This document reviews three schools of thought on what sources are likely to be the source of business success: the resource-based view, competence-based view, and dynamic capabilities view. It also discusses criticisms of the resource-based view, which is the most widely used model. Specifically, it outlines 13 criticisms of the resource-based view's VRIO framework, including that it does not fully explain how resources create strategic value and that the framework is not implementable in practice. The document concludes that resources alone cannot create competitive advantage and that dynamic capabilities need to be designed and continuously improved to achieve new advantages.

1. 3 SCHOOLS OF THOUGHTS
AND 13 CRITISISMS:
A REVIEW OF LITERATURE
HASSAN SHAHZAD
IHRM | MS-EM FURC

2. WHY DO SOME FIRMS
OUTPERFORMS OTHER ?

3. WHY DO SOME FIRMS OUTPERFORMS
OTHER ?
2- Paradigms
External Factor
Paradigm
Internal factor
Paradigm

4. WHAT SOURCES ARE LIKELY TO BE
SOURCE OF SUCCESS?

5. 3 SCHOOLS OF THOUGHTS
Rational-
equilibrium
school
RESSOURCE
BASED VIEW
OF FIRMS
(RBV)
Behavioral-
evolutionary
school
COMPETENCE
BASED VIEW
OF FIRM
(CBV)
Social
construction
ist school
DYNAMIC
CAPABILITIES
BASED VIEW
OF FIRM (DC)

6. 3 SCHOOLS OF THOUGHTS:
1. RESOURCE BASED VIEW (RBV)
•Firm ‘A’ is more successful than firm ‘B’, if
Firm ‘A’ controls more efficient and
effective resources than firm ‘B’

7. 3 SCHOOLS OF THOUGHTS:
2. COMPETENCE BASED VIEW OF FIRM (CBV)
•Firm ‘A’ is more successful than firm ‘B’, if
Firm ‘A’ is in a position to make use of available
resources more efficiently and effectively than firm
‘B’

8. 3 SCHOOLS OF THOUGHTS:
3. DYNAMIC CAPABILITIES BASED VIEW OF FIRM
(DC)
•Firm ‘A’ is more successful than firm ‘B’, if,
Firm ‘A’ has the ability to renovate competencies to achieve
new forms of competitive advantages i.e., to accomplish new
and innovative forms of competitive advantages.

9. THE RESOURCE BASED
VIEW (RBV)

10. MOST WIDELY USED RBV -MODEL

11. VRIO - FRAMEWORK

12. ASSUMPTIONS IN VRIO
MODEL
1. RESOURCES ARE HETEROGENEOUS
2. RESOURCES ARE IMMOBILE

13. CRITICISM
ON RBV
1
3

14. 13 CRITICISMS
This framework does not
explains the features necessary
to identify a resource to be
called as valuable
1. The value (V)
conundrum

15. 13 CRITICISMS
If all firm’s resources are
heterogeneous then at some
level of analysis all resources
become unique or Rare
2. The uniqueness or
rare (R) dilemma

16. 13 CRITICISMS
contradictS the core proposition of the
RBV that managers can engage in
“resource-based strategizing” to create
sustained competitive advantage
3. The cognitive
impossibility dilemma
(I)

17. 13 CRITICISMS
all the firms can apply
competencies and capabilities
to produce the same output
4. The Organization(O)
dilemma

18. 13 CRITICISMS
Researchers attempting to empirically
test the core proposition of the RBV
should identify, ex ante the resources
that will have strategic value ex post
5. The Tautology
problem

19. 13 CRITICISMS
The ex post analysis provide
limited insight into the
circumstances that will prevail in
the future
6. The static problem

20. 13 CRITICISMS
How the resources of a firm, various
processes and complementary
resources helps in contributing to the
overall success and competitive
advantage of that firm is unexplained
7. The absence of a chain of
causality

21. 13 CRITICISMS
Assumes that every embedded resource can
only create strategic value in that specific firm,
while it is in fact very possible that a given
resource can create even more strategic value
when becoming embedded in another firm
8. Asymmetry in
assumptions regarding
SFMs

22. 13 CRITICISMS
Unable to explicitly explain the complex
processes, the practicing of which, the
firm will be able to accumulate and
maintain the valuable resources
9. Accumulation of strategic
resources

23. 13 CRITICISMS
Instead of being a bundle of
resources, resources are treated
as singular distinct items
10. Synergetic effect of a
bundle of resources

24. 13 CRITICISMS
VRIO framework provides no such
prescriptions for practitioners
who want to implement this
theory inside any firm
11. Un-implementable in
practice

25. 13 CRITICISMS
core proposition of the VRIO
framework does not allow for
reproducibility of experiments,
falsifiability, and generalizability
12. The epistemological
impossibility problem

26. 13 CRITICISMS
it is critical to establish boundaries for
the framework by hypothesizing
competitive contexts within which
particular capabilities or competences are
determined to be more or less valuable.
13. One framework for different
competitive contexts

27. RESOURCE BASED COMPETITION
CONCLUSION
RESOURCES,
INTRINSICALLY
CANNOT BE A SOURCE
OF COMPETITIVE
ADVANTAGE
RESOURCE
PERFORMANCE
MANAGEMENT
PROCESSES NEED TO BE
DESIGNED
THESE PROCESSES MUST BE
CONTINUOUS AND ALIGNED
WITH STRATEGIC GOALTHE MANAGERS MUST
DESIGN CHALLENGING
PROGRAMS OF
INNOVATIVE AND
DYNAMIC
CAPABILITIES
RESEARCHERS MUST
SITUATE THEIR
RESEARCH CAREFULLY
IN DIFFERENT
SCHOOLS OF
THOUGHT

28. QUESTIONS PLEASE!

29. END OF PRESENTATION
THANK YOU