Foss & Foss Paper on Opportunity Discovery and the RBV
| Nicolai Foss |
With my frequent co-author, Kirsten Foss, I have written “New Value Creation in the Resource-based View: How Knowledge and Transaction Costs Shape Opportunity Discovery.”
I am reluctant to post the paper on a working paper site, partly because we ultimately want to submit the paper to one of those journals that dislike having submitted papers appearing on the internet, and partly because the paper is still pretty rough. However, if you drop me a mail at firstname.lastname@example.org I will be happy to send you a copy (in the hope of getting comments). Here is the Abstract:
Opportunity discovery, and therefore new value creation, should be integrated with strategic management theory. A resource-based starting point is that resources hold a number of valued attributes (i.e., functionalities, characteristics, uses, services), some of which may not yet have been discovered. Entrepreneurs engage in resource learning to discover valuable resource attributes. The discovery of such attributes is partly a function of prior knowledge, as stressed in the recent entrepreneurship literature. However, property rights and transaction costs also play a key role as determinants of opportunity discovery. Property rights can be held over resource attributes. The value of resource attributes is influenced by how well defined and enforced these rights are, which in turn depend on transaction costs. Because they impact expected rewards, transaction costs and property rights influence which resource attributes will be discovered and exploited by entrepreneurs. Moreover, some of the costs of combining and recombining resources and learning about the attributes of resources are transaction costs. Processes of resource learning are therefore influenced by transaction costs. Exploring the intersection of entrepreneurship, property rights, and knowledge in a resource-based context thus yields new insights into the nature of opportunities and opportunity discovery.