literature review on resource based view

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The resource-based view of the firm.

Douglas Miller Douglas Miller Management and Global Business Department, Rutgers University
https://doi.org/10.1093/acrefore/9780190224851.013.4
Published online: 26 March 2019

The Resource-Based View of the firm (RBV) is a set of related theories sharing the assumptions of resource heterogeneity and resource immobility across firms. In this view, a firm is a bundle of resources, capabilities, or routines which create value and cannot be easily imitated or appropriated by competitors due to isolating mechanisms. Grounded in the economic traditions of the “Chicago School” of economic efficiency, the “Austrian School” of economics, and organizational economics, the RBV comprises theories that explain the existence of (sustained) competitive advantage and of economic rents. Empirical research from this perspective addresses both firm performance and firm behavior at the level of business strategy (e.g., within-industry competition) and corporate strategy (e.g., acquisitions). Initially developed through a series of papers by several authors in the 1980s–1990s, major extensions and refinements of the RBV include the knowledge-based view of the firm (KBV), dynamic capabilities, and the relational view, which recognizes capabilities can be developed and shared through alliances between firms.

resource-based view
competitive advantage
firm performance
knowledge-based view
sustained competitive advantage
capabilities
dynamic capabilities

First labeled by Wernerfelt ( 1984 ) and developed through a series of papers by various authors, the resource-based view of the firm (RBV) explains how firms achieve competitive advantage and economic rents through ownership and management of assets, capabilities, knowledge, and similar internal resources. Resource-based theory is complementary to more outward-looking theories of competitive advantage, most notably Porter’s ( 1980 ) Five Forces approach to analyzing industry structure. The RBV has been applied to derive hypotheses about numerous areas of research in strategic management and other disciplines, becoming a prevailing perspective employed in the field over recent decades. However, criticism of the RBV as untestable, incomplete, or even tautological has generated substantial debate. Major reviews of the theory (e.g., Mahoney & Pandian, 1992 ; Hoskisson, Hitt, Wan, & Yiu, 1999 ; Barney & Arikan, 2001 ; Lockett, Thompson, & Morgenstern, 2009 ; Kraaijenbrink, Spender, & Groen, 2010 ) and empirical RBV literature (e.g., Armstrong & Shimizu, 2007 ; Newbert, 2007 ; Crook, Ketchen, Combs, & Todd, 2008 ) inform this current essay. The remainder of this essay discusses key assumptions and definitions, the historical development of the core literature and extensions, empirical applications, critiques and responses, and suggestions for use by researchers.

Assumptions and Definitions

Industrial organization economics typically assumed that firms were undifferentiated suppliers responding to demand and thereby setting prices to clear markets. Thus, observed performance differences between firms over time were seen as stemming from structural differences in industries and economies, such as government regulation or barriers to entry. If one firm discovered a useful asset or activity, other firms could quickly copy it and compete away any economic profits in excess of a basic return to risk. By contrast, the resource-based view (RBV) assumes the following:

Resources are heterogeneous across firms.

Resources are imperfectly mobile across firms.

As explained by Wernerfelt ( 1984 ), just as firms might occupy different positions in product markets (Porter, 1980 ), they might acquire or build different resources aligned with those positions. Developing products that make best use of one’s existing resources, and developing new resources that best support a set of products are two sides of the same coin. Therefore, firm strategy is idiosyncratic and heavily path-dependent—past investments, activities, relationships, and knowledge create the conditions for subsequent decisions by a given firm.

Resources are “all assets, capabilities, organizational processes, firm attributes, information, knowledge, etc. controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness” (Daft, 1983 ; as quoted by Barney, 1991 , p. 101).

While this early definition of resources listed “capabilities” as one example, later literature uses the term “resources” to indicate mostly assets rather than activities, described by nouns rather than verbs. Resources or routines (i.e., “regular and predictable behavioral patterns,” see Nelson & Winter, 1982 , p. 14) tend to be discussed as discrete inputs to be used in more complex or “higher-order” (Winter, 2000 ) activities called “capabilities.”

A capability “refers to the ability of an organization to perform a coordinated set of tasks, utilizing organizational resources, for the purpose of achieving a particular end result” (Helfat & Peteraf, 2003 , p. 999). These authors further distinguish between operational and dynamic capabilities:

An operational capability is “a high-level routine (or collection of routines) that, together with its implementing input flows, confers upon an organization’s management a set of decision options for producing significant outputs of a particular type” (Winter, 2000 , p. 983).

A dynamic capability is “the firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments” (Teece, Pisano, & Shuen, 1997 , p. 516); or to “build, integrate, or reconfigure operational capabilities” (Helfat & Peteraf, 2003 ) in any environment.

Despite these distinctions, the same logic applies to any of these conceptions of the internal components of a firm, whether these are called resources or capabilities, are considered as static or dynamic, reside in managers or other employees, or are distinguished in other ways. Assuming the component differs across firms, and rivals cannot easily copy the component, it is possible for firms competing in the same market (i.e., under the same structure) to have different performance, even in the long run, and different optimal strategies.

Clarifying earlier statements by various authors, Peteraf and Barney ( 2003 ), state that different versions of resource-based theory can explain either competitive advantage or economic rents, offering the following definitions:

An enterprise has Competitive Advantage if it is able to create more economic value than the marginal (breakeven) competitor in its product market. (Peteraf & Barney, 2003 , p. 314)

Economic rents are “returns to a factor in excess of its opportunity costs” and equivalent to the excess residual value (i.e., total economic value created less value delivered to the customer) of a focal firm relative to its break-even rival (Peteraf & Barney, 2003 , p. 315).

Competitive advantage relates closely to value creation, while economic rents take into account aspects of value appropriation, including what the firm has to pay in strategic factor markets (Barney, 1986a ) to acquire resources. Neither competitive advantage nor economic rents are defined as equal to profits or above-average returns. The extent to which indicators of financial performance such as market valuation, accounting returns, or growth reflect the fundamental dependent variables is an important discussion within the empirical literature on the RBV.

Development

Economic foundations.

Resource-based theory was built on diverse foundations in the underlying discipline of economics, reflecting the perspectives of the multiple authors who collectively developed the theory over several years. Primary influences were the “Chicago School” of economics, with its emphasis on efficiency; the “Austrian School” of economics, as interpreted through the lens of Edith Penrose’s Theory of the Growth of the Firm ( 1959 ); and organizational economics, particularly evolutionary economics (Nelson & Winter, 1982 ). As a comparison, Porter’s ( 1980 ) industry analysis derived directly from the approach of the “Harvard School” of industrial organization economics and its Structure-Conduct-Performance (S-C-P) paradigm (Mason, 1939 ; Bain, 1968 ; Caves, 1984 ). Whereas the S-C-P paradigm pointed to market power and barriers to competition as antitrust concerns, the “Chicago School” countered that a greater firm size and market share could arise instead from greater efficiency, in which case industry concentration was not necessarily harmful to social welfare. These efficiency arguments were brought into the strategic management literature by Demsetz ( 1973 ) and Rumelt ( 1982 ), among others, retaining the assumption that markets reach equilibrium (Lippman & Rumelt, 1982 ). Austrian economics (e.g., Von Hayek, 1948 ; Von Mises, 1949 ) does not share that assumption, focusing more on subjective, entrepreneurial alertness and judgment in an ever-changing business landscape. However, the links to Austrian economics were mediated through Penrose ( 1959 ). Her definitions of resources and their constraints, the distinction between resources themselves and the services that those resources provide, and the importance of managerial capabilities in teams are essential to the resource-based view (RBV) (Kor & Mahoney, 2004 ). Nevertheless, the potential for further refinements to the RBV using the assumptions and insights of Austrian economics was only appreciated later (Foss & Ishikawa, 2007 ; Foss, Klein, Kor, & Mahoney, 2008 ). Similarly, evolutionary economics, with its portrayal of industries as moving toward, yet never reaching, equilibrium, and its analysis at the level of routines, was incorporated into early RBV theory primarily through recognition that competitive advantage arises out of Schumpeterian “creative destruction” (Schumpeter, 1950 ; Barney 1986b ). However, later emphasis on knowledge resources and dynamic capabilities brought the influence of evolutionary economics to the forefront (Mahoney & Pandian, 1992 ; Teece et al., 1997 ).

Early Statements

Foundational writings in business policy included detailed accounts of how the internal workings of large corporations allowed them to thrive in difficult industries (e.g., Andrews, 1971 ). After heavy emphasis on industry characteristics in the early days of strategic management, Wernerfelt ( 1984 ) sought to restore the balance between internal and external analysis. He defined resources as the set of tangible and intangible assets semi-permanently attached to a firm. He proposed that the kind of resources subject to “resource position barriers” (Wernerfelt, 1984 , p. 173) can lead to high profits (akin to first-mover advantages; Lieberman & Montgomery, 1988 ); that strategy involves balancing the exploitation of existing resources and the development of new resources; that bundles of resources can be acquired in imperfect markets for entire businesses; and that this perspective leads to a new understanding of corporate diversification distinct from industry attractiveness and market power. Prahalad and Hamel ( 1990 ) further developed and popularized the idea that corporations should diversify on the basis of their “core competence.” Wernerfelt stated that “…these authors were single-handedly responsible for diffusion of the resource-based view into practice” (Wernerfelt, 1995 , p. 171).

Using a similar assumption of resource heterogeneity, Rumelt ( 1984 ) clarified several “isolating mechanisms” that prevent imitation of strategic resources, particularly “causal ambiguity” (Lippman & Rumelt, 1982 ), or uncertainty surrounding the link between any particular resource and the firm’s performance, which can lead to response lags. Barney ( 1986a ) further developed the concept of efficient strategic factor markets, using economic logic (Demsetz, 1973 ) to propose that gaining resources at an advantageous cost must come down to either differing expectations (preexisting heterogeneity, especially in information) or luck. Therefore, resources are only a source of economic rents when they are not fully tradeable. Barney ( 1986a ) concluded that internal analysis of one’s resources is a more likely path to economic rents than external analysis of industry conditions. Peteraf ( 1993 ) formalized the necessary conditions for resource-based economic rents as superior (heterogeneous) resources, ex post limits to competition (i.e., isolating mechanisms), imperfect resource mobility, and ex ante limits to competition (i.e., differing expectations under uncertainty). The mechanisms for imperfect resource mobility were explicated by Dierickx and Cool ( 1989 ). Along with causal ambiguity, they explain additional barriers to imitation: time compression diseconomies (related to learning curves; Lieberman, 1987 ), interconnected asset stocks (also called cospecialized assets; Teece, 1986 ), and asset mass efficiencies (e.g., R&D know-how creates absorptive capacity for further learning; Cohen & Levinthal, 1990 ). Dierickx & Cool ( 1989 ) also discuss the possibility of asset erosion and causal ambiguity about not only the function of resources, but also the process of their accumulation, pointing toward later, more dynamic variations of resource-based logic.

Next, a highly influential paper by Barney ( 1991 ) summarized the conditions for resource-based sustainable competitive advantage (SCA) through a concise framework: value, rareness, imperfect imitability, and non-substitutability (VRIN). This paper has been cited over 14,000 times (Web of Science). Barney later amended the framework to combine imitability and substitutability, adding organization (VRIO) to exploit the resource as the fourth factor (Barney, 1995 ). A resource or capability which is valuable, but not rare, can only bring the firm to competitive parity, at best. Value and rareness, with appropriate organization, can yield temporary competitive advantage. But only if all four conditions are met can the firm generate SCA from its resources. Barney’s ( 1991 ) framework brought together the earlier insights from multiple authors, clearly linking barriers to imitation (i.e., isolating mechanisms [Peteraf, 1993 ]) with sustainable competitive advantage. Other typologies (e.g., Black & Boal, 1994 ), descriptions of resource characteristics (e.g., Amit & Schoemaker, 1993 ; Grant, 1991 ), and clarifications of how the RBV relates to economic theories of the firm (e.g., Conner, 1991 ) further enriched this approach.

Major Extensions

As with the RBV in general, the development of the “knowledge-based view” (KBV) came through contributions from several authors. Building on Polanyi’s ( 1966 ) distinction between codified and tacit knowledge, Kogut and Zander ( 1992 ) describe the firm as a knowledge-bearing entity which acts as a social community. Since the knowledge developed in the firm is partially tacit and usually socially complex, knowledge is the quintessential resource that meets the VRIO criteria. Zander and Kogut ( 1995 ) further explicated five dimensions of knowledge: codifiability, teachability, complexity, system dependence, and product observability. A key distinction within statements of the KBV is whether knowledge is constructed at the collective level (Spender, 1996 ) or exists at the individual level, requiring organizational learning and integration capabilities to support a strategy (Grant, 1996a ).

The literature on dynamic capabilities also highlights combinative capabilities (Kogut & Zander, 1992 ), while elaborating on other capabilities that can build or alter resources or operational capabilities, especially in environments with rapid change (Grant, 1996b ). Definitions and exemplars of dynamic capabilities differ somewhat across seminal papers by Teece et al. ( 1997 ), Eisenhardt and Martin ( 2000 ), and Winter ( 2003 ). Some of the dynamic capabilities literature emphasizes the dynamics of markets, which require firms to use such capabilities; while other literature emphasizes the endogenous change that such capabilities enable, even to the point of enacting the environment. However, the core logic is consistent, and fits well within the RBV. Firms develop dynamic capabilities over time in a path-dependent manner, and constantly employ them to update their resources and activities. The complexity of these capabilities makes it difficult for competitors to understand or imitate them.

The third major extension of the RBV explains that resources and capabilities can be jointly developed, controlled, and used by firms in cooperative relationships. This “relational view” maintains a focus on internal operations, but allows more than one firm to share those operations. Dyer and Singh ( 1998 ) theorize that inter-organizational competitive advantage can come from relationship-specific assets, routines for extensive knowledge exchange, complementary and scarce resources or capabilities, and governance mechanisms that reduce transaction costs. The relational view has provided a bridge for more sociological explanations to influence the RBV (e.g., Gulati, 1999 ). The approach is consistent with Eisenhardt and Schoonhoven’s ( 1996 ) resource-based explanation that alliance formation arises from the combination of strategic needs and social opportunities. A more comprehensive resource-based theory of strategic alliances is provided by Das and Teng ( 2000 ).

Empirical Applications

Scholars have employed the Resource-Based View (RBV) to study phenomena in business strategy, corporate strategy, and cooperative strategy. Here, I cite early papers on each topic. For single-business firms, some studies of sustainable competitive advantage (SCA) have considered tangible assets such as property or location (Miller & Shamsie, 1996 ). Greater emphasis has been placed on intangible assets, including knowledge and innovation gained through R&D (Henderson & Cockburn, 1994 ) and know-how in functions of manufacturing, marketing, or information technology (Brush & Artz, 1999 ; Li & Calantone, 1998 ). Human resources have been studied both in terms of HR systems and policies for the development of firm-specific human capital (Delaney & Huselid, 1996 ) and strategic leadership (Castanias & Helfat, 1991 ). For corporate strategy, resource-based logic has driven research on corporate diversification (Robins & Wiersema, 1995 ), mergers and acquisitions (Capron, 1999 ), restructuring and divestitures (Bergh, 1998 ), international diversification (Arora & Gambardella, 1997 ), and technological diversity (Miller, 2004 ). The study of relational resources has shed light on alliance formation (Mowery, Oxley, & Silverman, 1996 ), performance (Combs & Ketchen, 1999 ), and duration (Dussauge, Garrette, & Mitchell, 2000 ). Overall, a bibliometric analysis identified 42 core papers in the RBV, which were cited by 3,904 papers published between 1991 and 2001 (Acedo, Barroso, & Galan, 2006 ), and thousands more since 2001 .

Critiques and Responses

The resource-based view (RBV) has been criticized on the basis of various concerns. See Kraaijenbrink et al. ( 2010 ) and Lockett et al. ( 2009 ) for more extensive analysis.

Several points of criticism concern the nature of resources. The broad definitions of resources in early RBV papers have been criticized as overly inclusive (Priem & Butler, 2001 ). Further, if every firm’s resources are unique, then comparisons, let alone generalizations from large-sample statistical analysis are impossible (Gibbert, 2006 ). Also, the types of resources most likely to support sustainable competitive advantage (SCA) (i.e., knowledge, reputation, or complex internal processes) will be difficult for researchers to observe (Godfrey & Hill, 1995 ). Finally, managers may have limited ability to control the sources of heterogeneity or even to effect change on the basis of resource-based logic, given imperfect property rights and uncertainty (Coff, 1999 ; McGuinness & Morgan, 2000 ).

In response to these criticisms about the nature of resources, some authors have acknowledged that not everything can be a strategic (Amit & Schoemaker, 1993 ) or critical resource (Wernerfelt, 1989 ). Also, heterogeneity does not have to imply uniqueness: firms could differ based on some quality of a resource measured on a continuum. While some empirical tests reinterpret common variables as proxies for resources (e.g., R&D, which is an input to organizational learning, not a direct measure of knowledge), other literature employs archival, observational, or survey methodology to assess well-defined resources or capabilities in a given setting (e.g., Henderson & Cockburn, 1994 ; Miller & Shamsie, 1996 ; Makri, Hitt, & Lane, 2010 ; Rawley & Simcoe, 2010 ; Wu, 2013 ). The main admonition of RBV proponents in this regard has been to improve theory and empirics through operationalization of key terms (Rouse & Daellenbach, 2002 ). The extensive empirical literature using RBV logic gives evidence that scholars seem to be able to define resources in a meaningful way and measure them to some extent, and Prahalad and Hamel’s ( 1990 ) explanation of core competence was widely embraced by corporate executives.

Regarding the paper by Barney ( 1991 ) laying out the resource characteristics of value, rareness, imperfect imitability, and non-substitutability, the strongest critique has been about value. Priem and Butler ( 2001 ) contend that (the use of) a resource can only be valuable if an economic actor outside the firm desires to pay for it. Therefore, the definition of value is exogenous to the RBV. If the resource itself is static (its characteristics do not change over time), then a resource-based SCA is only possible if markets are relatively stable. Furthermore, Priem and Butler ( 2001 ), among others, argue, it is a tautology to define competitive advantage as the condition of implementing a rare value-creating strategy while theorizing that the resources that create competitive advantage are those that are valuable and rare.

The defense by Peteraf and Barney ( 2003 ) exemplifies several aspects of response to this critique. First, they clarify terms, such as competitive advantage, for which multiple definitions existed by different authors (Powell, 2001 ). Second, they explain that valuable resources do not necessarily lead to competitive advantage, but only create potential for it. Third, they draw on the “value-price-cost” framework (Anderson & Narus, 1998 ) to distinguish between value creation and appropriation. Barney ( 2001 ) acknowledges that value is exogenous to resource-based explanations, while Makadok ( 2001 ) attempts to break the tautology by suggesting value is only revealed after the resource is deployed in the market, and Kraaijenbrek et al. ( 2010 ) suggest that a more subjective and socially defined view of value would help.

Other critiques highlight the boundaries of resource-based theory. First, it is possible to state the core propositions of the RBV (e.g., Barney & Arikan, 2001 ) without explaining how resource heterogeneity arises. Therefore, while resource-based research may explore the emergence of heterogeneity, it is not inherent to the theory itself. Second, VRIO (valuable, rare, costly to imitate, and organizationally enabled) resources are not a necessary condition for SCA; lasting differences in firm profitability can exist due to industry or national economic structure. Even at the resource level of analysis, uncertainty and sunk costs (e.g., as in bidding on mineral rights) can generate SCA in a set of initially homogeneous firms (Foss & Knudsen, 2003 ). Third, competitive advantage is not a sufficient condition for economic rents or above-normal returns, due to the principle of equifinality (Ray, Barney, & Muhanna, 2004 ). Rivals may have distinct resources that yield similar improvements in efficiency, which would be a case of resource substitutability. Yet even if rivals have different sources and realizations of improved efficiency—for instance, lower raw-material costs versus economies of scale in production—they could each have a (sustained) competitive advantage but no difference in overall cost or profits. Thus, superior financial performance does not necessarily imply the presence of VRIO resources, nor does the presence of VRIO resources guarantee superior financial performance.

Scholars writing in the RBV tradition tend to see these issues as opportunities to combine resource-based logic with theory at other levels of analysis, such as individual creativity, team production, industry structure, technology evolution, or legal systems. Along with extensive consideration of firm performance (Armstrong & Shimizu, 2007 ), the empirical RBV literature seeks to explain or predict firm behavior which might also reflect these non-resource-level factors. In this way, a particular study might test one step in the chain of causality, such as from a unique historical circumstance to persistent superior efficiency or reputation, without trying to link that advantage to financial performance.

A few other calls for refinement to resource-based theorizing and testing have come from scholars seeking to develop the RBV. Dierickx and Cool ( 1989 ) clarify that strategic factor markets are incomplete, and resources accumulated internally over time are particularly good candidates to support SCA. The literature on dynamic capabilities (Teece et al., 1997 ) recognizes the potential for change in both firm activities and industry conditions. Moreover, the capabilities literature highlights that complex bundles of resources, not standalone assets, are usually necessary to develop SCA (Newbert, 2008 ). Makadok ( 2001 ) distinguishes between resource-picking and capability-building and analyzes how they might interact in a single firm. Others explain the role of managers in resource recombination through activities of stabilizing, enriching, and pioneering (Sirmon, Hitt, & Ireland, 2007 ). Poor management can lead to erosion of capabilities or their imitation. Also, just as resource heterogeneity and immobility can lead to sustained advantage, it can also lead to long-term disadvantage; the converse of core competence (Prahalad & Hamel, 1990 ) is core rigidity, being locked in to resources with low value (Leonard-Barton, 1992 ).

Suggestions for Use

The resource-based view is best considered a “research program” (Lado, Boyd, Wright, & Kroll, 2006 ) or “metatheory” (Levitas & Ndofor, 2006 ) involving the core assumptions of resource heterogeneity and imperfect mobility, not a single theory or a paradigm. A resource-based theory can incorporate various additional assumptions, levels of analysis, or logic from complementary theories, and seek to explain or predict various outcomes. Thus, the persistence of the terminology “resource-based view” (RBV) rather than “resource-based theory” (RBT) reflects not only inertia in language, but also an appreciation of the rich ground which the core assumptions provide for research. There is no single resource-based theory, but many are possible. Based on the responses to critiques of the RBV and exemplary studies in the literature, paying attention to the following steps will help to ensure the development of sound and useful resource-based research.

First, define assumptions about decision-makers and their thought processes. Most of the RBV literature fits into Organizational Economics, recognizing bounded rationality, asymmetric information, transaction costs, and limitations to optimal contracting. The knowledge-based view (KBV) is more explicitly behavioral and process-oriented (Hoskisson et al., 1999 ), often eschewing any consideration of opportunism. Instead, KBV research highlights issues in replication or transfer of tacit knowledge and the possibility of satisficing in the process of knowledge search. Some variations of dynamic capabilities reasoning incorporate a stronger role for the subjective judgment of managers. For example, managers may have mental models or a “dominant logic” (Prahalad & Bettis, 1986 ) that they apply or adjust depending on their assessment of internal and external factors. Other assumptions about individual and group decision-making—common cognitive biases, the psychology of learning, creativity, negotiation—can provide microfoundations to strengthen resource-based theory.

Second, define the objective of the firm: temporary competitive advantage, sustainable competitive advantage, economic rents, survival, or some other conception of performance. What is an appropriate measure for the objective? If relative to competitors, how are competitors defined? If it is “long term,” then over what length of time should the performance be measured? Resource-based theory does not have to accept the standard business-school goal of maximizing shareholder value. Organizations with an express purpose of benefiting multiple stakeholders still need to compete, and can have resources or capabilities, as well as products, that differ from those of other organizations. Even if the theory is meant to explain strategic behavior, rather than performance, there must be an account of why that behavior would be selected, involving both behavioral assumptions and an objective.

Third, a closely related subject is the nature of economic equilibrium, or the lack of it. Are there barriers to entry or imitation that exist outside the firm’s own efforts? Do managers expect that if they build a strategy on a superior capability, the market will stay consistent enough for that strategy to work years later? Some theoretical treatments of resource-based logic using non-cooperative (e.g., Grahovac & Miller, 2009 ) or cooperative game theory (e.g., Adner & Zemsky, 2006 ; Lippman & Rumelt, 2003 ) clarify definitions, objectives, the structure of markets, and the nature of competition. While such parsimonious precision may not be possible for a large-scale empirical study, such a study can at least be internally consistent with a neoclassical, evolutionary, or subjectivist economic approach, or a more behavioral one.

Fourth, develop a theory for the particular context. Generalizability is not the ultimate goal of any single RBV study, because resources and their characteristics can only be clearly valued and measured in a particular setting. Thus, findings need to be aggregated and compared across settings to build the overall research program. Ultimately, research on intangible, inimitable resources requires process-based case studies, returning the field of strategic management to its roots. Thus, RBV research may be better approached from a critical realist or constructivist perspective than a positivist philosophy of science (Miller & Tsang, 2011 ; Mir & Watson, 2000 ; Tsang & Kwan, 1999 ). A theory of sustainable competitive advantage for the particular context could mean paying attention to operationalizing each part of VRIO (value, rareness, imitability and substitutability, and organization) and how those parts interact. For instance, value might derive from R&D to create a product feature favored by consumers, or from improved efficiency in manufacturing. This distinction has implications for imitability: the internal process may be more causally ambiguous, whereas the same product feature that increases willingness-to-pay might be achievable through a substitute capability. Further, if the industry is already an oligopoly because other resources are rare, the adoption of a resource with greater value-creation potential would induce rivals to be willing to pay more to imitate that resource, so value, rareness, and imitability are intrinsically tied (Grahovac & Miller, 2009 ). For small firms, organization may be primarily owner/manager attention to the capability, while for large firms, whether a resource is fully utilized depends more on organizational structure. Constructs and variables need not be generalizable across contexts. Note that the VRIO framework is multiplicative, not additive: all four parts must be satisfied for sustainability. However, reviews of the empirical RBV literature have generally found most papers focus on either value or imitability; rareness is implied by barriers to imitation (Crook et al., 2008 ), and organization is often assumed.

Fifth, evaluate endogeneity directly. The RBV explains that managers play an active role in selecting and using resources and capabilities, resulting in strong path-dependence. Therefore, any sample of firms with variation in a resource will not capture random assignment of resources to firms. To evaluate the relationship between the quantity or quality of a resource and firm performance (or other outcomes), one must take into account the likelihood of the firm having that resource (Masten, 1993 ). Since both resources themselves and the decision processes behind their accumulation are often unobservable, dealing with endogeneity is a primary challenge for empirical research in the RBV. Note that controlling for endogeneity through the use of longitudinal data and statistical methods (e.g., Heckman selection equations or propensity scores) is necessary not only to establish the direction of causality between constructs, but also to accurately assess the magnitude and sign of the correlations themselves. For instance, resource-based literature on diversification uses various techniques to evaluate both the possibility of endogeneity from feedback loops (i.e., better performance facilitating further diversification) and possible spurious relationships; questioning whether there is a significant performance effect of diversification at all, on average (e.g., Villalonga, 2004 ; Miller, 2006 ). In a related manner, Bayesian techniques allow researchers to evaluate each firm’s decision as unique, more fully incorporating known heterogeneity (e.g., Mackey, Barney, & Dotson, 2017 ). These techniques answer the question “What should a given firm do?” rather than “What should the average firm do?” Empirical studies in the RBV have moved away from simple regressions of performance on measures of resources, and toward systems of equations incorporating latent factors, self-selection, and instrumental variables to control for endogeneity.

Sixth, employ resource-based logic with other theories. Broadly speaking, the RBV is a firm-level theory. Thus, factors at other levels of analysis can create important contingencies in the relationships between resources/capabilities and competitive advantage or economic rents. Empirical research employing resource-based logic has incorporated national, industry, strategic group, dyad, network, and corporate parent levels of analysis. Early on, Amit and Schoemaker ( 1993 ) noted the importance of adjusting the performance variables in RBV studies for industry, and dummy variables for other levels of analysis are common. More interesting is research that develops the logic of how the internal and external factors interrelate. There are also levels of analysis within firms, such as teams, individuals, or various stakeholders. These micro levels of analysis particularly shed light on who appropriates the value created in a firm (e.g., Coff, 1999 ). Cooperative game theory is another approach by means of which to explain value appropriation, with economic actors defined at various levels of analysis (e.g., Adegbesan, 2009 ; Lippman & Rumelt, 2003 ). Another broad characterization of the RBV is that it explains what happens to resources and because of resources, but does not necessarily explain why a firm has those particular resources. One opportunity for new combinations of theory comes from the intersection of RBV with literature on entrepreneurship and creativity. Insights about the origin of resources can especially help to define what it means for a resource to be non-substitutable. Another opportunity is to link RBV logic with a specific theory of the firm. Gibbons ( 2005 ) formalizes four such theories based around transaction costs (with rent-seeking), property rights, incentive systems, and adaptation. In particular, the KBV meshes well with Transaction Cost Economics, since knowledge is difficult to trade without revealing it to another party (e.g., Argyres & Zenger, 2012 ; Silverman, 1999 ). Property rights theory fits with management of tangible resources (e.g., Kim & Mahoney, 2005 ), while dynamic capabilities align well with incentive systems and adaptation theories (e.g., Teece, 2007 ). Attempts to define the RBV (or KBV) as a theory of the firm itself (Conner, 1991 ; Conner & Prahalad, 1996 ; Grant, 1996a ) have not been widely accepted (e.g., Foss, 1996 ; Mahoney, 2001 ). Likewise, since strategic management is an eclectic field, it is unlikely that anyone will build a grand, unified theory of competitive advantage with resources as the foundation. Instead, it is possible that many different contributions will develop, adopting various theoretical perspectives in conjunction with the core assumptions and insights of the RBV.

Resource-Based View Theory

First Online: 01 January 2011

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literature review on resource based view

Mahdieh Taher 4

Part of the book series: Integrated Series in Information Systems ((ISIS,volume 28))

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Resource-based view (RBV) theory has been discussed in strategic management and Information Systems (IS) for many years. Although many extensions and elaborations of RBV have been published over the years, to a considerable extent, most of them have identified critical resources and investigated the impact of resources on competitive advantage and/or other organization issues such as corporative environmental performance, profitability, and strategic alliance. Nevertheless, the orchestration of resources seems to influence these results. There still remains the issue of resource relations in an organization, the internal interaction of resources, especially IT resources with non-IT resources and the process of IT resource interaction with other resources within a firm which we have called resource impressionability. To fill these gaps in IS literature, we propose the new concept of resource orchestration in order to answer resource impressionability issues during implementation of IT projects.

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Abbreviations

Competitive advantage

Information system

Information technology

Resource-based view

Sustained competitive advantage

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Taher, M. (2012). Resource-Based View Theory. In: Dwivedi, Y., Wade, M., Schneberger, S. (eds) Information Systems Theory. Integrated Series in Information Systems, vol 28. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-6108-2_8

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A systematic review of resource-based view and dynamic capabilities of firms and future research avenues.

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This study synthesizes empirical research on Resource-Based Views (RBVs) and Dynamic Capabilities (DCs) of firms across various sectors, aiming to create a comprehensive understanding of these topics. Utilizing a systematic literature review methodology, 46 articles that met stringent screening criteria were analyzed, with key information extracted. These articles, sourced from databases such as Science Direct, Elsevier, JSTOR, and Google Scholar, centered on studies related to RBV and DCs. Thematic content analysis was employed to distill the primary research focus on RBV and DC. Search terms included "resource-based view," "firm resource approach," "dynamic capabilities," "firm capabilities," and "organizational capabilities." Inclusion criteria were based on search boundaries, publication date, language, and search strings, while exclusion criteria included relevance, quality, and duplication. The analysis yielded five major themes related to RBV (knowledge-based, human, physical, technological, and organizational resources) and four primary themes regarding DCs (marketing, operational, innovative, and alliance/integration capabilities). These themes were scrutinized to comprehend the current state of knowledge, identify research gaps, and suggest future research opportunities. The review reveals that while RBVs emphasize how a firm's resources contribute to its competitive advantage, DCs elucidate how firms can cultivate a competitive advantage in fluctuating environments. Areas underexplored in existing research, such as the types of resources influencing financial and non-financial performance, the measurement of a firm’s capabilities, and the critique of RBV, present potential avenues for future investigations.

resource-based view, dynamic capabilities, firms’ capabilities, resources, capabilities, systematic literature review

In today's dynamic and highly competitive environment, organizations should be active actors in the market and must be able to respond to environmental changes through their resources and capabilities [1]. Firms need to recognize and take advantage of resource opportunities and prevent potential threats to achieve a long-lasting competitive edge [2]. According to the resource-based view (RBV), a firm's ability to maintain competitiveness depends on its access to valuable, rare, inimitable, and non-substitutable resources [3]. The firm's ability to create or obtain these resources has an impact on its effectiveness, competitiveness, and profitability. The RBV emphasizes the organization's resources, capabilities, and competencies to identify ways to provide superior competitive advantages [4]. A firm can possess various resources and capabilities, and most of these capabilities are closely associated with improved performance [5, 6].

Capabilities are bundles of knowledge and skills that allow firms to plan their operations and utilize their resources [7]. Dynamic capabilities (DCs) are a perspective developed based on the RBV framework to describe how businesses can dynamically build-essential and unique resource qualities. To gain a competitive advantage, the organization must constantly integrate, reconfigure, renew, and create tangible and intangible resources in response to changing market conditions [8]. According to Zahra [9] DCs involve processes that are used to reorganize the resource base to respond to changing market conditions. DCs are the capacity of a firm to combine, develop, and reorganize its internal and external resources and competencies to respond to rapidly shifting business environments. RBV and DCs are crucial to gaining and maintaining a competitive advantage because they enable firms to rearrange their resources in response to changes in the external environment [10]. The competition between Samsung and Apple can be taken as a practical example to understand RBV and DCs. The two businesses compete against the same external market pressures and work in the same sector. However, because of the disparity in resource availability and DCs, the organizations achieve differing organizational performance.

Even though research on strategic management is increasingly focused on the relevance of RBV and DCs for the competitiveness of firms, a great number of publications on the subject over the last decade have caused fragmentation of knowledge, and as a result, various authors have criticized the concept as being difficult to operationalize if it is not systematically reviewed [11, 12]. This research aims to synthesize the current progress of research on RBV and DCs to address this fragmentation. We hope our systematic review will make important contributions both intellectually and empirically by identifying, assessing, and integrating the research findings to produce a summary of the most recent data to provide an evidence-based metaphor on the topic. Therefore, our review adds relevant value to existing knowledge of the topic and creates future research agendas for academics who are interested in exploring the topic.

This review was guided by the following research questions:

RQ1: What are the various research designs and methodologies that have been used in RBV and DC’s publications?

RQ2: What are the key themes and trends in the RBV and DCs literature, and how have they evolved over time?

RQ3: What are promising avenues for further RBV and DC research?

Based on the results of our review, the majority of studies agree that the RBV of the firm places more emphasis on gaining sustainable competitive advantage through VRIO resources, whereas the dynamic capabilities view places a greater emphasis on the question of competitive survival in response to quickly changing contemporary business conditions.

Denyer and Tranfield's [13] five-step approach to a systematic review (question formulation, locating studies, study selection and evaluation, analysis, synthesizing, and reporting results) and thematic content analysis were used to draw the main emphasis of research on the RBV and DC. Accordingly, the current study is structured as follows: the literature review follows this introduction section. Then the methodology used in the study is described in depth. Then, the result, discussion, theoretical and practical implications, conclusions, limitations, and suggestions for future research are discussed, respectively.

In this part of the study, the theoretical literature includes a review of theories and concepts related to the study topic; specifically, resource-based views, dynamic capabilities, and competitive advantage through resources are presented, respectively.

2.1 Resource-based view

According to RBV, wealth is generated from the exploitation of resources [14]. Organizations must utilize their resources to generate economic value in a way that is superior to their competitors [15, 16]. By using the RBV's foundations, businesses can gain a competitive edge by implementing methods that none of their present or potential competitors can adapt [17]. The resources can be tangible or intangible [18]. In addition, heterogeneity (talents, capacities, and other resources vary from business to business) and immobility (resources do not move from one organization to another) of resources are also essential assumptions of RBV [19, 20]. Brand equity, business processes, knowledge, and intellectual property are examples of intangible resources that are typically immovable. Figure 1 shows that resources can be divided into tangible and intangible types, both of which are crucial for the organization's smooth operation.

Figure 1. The model illustrates RBV's key points

Source: Adopted from Barney (1991)

2.2 Which resources matter?

As shown in Figure 2, Barney responds to this question using the VRIO framework: only valuable (V), rare (R), inimitable (I), and organizationally embedded (O) resources can provide a competitive advantage. According to the RBV theory, a firm's resources need to fulfill "VRIO" criteria to bring sustained competitive advantage to the company [21].

Figure 2. The value, rareness, imitability, and organization framework

Despite RBV's advantages and its development, some literature has criticized its applicability. The RBV has also been the subject of debate due to its static nature. RBV assumes a static viewpoint and does not explain how useful skills could be developed and strengthened in quickly changing environments. Armstrong and Shimizu [22] stated that RBV's usefulness from a theoretical perspective is under debate due to its rigidity. As some scholars have argued, the RBV does not have a well-established method that can guide firms in achieving sustainable competitive advantage [23].

2.3 Dynamic capabilities of the firms

DCs are an extension of the RBV [24], and the firm can integrate, build, and reconfigure internal and external competencies to address rapidly changing circumstances in the environment [25]. The “dynamic capabilities” (DC) broaden RBV’ by addressing the rigidity problem of RBV [26, 27]. As highlighted by Amlt and Schoemaker [28] capabilities describe a company's ability to use its resources and intermediate commodities created by a business to increase the productivity of resources. Dynamic capabilities have been defined as a collection of organizational and strategic procedures that have been enhanced to respond to market changes. The DC perspective addresses a gap in the RBV by emphasizing how organizations can thrive in uncertain situations by rearranging their competencies, resources, and abilities. DCs play a crucial role in strategic management as they allow firms to adapt, integrate, and restructure their internal and external resources to address environmental changes [29].

Aromataris and Pearson [30], argued that DCs are not dependent on the environment's dynamic nature but rather on an organization's ability to respond to environmental changes, and can also be created in stable circumstances.

2.4 Competitive advantage through resources

According to Teece [31], "if an enterprise has resources and competencies but lacks DCs, it might have the potential to make a competitive advantage for a short period, but it cannot sustain the long-term competitive returns [32], unless by chance." Through the DCs, businesses can make use of resources and adjust in novel ways to gain a competitive advantage [33]. To respond to changes in dynamic settings, the DC approach emphasizes the importance of a firm's ability to adapt, integrate, and rearrange organizational resources, skills, and competencies. Jensen et al. [34] specified that RBV is used to examine resources as possible sources of competitive advantage. By updating their resource base and developing operational capabilities that outperform competitors, firms can increase significant competitive advantages and strong relationships with their customers. If competing companies cannot imitate firms' operational competencies or do not have access to the same resource base, they may shy away from trying. Wang et al. [35] argue that, if a firm’s operational capabilities are distinctive and difficult to replicate, it might give it a competitive advantage in terms of cost and consumer value. Therefore, DCs can improve firms' performance by enabling businesses to renew operational capabilities that are challenging to imitate or expensive for rivals to do so.

On the other hand, Nason and Wiklund [36] found no evidence to support the argument that a firm that uses RBV grows at a faster rate than one that doesn't. However, the RBV perspective could be challenged when highly competitive and unstable business environments force firms to reconfigure their resources to handle new challenges and opportunities. The capacity of a company to modify its resources over time to respond to environmental changes becomes the source of its competitive advantage in such dynamic situations that necessitate more frequent resource reconfiguration [37].

DC has evolved as a solution to RBV's problems. The greater unpredictability of environmental concerns like the global financial crisis, climate change, and emerging economies has increased the importance of the DC approach [38]. DCs refer to processes used by businesses to integrate, reconfigure, acquire, and release resources to match and even drive market change. As Duarte Alonso et al. [39] stated, DCs are associated with strategic decision-making procedures that initiate businesses to invest in R&D, expand markets, and form relationships to improve firm profitability. DC focused on the relevance of knowledge resources and learning processes that enable businesses to apply their knowledge and expertise to adapt to changing environments. In addition, El Akremi et al. [40] have argued that, through the intricate relationships between knowledge, experience, and competence, DCs are developed over time. For instance, studies have demonstrated how experience can influence the creation of powerful DCs that improve business performance. Therefore, how management transfers, shares, and recombines knowledge resources within and across the business is the foundation of the DC approach.

3.1 Study design

We adopted a systematic literature review approach to accomplish the goal of this study. A systematic review follows a rigorous, transparent, and scientific procedure to replicate studies conducted by other researchers. This review was also guided by the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA).

3.2 Inclusion and exclusion

The current study used some inclusion and exclusion criteria. The inclusion criteria were: search boundary, time of publication, language, and search string. The search boundary was determined by focusing on academic journals in strategic management, organization, business, and marketing. The search was limited to peer-reviewed articles published in the English language from January 2015 to December 2022. Finally, the search string was used as inclusion criteria by focusing on RBV and DC-related themes. The exclusion criteria include relevance, quality, and duplication. It was done by reading the abstracts and conclusions of the downloaded articles. The relevance was determined by deciding whether articles fit the identified keywords. To ensure quality, the study excluded unpublished articles, working papers, and conference papers. Duplicated articles were excluded by assigning codes to each article and by manual detection.

To choose the final set of 46 publications, the authors tracked studies electronically, manually revised them through detailed reading, and engaged each other through e-mail communication.

3.3 Data collection

To select studies for our review purposes, we initially defined search terms and keywords that could be used for searching for studies. The search terms were "resource-based view,” “firm resource approach,” “dynamic capabilities," "firm capabilities,” and “organizational capabilities." These terms were searched using the asterisk (*) wildcard to retrieve all related papers. In order to instruct the database on how to organize the search terms, distinct search keywords were developed utilizing the primary Boolean operators (AND, OR) with their logical order. This study searched studies from nine reputable databases, such as Science Direct, Elsevier, JSTOR, Taylor & Francis, Emerald, Springer, Wiley Online Library, SAGE, and Google Scholar, as summarized in Figure 3.

Figure 3 . Process of article selection

3.4 Data analysis

In this study, descriptive and thematic content analyses were used to address the review questions. The descriptive analysis provides a brief background for readers by describing the study characteristics [41]. Moreover, in the thematic content analysis process, first, the researchers manually encoded the main issues addressed in the selected articles, and then an interpretative approach was used to analyze the results of the study.

4.1 Description of the studies

This section details the nature of selected studies on RBV and DC in terms of time frame, types of research, country of research, and the publication field.

4.2 Quantity of publications per year

As we can observe from Figure 4, the largest number of selected articles was published in the year 2015 .

Figure 4. Number of publications by year

4.3 Types of research

The below pie chart (Figure 5) shows the research methods used by selected papers in this review. Based on the result, studies were divided into four categories: quantitative empirical research (50%), qualitative empirical research (41%), mixed empirical research (2%), and theoretical research (7%). We verified that 93% of the studies were empirical investigations.

Figure 5. Types of research

4.4 Country of studies

The findings show that the majority of studies (13 articles) are located in the USA, followed by China (6 articles) and Australia (3 articles).

4.5 The publication field analysis

To understand the current research status of published articles on the topic, we used the journal classification standard of the "Academic Journal Guide 2018." Based on the results, the selected published articles were classified into six fields (see Figures 6 and 7). Specifically, the highest number of publications was concentrated in two areas: general management (38%) and business strategy (20%). The next two areas in terms of the concentration of published articles were international business and area studies (15%) and entrepreneurship and small business (11%). The two areas with the lowest number of published articles were innovation and technology change management (10%) and organization studies (6%).

Figure 6. Country of studies

Figure 7. Publication field analysis

4.6 Thematic analysis of RBV studies

The results of our comprehensive assessment of the literature offer several discussion points on the subject of RBV and DCs. This section provides details about each of the mainly investigated themes in RBV publications over the past eight years, such as knowledge-based resources, human resources, physical resources, technological resources, and organizational resources.

4.7 Knowledge-based resources

Thanh Nhon et al. [42] stated that firms must provide a knowledge-based product to clients with a higher value in comparison to their rivals to gain a competitive edge, which is the outcome of extensive experience in using particular tangible and intangible resource portfolios. Similarly, Assensoh-Kodua [43] confirmed that an organization's competency (ability to operate effectively) is determined by its resource know-how. As Goh and Loosemore [44] stated, the term "intellectual resources of a firm" refers to the intangible assets provided by the knowledge and experience of a firm's employees. Rađenović and Krstić [45] argue that, in today’s information age, intellectual capacity is the main factor in gaining higher performance and competitive advantage. Intellectual property rights such as patents, copyrights, trademarks, trade secrets, industrial designs, and service marks protect a firm's unique resources from imitation.

Knowledge-based resources are mainly viewed in the form of specialized talents, such as technical, creative, coordination, and collaborative skills [46]. These resources are primarily developed by individuals, then shared, transferred, and codified at the levels of organizational groups, organizational units, and organizations as a whole. Utilizing knowledge-based resources generates value that can be in the form of patents, innovations, and human capital [47].

Intellectual capital needs firms' knowledge capabilities and, as one component of RBV, it has the following properties: it is rare, valuable, non-substitutable, and imperfectly imitable. According to Khaksar et al. [48], using the strategic know-how approach, in intellectual capability brings value to firms' performance in terms of cost, quality, flexibility, and delivery. The configuration of a firm's resources is unique due to the intellectual capital inherent in organizational structures and processes. Knowledge resources enable the creation of various types of DCs.

As Kankanhalli and Pee [49] specified, knowledge and intellectual capital can be viewed as an organization's ability to exploit and deploy resources to assure the long-term competitiveness of the organization. Within the organization, the intellectual capital of an organization can be seen as an additive or formative aggregate with KM capabilities in capturing, sharing, applying, and creating unique value for the firm. According to Wu et al. [50], a variety of knowledge sources exist, including social networks, technology, insight, authoritative figures, rational-inductive reasoning, and scientific empiricism. Knowledge sharing is concerned with the transfer of knowledge among employees, departments, and organizations. Utilizing acquired knowledge to add value is the emphasis of knowledge application [51].

Different firms may prioritize knowledge acquisition, creation, exchange, and application differently. Firms that succeed in all four of these activities are most likely to outperform their rivals. Therefore, intellectual capital is a core component of RBV, which uses external and internal knowledge to improve performance by optimizing opportunities and reducing uncertainty and risks for firms using cognitive capability [52].

4.8 Human resources

According to Mweru and Muya [53], RBV emphasizes that human resource activities, particularly talent management, play a crucial role in the competitiveness of firms. Studies [54, 55], have argued that a firm's internal environment that encourages the development of human capital can result in higher levels of innovation, customer service, and operational efficiency, which can support competitive advantage under various business strategies. HR strategies support firms in the realization of their business goals.

A human resource strategy produces more valuable employee-based resources, which gives a unique competitive advantage to the firm. HR has both direct and indirect effects on the capabilities of firms. Enhancing operational capabilities requires an integrated effort of human resources and information technology [56]. Consequently, strengthening firms’ competence requires internal learning capability growth through human resources development.

4.9 Physical resources

The RBV Model includes the tangible assets of firms, like physical resources, which include products, machinery, equipment, capital, and infrastructure. A firm's physical resources include the products and raw materials, machinery, plants, and buildings utilized to produce its goods and services. Physical resources include the availability of production capacity, privileged access to supply sources, possession of current technological equipment, and related facilities that help to put the firm's marketing efforts into practice. According to İpek [57], physical resources are crucial for maximizing a firm's operational scale and wealth, which have a big impact on a firm's competitive strategy.

Steiner et al. [58], argued that a focus on only physical resources does not assure sustainable competitive advantage for firms, and therefore firms must integrate them with other resources like human, intellectual, and technological resources.

4.10 Organizational resources

Organizational resources include firm strategy, design, systems, policies, and culture. The internal organizational competencies of firms must be developed to successfully improve the sustainability of their performance. Strategic orientation (specifically, being proactive and taking risks) is one of the key internal resources and capacities for improving organizational performance [59, 60]. Firms’ competitiveness depends on their internal qualities, such as company culture, flexible design, quality orientation, product diversification, and customer loyalty.

As Grant and Verona [61] pointed out, the identification of organizational resource capabilities should be based on three criteria: performance (performance of a specific task or function), cognition (awareness of performing capabilities), and action (capability of observable routines, processes, decisions, directions, and activities within the organization). The study concluded that organizational capability is a key resource for technological change, learning, adaptation, firm boundaries, competitive advantage, and strategic decision-making. Likewise, Akhtar et al. [62] found that an organization's ability to address continuing demands depends on the optimal use of resources and making necessary adjustments to its resources to fit its size, culture, managerial traits, and policies.

4.11 Technological resources

According to Yang et al. [63], information systems researchers are increasingly using RBV to develop valuable and rare resources associated with the unique capabilities of IT that could be sources of competitive advantage. The study found that web knowledge, technological alignment, e-commerce, internal technical skills, e-training, electronic customer and supplier relationships, and the utilization of sophisticated technology are some of the technological benefits that can provide a unique competitive advantage for firms. As Mikalef and Pateli [64] stated, IT capability emphasizes the ability to mobilize and deploy IT-based resources in combination with other organizational resources that support the implementation of business strategy. Jiang et al. [65] also stated that IT capability is a key enabler of innovation and a crucial organizational asset that may boost productivity, lower operational costs, and improve the operations of firms. Lioukas et al. [66], also argued that effective alliances can be derived from strong IT capabilities.

Information technology is one of the key factors that affect an organization's capacity and sustainability. Nandi et al. [67] found that incorporating technology into operation systems can improve the firm's performance. The study found that efforts to develop technology-enabled systems are more focused on enhancing operational-level capabilities (capacity for collaboration and information sharing). Operational skills include quality improvement, process improvement, flexibility, cost reduction, and processing time reduction. Wilden and Gudergan [68] argue that technology has a greater influence on a firm's competitiveness.

Technological adoption, which typically involves business process automation, leads to firms' competitiveness. As noted by Shan et al. [69], utilizing sophisticated IT tools and resources can often lead to a competitive edge and improved business performance. Tsou and Chen [70] suggest that firms, particularly in high-tech industries, must effectively use the latest technology to survive and thrive in rapid and ongoing environmental changes. IT resources also need to take into account the business relationship, which has a significant impact on the capabilities of the firms.

Based on our review result, firm's ability to quickly recover from unfavorable situations depends on its technological capability, which can help firms restore their competitiveness. We argue that if the technological resources do not fit the VRIO Framework, they are easy for other companies to imitate and, consequently, will not be sources of competitive advantage. As a result, firms can analyze their technological resources through VRIO lenses to identify their technological resources' competitiveness level.

4.12 Analysis of studies on DCs of firms

RBV allows the creation or development of various capabilities that positively influence the performance and competitiveness of firms. The recent studies on DCs of firms mainly emphasized marketing, operational, innovation, and integration capabilities.

4.13 Marketing capability

According to Hunt and Madhavaram [71], marketing capabilities include an organization's ability to recognize and meet customers' demands at the right time, place, and price. Likewise, Kamboj et al. [72] stated "marketing capability" as the integrated process of utilizing tangible and intangible resources to satisfy the unique demands of consumers, provide a competitive product, and position a superior brand image in customers' minds.

Kull et al. [73] found that RBV is a valuable means to ensure marketing capabilities because it highlights the real drivers (resources) of marketing performance and can provide a framework to gain sustainable competitive advantage. Similarly, Quaye and Mensah [74] found that RBV has the potential to develop marketing features that can support the firm's long-term competitive advantage. Firms' marketing capabilities include a market intelligence system that helps firms keep track of changing external variables that influence the competitiveness of firms. Moreover, firms utilize intelligence to optimize strategy, imitate new things from competitors, and establish sustainable relationships with stakeholders.

4.14 Operational capability

Operational capabilities consist of collections of knowledge, procedures, and practices that a firm uses frequently to configure its activities. Firms must build specific operational capabilities to continuously align with market needs and fulfill the broader environmental requirements. Rohani et al. [75] specified that operational capabilities are subject to change over time, they are influenced by firms’ resource performance. Firms need to combine a variety of operational resources (such as machines, tools, workers, facilities, physical areas, or vendors) with dynamic capabilities to win over competitors.

The operational capability of firms improves fundamental skills that enable firms to achieve their production objectives with improved or higher product quality, flexibility, quick delivery, and cost reduction. Operational capabilities also enable businesses to improve the speed, quality, and cost-effectiveness of their operations. It also enables the firm to carry out routine tasks, facilitate present resource utilization, and support the effective and efficient delivery of goods and services so that it can make the best use of its resources [76].

4.15 Innovation capability

According to the resource-based approach, innovations develop a sustained competitive advantage by utilizing resources to meet the needs of customers in ways that are hard to imitate [77]. Innovativeness can be stated as a firm's willingness to depart from its current state and practices by expanding its current market share or creating new markets with unique products and services by integrating its resources with creative processes and behaviors. Organizational resources and capabilities are what drive and determine a firm's potential for innovation. Organizational resources, both tangible and intangible, are used as input to convert them into novel forms of products that lead to competitive advantage. The innovative ability in product development can allow firms to differentiate their products from those of competitors and ultimately can help them achieve superior performance. Thus, the capability that forms as a result of the resources within firms is required for successful product innovation in order to enhance product innovation capabilities and attain a competitive advantage, therefore, RBV has great strategic importance for innovation.

The financial resources, technical resources (such as production equipment, manufacturing facilities, and IT systems), human resources with advanced skills and know-how of R&D, and marketing competence all play pivotal roles in innovation capabilities. The proactive (resource-push) approach is a more secure foundation for innovation than the reactive (market-pull) attitude (where firms innovate because they are asked by clients). Innovativeness is effective if and only if it is based on enough resources (inputs) that are based on knowledge to produce services and products in a novel way.

According to Donnellan and Rutledge [78], the contemporary changing and dynamic environment has obligated firms to develop their capacity for innovation. The study suggests that firms' innovativeness should be combined with RBV to improve overall performance. A firm's capacity for innovation helps in identifying new opportunities in the larger business landscape and fits with the macro- and micro-level competencies. Eryarsoy et al. [79] suggest that innovative firms are more successful in effectively responding to environmental risks by avoiding monotonous routines and offering fresh ideas. In addition, a company's innovative capacity through its internal resources is crucial to its competency, and the study found that some businesses are more innovative than others due to their resource capacity. Therefore, organizations can strengthen their innovation capabilities through resource management, which also fosters the development of novel skills.

Roostika [80] stated that a learning approach enhances creativity and innovation potential. Training, understanding of resource management, and knowledge-sharing initiatives can all promote organizational learning. Similarly, Hitt et al. [81] specified that, in RBV, organizations' unique resource utilization needs specialized learning skills that are required to generate unique, innovative values.

The competitive advantage, customer satisfaction, and sustainable performance cannot be achieved without managing resources innovatively. Based on our review result different set of unique abilities, practices, and routines for significantly configuring or modifying current operational processes or creating and implementing novel processes is part of "innovation capability." Also, technological capability is a key factor in innovation and a crucial organizational asset that can boost productivity, improve products and processes, and lower operating costs. To acquire sophisticated technological talents, which are typically difficult to imitate by simple observation, firms need to frequently work on innovativeness [82].

Lack of flexibility in strategy or rigidity may result in businesses losing their competitive advantage. In other words, this implies that innovation has become a crucial component for businesses to gain a competitive advantage. Having a strong understanding of innovation capability gives a competitive advantage over rivals by assisting them in identifying ways to increase their organizational effectiveness by adopting unique values.

4.16 Resource alliances/integration capability

An organization may look beyond its walls to effectively identify, acquire, and allocate external resources. This capability can help firms develop and carry out strategies that can increase their productivity, effectiveness, and growth. Strategic alliances could be one method to get potential external resources to enhance competitiveness. As stated by Mamédio et al. [83], firms form strategic partnerships to acquire valuable external resources that can also help firms build unique capabilities and enable them to maximize market opportunities or lessen risks. In addition, an organization can adjust inter-organizational alliances in a particular way to respond to shifting external conditions. This skill consists of abilities like alliance design, alliance formulation, and alliance implementation. To gain a competitive edge, the firms can use these capabilities, which may support exploring new markets through partnerships, responding to changing customer demand, and stabilizing the environment. Firms can set up alliances to get new capabilities possessed by partners and expand access to outside resources. To deal with environmental concerns and boost performance, the firms can make alliance decisions that allow them to replace their diminishing resources, integrate new capabilities, and accumulate resources [84].

Companies primarily employ alliances to obtain and integrate the valuable resources of other companies. Since resource alliances are primarily the outcome of resource integration across enterprises, RBV has the potential to aid firms in choosing and integrating competitive resources in the alliance process. An integrative capability has a strong direct impact on a firm's performance (marketing effectiveness and financial performance) as well as an indirect impact on the development of operational capabilities.

Researchers specified the importance of learning, human resources, and technological capabilities as important factors that improve inter-firm resource integration. Human resources have significant effects on integration through sharing experience, knowledge, and skills. Also, technology and the development of strategic relationships with supply chains are positively correlated with the integration of external and internal information [85].

This study aimed to review the existing literature on the topic of RBV and DCs of firms. The review result shows that resources can be tangible (e.g., physical resources), intangible (e.g., knowledge-based, technological, and organizational resources), or human-based (employee expertise and skill). RBV emphasizes four main questions about a resource or capability to assess its competitive potential: the question of Value (can the firm use the resource or capability to take advantage of an opportunity or neutralize a threat?), the question of rarity (is the resource or capability controlled by a small number of firms?), the question of imitability (is difficulty to imitate?), and the question of an organization (is the firm ready and organized to utilize the resource?).

In line with RBV, five main investigated themes have been identified in this study, such as knowledge-based resources, human resources, physical resources, technology, and organizational resources; also, in DCs, the study identified four main themes, such as marketing, operations, innovation, and integration capabilities.

One of the most important strategic resources of a firm is its intellectual or knowledge-based resources. It is among the main resources that determine consistent competitive advantage and superior business performance. This resource is considered difficult to imitate and socially complex as it requires unique cognitive skills. Knowledge is rooted in and circulates throughout organizational culture, identity, policies, practices, systems, and employee routines. Our finding shows that knowledge-based resources incorporate both intellectual and informational resources. Researchers on these themes mainly addressed topics like a firm's technical knowledge, industry knowledge, and market knowledge. Informational resources have attracted researchers' interest, particularly scholars who deal with factors like information systems, market information, and trade information.

The RBV also acknowledges human resources functions and employees as crucial strategic players in creating and sustaining firms’ competitive advantage. Human resources have been assumed to be strategically vital to a firm's success. However, it is still debatable whether human resources can offer a long-term, irreversible competitive advantage. Human resource systems and practices are specific to a firm and contribute to the competitiveness of firms. Human resources are a strategic asset that is challenging for rival companies to copy. On the other hand, there is debate over researchers' findings on the rarity and imitability of human resources, and, as a result, there are still arguments over the question of whether or not human resources can offer a persistent competitive advantage.

Physical resources are one of the key categories of firm resources in RBV. The physical resources are tangible and include things like machinery, raw materials, financial resources, and locations. Some studies argue that the firm's physical resources are insufficient to support operations and the firm's competitiveness. According to David-West et al. [86], physical resources need to be aligned with human, technological, financial, and other resource categories to be sources of competitiveness. Therefore, physical resources need to integrate with knowledgeable manpower, technological know-how, and strategic planning skills. In today's tight business environment, combining physical resources with dynamic marketing capabilities ensures long-term competitive sustainability. However, some studies argue that physical resources are more easily accessible and can be substituted; as a result, these resources need to be used in combination with technology or talented management and are expected to be updated regularly.

From the perspective of resource-based theory, technology is one of a firm's primary sources of competitive advantage. Technology resources are among the most important resources that improve firms' ability to innovate (for products and/or processes) and are crucial for the development of competitive advantages, particularly differentiation strategies. This is because technology enables a firm to generate competitive advantages not only through product differentiation but also by minimizing costs; as a result, it offers greater competitive capacity even in the global market. In this regard, product and process innovations and patents are the variables that best reflect these technologically-based competitive advantages [87].

Organizational resources are also highlighted in the RBV studies. The overarching premise of the studies was that organizations with abundant internal resources are better able to resist environmental issues. The formal reporting structures, planning, regulating, and coordinating systems are examples of organizational resources. Organizational resources are a complex combination of assets, people, and procedures that firms utilize to transform inputs into outputs. They are ingrained in the firm's routines, processes, and culture. Organizational resources help to gain a competitive advantage by lowering costs, lean production, high quality, and quick product development.

Empirical evidence for organizational competitiveness and performance implies that RBV needs to be supported by dynamic capabilities to gain sustainable benefits. For instance, firms with dynamic marketing skills perform better since they can monitor changes in and adjust to the consumer environment. The research on marketing capabilities emphasized product-development capabilities, product quality, the capability to offer variety, distribution capabilities, communication capabilities, and price capabilities. Also, operation capability is the term used to describe the collection of complex tasks carried out by businesses to increase productivity through the utilization of their production capabilities, material flow, and technology.

Operational capability is the fundamental skill that enables a company to achieve its production objectives, such as higher product quality, product and volume flexibility, quick delivery, and cost reduction. Studies in operational capabilities assume that gaining a competitive advantage can be accomplished by managing a superior material flow process, disseminating effective process knowledge, and making optimal use of the company's resources.

In addition, a firm’s competitive advantage through innovative capability is also of great importance for its efficacy. Some businesses are more proficient and competent than others due to their innovative capabilities. Innovation is critical for creating and delivering greater value to customers. Additionally, competitors will find it difficult to respond in a short time to the firm's innovation strategy. Additionally, we found that alliance capabilities may minimize the resource deficits of the firms and quicken the competitiveness of firms in their environments. The alliance's capabilities can improve the firm's internal and external operations in a coordinated and integrated way, which will optimize partners' values. In sum, RBV is more important when two businesses compete against the same external market pressures and work in the same sector. Although DCs of firms have greater potential for achieving distinctive competencies that will help the company achieve long-term sustainability.

5.1 Theoretical implications

The findings of this study hold immense significance when it comes to the theoretical implications of the growth of strategic management knowledge. More specifically, our findings pertain to the utilization of resources and firm capacities. Our study has explicitly demonstrated the current state of evidence in relation to the RBV and its linkage with the dynamic capabilities of firms. In addition, our research has taken into consideration the contribution of RBV and DCs to the firm's success as well as their role in the creation of value. Therefore, it is safe to say that our study is of utmost importance in advancing both managerial and employee knowledge on the subject matter.

From this study's findings, one can understand how firms gain a long-term competitive advantage by finding and developing unique resources to meet the needs of markets. Likewise, our findings offer important theoretical insight regarding the dynamic capability of firms and their ability to integrate, develop, and reconfigure external resources by creating competencies to address and shape quickly changing business conditions. Also, we found that RBV places more emphasis on developing a long-term competitive advantage through the VRIO framework, which would support firms to hold the best position and gain long-term success. Likewise, the DCs of the firm emphasize sustaining this competitive advantage in response to quickly transforming environmental conditions. Therefore, these findings explicitly show existing empirical views on the study topic, which will have important implications for further theory development and utilizing the existing concept of the topic in future studies.

5.2 Practical implications

The results of this study support the competitiveness of firms since our results imply that distinct competitive advantages are mainly derived from the internal resources and external capacities of firms. Firms can utilize the RBV framework to develop and use their resources as their major source of wealth by making appropriate strategic decisions. Therefore, our theory-based discussion of RBV and DCs may support firms in making operational and strategic decisions regarding resources and capacities.

Managers can make strategic decisions at the corporate, business, and functional levels by using VRIO analysis to identify the resources that support long-term competitive advantages. Our study shows that RBVs can be useful for evaluating a firm's internal resources and capabilities and an effective tool for evaluating businesses. As a result, this research can serve as a solid base for the development of firms' capabilities, which can result in higher performance. Moreover, our results can help in improving organizational resource utilization and designing training for employees on how to use RBV efficiently, specifically on how to utilize intellectual, human, physical, technological, and organizational resources, as well as marketing, operational, innovative, alliance, and integration capabilities.

This research aims to investigate the existing empirical body of knowledge on the RBV and DCs of firms to provide a fresh conceptualization of recent studies on the topics. To accomplish this objective, we conducted a systematic review of the literature on the RBV and DCs of firms. Our analysis found that knowledge-based resources, human resources, physical resources, technology, and organizational resources are the main investigated thematic areas of existing RBV studies. Likewise, marketing, operations, innovation, and integration capabilities are the main topics investigated by scholars of DCs. This study offers a vital framework for understanding the association between RBV and firms' DCs.

Organizations can address today's growing environmental problems through efficient and effective utilization of resources. The competitive value of a firm's operations is achieved through the configuration of tangible and intangible resources to create unique value. The basic concepts of RBV are mainly firm-centric because they stress how resources under a firm's control could contribute to the firm's competitive advantage. Investments in resources can improve firms’ initiatives regarding the development of products and services and improve their overall competitive advantage. Similarly, in the contemporary economy, the success of firms depends on their capabilities to recognize the potential in the market and find a way to use it. Researchers emphasize DCs to explain how firms can develop competitive advantage in dynamic environments, which enables them to understand the ways firms adapt to a rapidly changing environment.

Despite the overall strengths of this review, this systematic review has the following main limitations: First, the review is limited to the period from 2015 to 2022 and excludes pre-2015 contributors to the field. Also, it was limited to publications that were selected from only nine databases. The search for studies was limited to English-language articles. Additionally, the process of article identification was through a keyword-based search, and that limited authors to gathering data based on selected keywords only. Future researchers may find manageable ways to broaden their search boundaries, languages, and time periods to conduct more generalizable studies. In addition, future scholars can consider more databases to reach a more reliable result. Moreover, there is another limitation in our review due to the adoption of thematic content analysis as a method of data analysis. This data analysis technique is susceptible to possible subjectivity; thus, future research can reduce the subjectivity issue by utilizing a variety of systematic review software tools. For instance, Castelfranchi [88] recommended “Alceste software,” as it is one of the computerized text analysis software packages that enable researchers to find structures, recurrences, and patterns in the text.

Scholars have mainly focused on the roles of resource creation and resource recombination; however, the issue of resource functionality has not been addressed yet. Therefore, the neglected subject of resource functionality requires attention. Future studies can comprehend resource functionality and how it relates to the possible product or service market sectors in which a firm competes.

Previous research did not sufficiently address the types of resources that might influence the financial and non-financial performance of various types of firms. Therefore, further investigation is needed to specify which resources are most crucial for reaching a competitive advantage concerning various kinds of firms.

Modern technology is crucial for firms' RBV, specifically in turning raw materials into resources and using them for firms' success. Therefore, to advance the applicability of the RBV framework in today's technological era, further researchers need to investigate how big data, cloud computing, artificial intelligence, and other contemporary technologies can be applied in RBV.

The absence of more direct measures of a firm’s capabilities in existing research can be another fruitful area for further study. Therefore, we suggest future research employ qualitative surveys and principal component analysis to find more profound and direct measurements of the firm's capabilities. Furthermore, research may also find ways to investigate different types of capabilities in different industries to arrive at more reliable results.

Initially, BBVs were introduced by Barney, which followed the VRIO framework. However, as the framework was developed three decades ago and as there has been significant variation in the environmental variables since 1991, further researchers are needed to investigate the framework's compatibility with current environmental conditions. The framework is also criticized by some authors for being time-consuming, having an excessive dependence on subjective judgment, and being primarily concerned with internal analysis. As a result, we suggest further research to assess how RBV can be refreshed in today's rapidly changing environments. Additionally, examining the criticisms to offer another alternative framework, modify existing ones, or validate the one that already exists is also an important area for future researchers.

In the Table 1 below, we detail the 46 articles included in our systematic literature review.

Table 1. Details of references

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A Systematic Review of Resource-Based View and Dynamic Capabilities of Firms and Future Research Avenues

2023, International Journal of Sustainable Development and Planning

This study synthesizes empirical research on Resource-Based Views (RBVs) and Dynamic Capabilities (DCs) of firms across various sectors, aiming to create a comprehensive understanding of these topics. Utilizing a systematic literature review methodology, 46 articles that met stringent screening criteria were analyzed, with key information extracted. These articles, sourced from databases such as Science Direct, Elsevier, JSTOR, and Google Scholar, centered on studies related to RBV and DCs. Thematic content analysis was employed to distill the primary research focus on RBV and DC. Search terms included "resource-based view," "firm resource approach," "dynamic capabilities," "firm capabilities," and "organizational capabilities." Inclusion criteria were based on search boundaries, publication date, language, and search strings, while exclusion criteria included relevance, quality, and duplication. The analysis yielded five major themes related to RBV (knowledge-based, human, physical, technological, and organizational resources) and four primary themes regarding DCs (marketing, operational, innovative, and alliance/integration capabilities). These themes were scrutinized to comprehend the current state of knowledge, identify research gaps, and suggest future research opportunities. The review reveals that while RBVs emphasize how a firm's resources contribute to its competitive advantage, DCs elucidate how firms can cultivate a competitive advantage in fluctuating environments. Areas underexplored in existing research, such as the types of resources influencing financial and non-financial performance, the measurement of a firm's capabilities, and the critique of RBV, present potential avenues for future investigations.

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