relatedness (i.e. diversify into a market in which you can apply your existing resources), whereas market-influenced diversification is based on market relatedness (i.e. diversify into markets where you have previous knowledge of market conditions, etc.). Compete on resources, not products Adapting a resource-based approach towards management requires a shift from focusing on products and product development to concentrating on resources and resource development. Thus, the main strategic focus of a company should not be on standardized products or different product offerings, but on how the company can create maximum value ¨ for its customers based on its resources (Gronroos, 1996). By adapting a resource-based approach, the main role of the sales personnel should not be to promote specific products to customers. Instead, the sales function should match the needs of the customers and the resources of the company. In order to apply contemporary management and marketing practices such as mass customization, one-to-one marketing, and customer-driven organizations, a resource-based approach is essential. Product development is, of course, still important. However, without the continuous development of resources, in termsDOI 10.1108/02580541011035375 VOL. 26 NO. 5 2010, pp. 3-5, Q Emerald Group Publishing Limited, ISSN 0258-0543 j STRATEGIC DIRECTION j PAGE 3
  • 3. of knowledge and company capabilities, the resources of firms will become obsolete. Thus, without the relevant capabilities, successful product development would be impossible. The importance of SHRM When product life-cycle times continue to decrease, costly efforts to protect resources (through patents, copyright, etc.) become less attractive. Resource-based strategic management focuses on developing hindrances to imitation of resources instead of protecting products. Thus, building strong relationships with employees and other key human resources is essential in today’s dynamic business environment. Linking of human resource management practices to the strategic direction of the firm is crucial, and the emergence of the field of SHRM (strategic human resource management) reflects this notion ´ (Andersen, 2007a). Thus, SHRM practices have two main functions: 1. to enhance organizational learning, thereby developing strategic resources in terms of different capabilities (i.e. to develop competitive advantages); and 2. to implement employee retention strategies in order to make the competitive advantage sustainable. Imitation of competitive advantages All companies cannot concentrate on being innovative and entrepreneurial. A more cost-effective strategy would be to closely monitor the actions of competitors in order to swiftly imitate successful actions, without taking the risks associated with being the first to act. In the marketing literature, this is sometimes referred to as ‘‘second-mover advantages’’. However, from a resource-based approach these actions do not necessarily have to be restricted to actions undertaken in the product market (for example, by being the first company to launch a new product or the first company to enter a new market). Instead, imitation of business processes and resources can also generate competitive advantages. ´ Taking into consideration resources and processes, Andersen (2007b) proposed a sequential model for the imitation of competitive advantages. In order to imitate the best in the industry, companies are advised to initially analyze the possibility of imitating the market strategy. If this requires new business processes, the next step would obviously be to attempt to imitate these processes. Finally, if the processes require new resources and/or capabilities, companies would have to assess the possibility of acquiring similar resources. For example, let us assume that the market leader within an industry has gained this position by a differentiation strategy in terms of high-quality products. If the imitator is able to produce similar products, it will only have to adapt a new market strategy by communicating this information and/or by focusing on the most profitable markets. If the imitator is not producing high-quality products, the next step would be to consider re-orienting its business processes by focusing more on quality management. If the company does not possess the resources necessary to implement more quality-oriented processes, it will have to develop or invest in these resources. Conclusions This article can be summarized by these managerial implications: B Diversify based on what you can do (i.e. your capabilities) and not on the markets you are currently serving. ‘‘ Diversify based on what you can do (i.e. your capabilities) and not on the markets you are currently serving. ’’ j jPAGE 4 STRATEGIC DIRECTION VOL. 26 NO. 5 2010
  • 4. ‘‘ Focus on how you can create value together with your customers, based on your resources and not on what you can offer to your customers in terms of a set of products. ’’ B Focus on how you can create value together with your customers, based on your resources and not on what you can offer to your customers in terms of a set of products. B Competitive advantages can almost always be explained by human resources. Thus, integration of HRM practices with strategic management is essential in order to develop and sustain competitive advantages. B Resources are generally complex in terms of imitation or acquisition. Thus, when imitating successful competitors, begin by analyzing market strategies and processes. If these practices are not possible to imitate without new resources, then determine the possibility of acquiring these resources. References ´ Andersen, J. (2007a), ‘‘A holistic approach to acquisition of strategic resources’’, Journal of European Industrial Training, Vol. 31 No. 8, pp. 660-77. ´ Andersen, J. (2007b), ‘‘How and what to imitate? A sequential model for the imitation of competitive advantages’’, Strategic Change, Vol. 16 No. 6, pp. 271-9. Barney, J.B. (1991), ‘‘Firm resources and sustained competitive advantages’’, Journal of Management, Vol. 17 No. 1, pp. 99-120. Grant, R.M. (1991), ‘‘The resource-based theory of competitive advantage: implications for strategy formulation’’, California Management Review, Vol. 33 No. 3, pp. 114-35. ¨ Gronroos, C. (1996), ‘‘Relationship marketing: strategic and tactical implications’’, Management Decision, Vol. 34 No. 3, pp. 5-14. Porter, M.E. (1980), Competitive Strategy, Free Press, New York, NY. About the author ´ ¨ Jim Andersen is an Assistant Professor at the Swedish Business School at Orebro University, Sweden. His research focuses on strategic management, in particular resource-based ´ theory and entrepreneurial strategies. Jim Andersen can be contacted at: jim.andersen@ oru.se j j VOL. 26 NO. 5 2010 STRATEGIC DIRECTION PAGE 5