Jay B. Barney

Firm Resources and Sustained Competitive Advantage

Understanding sources of sustained competitive advantage has become a major area of research in strategic management. Building on the assumptions that strategic resources are heterogeneously distributed acrossfirms and that these differences are stable over time, this article examines the link betweenfirm resources and sustained competitive advantage. Four empirical indicators of the potential of firm resources to generate sustained competitive advantage-value, rareness, imitability, and substitutability-are discussed. The model is applied by analyzing the potential of severalfirm resourcesfor generating sustained competitive advantages. The article concludes by examining implications of this firm resource model of sustained competitive advantage for other business disciplines.

Information technology and sustained competitive advantage: a resource-based analysis

The concept of IT as a powerful competitive weapon has been strongly emphasized in the literature, yet the sustainability of the competitive advantage provided by IT applications is not well-explained. This work discusses the resource-based theory as a means of analyzing sustainability and develops a model founded on this resource-based view of the firm. This model is then applied to four attributes of IT -- capital requirements, proprietary technology, technical IT skills, and managerial IT skills -- which might be sources of sustained competitive advantage. From this resource-based analysis, we conclude that managerial IT skills is the only one of these attributes that can provide sustainability.

The resource-based view of the firm: Ten years after 1991

At present, the resource-based view of the firm is perhaps the most influential framework for understanding strategic management. In this editor’s introduction, we briefly describe the contributions to knowledge provided by the commentaries and articles contained in this issue. In addition, we outline some additional areas of research wherein the resource-based view can be gainfully deployed.

Differences between Entrepreneurs and Managers in Large Organizations: Biases and Heuristics in Strategic Decision-Making

Executive Summary The purpose of this study was to further explore differences between entrepreneurs and managers in large organizations. However, rather than focusing on previously examined individual differences, this study examined differences in the decision-making processes used by entrepreneurs and managers in large organizations. Building on nonrational decision-making models from behavioral decision theory, we asserted that entrepreneurs are more susceptible to the use decision-making biases and heuristics than are managers in large organizations. To understand why entrepreneurs and managers in large organizations may vary in the extent to which they manifest biases and heuristics in their decision- making, it is important to understand the utility of nonrational decision-making. Under conditions of environmental uncertainty and complexity, biases and heuristics can be an effective and efficient guide to decision-making. In such settings, more comprehensive and cautious decision-making is not possible, and biases and heuristics may provide an effective way to approximate the appropriate decisions. The use of heuristics has also been found to be associated with innovativeness. Perhaps a critical difference between these sets of individuals is the extent to which they manifest biases and heuristics in their decision-making. We examined differences between entrepreneurs and managers in large organizations with respect to two biases and heuristics: overconfidence (overestimating the probability of being right) and representativeness (the tendency to overgeneralize from a few characteristics or observations). In this study, entrepreneurs are those who have founded their own firms and are currently involved in the start-up process with the average time since founding of 1.7 years. The analysis for this study involved responses from 124 entrepreneurs. Managers are individuals with middle to upper level responsibilities with substantial oversight in large organizations. To be included in this study, the managers had to oversee at least two functional areas (sample average was 4.55 functional areas). Usable responses were received from 95 managers. The results from the logistic regression analysis show strong support for both hypotheses. Even after controlling for numerous factors, such as several traits and demographic factors, enduring support was found for the way entrepreneurs and managers in large organizations make decisions. Our overconfidence and representativeness variables correctly categorized entrepreneurs and managers more than 70% of the time. Thus, this research indicates that entrepreneurs do behave differently than do managers in large organizations and that these differences are substantial. Practically, we speculate that without the use of biases and heuristics, many entrepreneurial decisions would never be made. With entrepreneurial ventures in particular, the window of opportunity would often be gone by the time all the necessary information became available for more rational decision-making. Additionally, successfully starting a new business usually involves overcoming multiple hurdles. Using biases and heuristics as simplifying mechanisms for dealing with these multiple problems may be crucial. To face such hurdles from a strict econometric approach would not only postpone decisions, but would in all likelihood make them overwhelming. More specifically, overconfidence may be particularly beneficial in implementing a specific decision and persuading others to be enthusiastic about it as well. The use of biases and heuristics may also offer some help in explaining why entrepreneurs sometimes make bad managers. Whereas the use of cognitive biases may be beneficial in some circumstances, it can lead to major errors in others. Although research has yet to establish performance implications, it is possible that the more extensive use of heuristics in strategic decision-making may be a great advantage during the start-up years. However, it may also lead to the demise of a business as a firm matures.

Resource-based theories of competitive advantage: A ten-year retrospective on the resource-based view

The resource-based view can be positioned relative to at least three theoretical traditions: SCP-based theories of industry determinants of firm performance, neo-classical microeconomics, and evolutionary economics. In the 1991 article, only the first of these ways of positioning the resourcebased view is explored. This article briefly discusses some of the implications of positioning the resource-based view relative to these other two literatures; it also discusses some of the empirical implications of each of these different resource-based theories.

On becoming a strategic partner: The role of human resources in gaining competitive advantage

Although managers cite human resources as a firms most important asset, many organizational decisions do not reflect this belief. This article uses the value, rareness, imitability, and organization (VRIO) framework to examine the role that the human resource (HR) function plays in developing a sustainable competitive advantage. Why some popularly cited sources of sustainable competitive advantage are not, and what aspects of a firms human resources can provide a source of sustainable competitive advantage are discussed. The role of the HR executive as a strategic partner in developing and maintaining competitive advantage within the firm is also examined.

Information technology and the performance of the customer service process: a resource-based analysis

Delivering quality customer service has emerged as a strategic imperative, one that is increasingly tied to a firms information technology resources and capabilities. This paper presents an empirical study that examines the extent to which IT impacts customer service. More specifically, this study investigates the differential effects of various IT resources and capabilities on the performance of the customer service process across firms that compete in the North American life and health insurance industry. The paper builds on (1) information systems work that suggests that the effects of IT are best documented at the level of processes within a firm, (2) information systems work that suggests that the performance effects of IT are likely to be contingent in nature, and (3) developments in the resource-based view, which describes the kinds of IT resources and capabilities that are likely to enable a process in one firm to outperform the same process in competing firms. The findings suggest that tacit, socially complex, firm-specific resources explain variation in process performance across firms and that IT resources and capabilities without these attributes do not. Of particular interest to IS scholars, it is found that shared knowledge between IT and customer service units-an important driver of how IT is implemented and used in the customer service process-is a key IT capability that affects customer service process performance and moderates the impacts of explicit IT resources such as the generic information technologies used in the process and IT spending, which-consistent with resource-based predictions-were not found to be directly and positively associated with relative process performance. The implications of the findings for research and practice are discussed.

The Future of Resource-Based Theory Revitalization or Decline?

Since the 1991 publication of the first Journal of Management special issue devoted to resource-based inquiry, resource-based theory (RBT) has evolved from a nascent, upstart perspective to one of the most prominent and powerful theories for understanding organizations. Indeed, 20 years after that landmark issue, RBT appears to have reached maturity as a theory. One implication of this maturity is that RBT lies at a critical juncture, one that will be followed either by revitalization of the theory or by its decline. In this introductory article, the authors provide a brief overview of the contributions provided by the commentaries and articles contained in this third Journal of Management special issue on RBT. These contributions center on five themes: interlinkages with other perspectives, processes of resource acquisition and development, the micro-foundations of RBT, RBT and sustainability, and method and measurement issues. Their view is that the commentaries and articles collectively offer a foundation for extending RBT in meaningful new directions and steering clear of decline. They also offer their thoughts about some key opportunities within each of the themes for further revitalizing research involving the RBT.

How Do Entrepreneurs Organize Firms Under Conditions of Uncertainty

Entrepreneurs looking to exploit market opportunities and create economic value must concern themselves with both value creation and value appropriation. In this context, entrepreneurs face an unusual challenge; they must accomplish these two tasks before the economic value of the market opportunity is known, even probabilistically. The purpose of this article is to describe how entrepreneurs in these settings organize a firm to solve their resource coordination and profit appropriation problems. Three different ways of organizing firms in these settings are examined, and their implications for research in entrepreneurship and other fields are discussed.

Forming and Exploiting Opportunities: The Implications of Discovery and Creation Processes for Entrepreneurial and Organizational Research

Research on opportunities has received significant attention in entrepreneurship in the last decade. However, recently the focus has shifted from opportunities themselves to the processes that form and exploit them. This paper traces the history of opportunity origins and draws upon the implications of opportunity types to suggest associated entrepreneurial processes. This paper then suggests future research and applications based on processes used to form and exploit opportunities.