Organizations and Markets

Forgotten/Overlooked Pioneers of the RBV

10 October 2006 at 7:17 am Nicolai Foss 3 comments

| Nicolai Foss |

Pointing to intellectual precursors is an important rhetorical exercise in many fields and disciplines. There may be rational reasons for this practice. Perhaps it helps build identity and assists group cohesion, and other things that we know very little about at O&M. Of course, to some people (including this blogger), doctrinal history is inherently interesting, but people with this preference seem to be a small and vanishing minority (in all of social science; I doubt anyone in natural science does doctrinal history professionally). To the extent that doctrinal history issues enter management discourse, it seems to mainly serve a legitimizing purpose.

When strategy management scholars of the resource-based variety ponder the past of their approach one name invariable comes up, namely that of Edith Tilton Penrose who has acquired the status of pioneering matriarch of the RBV. Numerous papers have been written on Penrose as a precursor of the RBV (e.g., this, this, and  this).

Although I have the greatest admiration for Penrose’s work, particularly her 1959 book, I have some difficulties with this interpretation.

1.  If the modern RBV is mainly associated with the “high church” (to use Gavetti and Levinthal’s terminology), Barney-type analysis of the conditions of sustained competitive advantage, as I believe is the case, then Penrose isn’t really much of a precursor of the RBV. The precursors are rather to be found among more orthodox economists, notably Harold Demsetz (who is in this sense a “forgotten pioneer”). I have written about this at length elsewhere (e.g., here) and shall not spend more time on it (in this post and in general!).

2. If we take a somewhat broader, “low-church” view of the RBV, and also include ideas on competencies, dynamic capabilities, etc., there are many forgotten pioneers (or more precisely, while they may not be forgotten in general, their precursor role relative to the RBV is overlooked or forgotten. Here are some of these:

• The post-Marshallians — that is, those economists and management scholars who in the 1920s-1950s drew inspiration from Alfred Marshall’s evolutionary industrial analysis, and rejected the “Marshallian” approach pioneered by Arthur Pigou, Jacob Viner and Joan Robinson. Among these were D.H. McGregor, Philip Andrews, Jack Downie, and particularly George B Richardson, who coined the notion of firm capabilities (among modern theorists, Oliver Williamson is one of the few to recognize Richardson’s role as a neglected precursor; see this paper). These writers emphasized (like Marshall) firm heterogeneity and stressed those features of firms that we today would describe by concepts such as “routines” and “capabilities.” (Penrose may be regarded as belonging to this group of writers, as Brian Loasby has often argued).
• Richard Cyert and James March — Their analysis in A Behavioral Theory of the Firm is the precursor of chapters 3, 4, and 5 in Nelson and Winter’s 1982 book, An Evolutionary Theory of Economic Change, the most important sources of the low-church view of the RBV.
• Alfred Chandler — Chandler’s tome-length treatments emphasize the administrative framework that organizes resources. Without using resource-based terminology, he argues that firm-level advantage may be derived from organizational resources.
• Philip Selznick — Coined the notion of “distinctive competence” in Leadership in Administration.
• Kenneth Andrews — Andrews’ discussion in The Concept of Corporate Strategy of the SWOT framework treated the SW side in resource-based terms.

Entry filed under: - Foss -, Strategic Management.