A secondary problem with RBV is that, although it explains competitive advantage, it doesn’t necessarily explain strategic behavior.

My two cents.

Cheers,
Rich

First, RBV is taken for granted as a valid theory at the firm level. How many reviewers dare question the underlying logic of RBV when used in a study to build arguments for firm-level advantage? More to the point, what alternative (firm-level) theories exist that may better explain why some firms enjoy advantages while others do not? RBV constitutes an “easy out” for many researchers in their pursuit of theoretically “valid”arguments for firm-level antecedents of performance. (Though I have also seen studies that invoke RBV at the national level…)

Second, the RBV seems to be easy to understand for researchers and business people alike. The idea that firms must possess some kind of resources that are VRIO…in order to be successful in competing with others is trivially appealing. As with Porter’s 5 forces, the simple and intuitive nature of the RBV makes it a candidate for overuse…

We have the RBV, TCE, principal-agent theory, Alchian & Demsetz’s ‘team’ theory, Grossman & Hart, and so on. But if these really are theories of the same thing – and they may not be – then what is the relationship between their critiques?

By critiquing the RBV do we learn something essential about critiquing the others – and thereby where those theorizing the firm might best look next?

I did not mention the Alchian influence only because it would have sounded like too many OK names. Of course his work was part of the stew,

The more general point is that, in spite of the comments by Jay that you note in your paper, the UCLA economics department and our part of the BSchool (not yet the Anderson School) were interacting intellectually and very fruitfully in a project to critique Porter’s work. Such intellectual ferment is VERY unusual, though I did not know that at the time. Though, given that it was happening, that UCLA failed to become the place that made its mark by fulfilling this project’s promise is another story.

Your paper shows the great value of paying attention to the history of ideas if one wants to get a sense of where to go next. As you show, RBP1 (static and equilibrium variety) is fruitless and barren. RBP2 remains un-theorized – rich pickings for a younger generation of scholars i.e. those who come to understand that academic progress – as Kant reminds us – comes only through mounting critiques and not from merely repeating the inanities of their elders.

The project which Jeroen, Aard and I took on was to see precisely how the RBV could be criticized and opened up so that one could see its entrails, given its inherently closed and dogmatic nature. It took us over four years and several accepted Academy papers to shake the points into their current shape. Kind comments notwithstanding – thank you – it is still not right.

As you know, I think the history of ideas revealing and worth debating. Your story about the history of the RBV would stand against that offered in:

Barney, J. B. (2005). Where Does Inequality Come From? The Personal and Intellectual Roots of Resource-Based Theory. In K. G. Smith & M. Hitt (Eds.), Great Minds in Management: The Process of Theory Development (pp. 280-303). Oxford: Oxford University Press.

In this story Jay suggests that in spite of being at Yale while both Nelson and Winter were there, it was not their ideas that influenced his thinking.

We have also got the matter of dates. I was at UCLA with Jay in 1982 and writing about the same issues – we (see Jay’s list of those involved) were all talking about them – on the one hand reacting to Porter’s Competitive Strategy (1980) and on the other attending doctoral seminars in the UCLA economics department with Klein and Demsetz and methodology seminars with Kaplan. Dick Rumelt was part of these conversations and very influential. Nelson & Winter’s 1982 book was not, nor was Penrose 1959, largely because our discourse was closer to mainstream microeconomics. Porter and the huge success of his 5-force analysis was our target.

Broadly speaking, we proposed the notion of heterogenous resources (which presupposed inequalities generated by some less-than-completely-efficient means of resource distribution) against Porter’s notion of less-than-completely-efficient markets as the core of an explanation of a firm’s competitive advantage.

Both Jay and I were writing about corporate culture and the value of distinguishing between what we might now call tangible and intangible resources as possible sources of competitive advantage.

In this way the idea-map of market-based explanation versus resource based explanation – and tangible resources versus intangible resources was more or less settled for our little community by 1982 and remains more or less unchanged today. An additional dimension – static versus dynamic – leads on to the dynamic capabilities literature. Whether that is really an extension and whether or not it works is a discussion for another day.