Firm Resources, Core Competencies and Sustainable Competitive Advantage: An Integrative Theoretical Framework

Abstract

A number of studies based on the Resource Based View (RBV) consider resources as the only sources of gaining a source of a firm's sustainable competitive advantage. According to the RBV approach, there are qualities that resources must possess in order for them to realize sustainable competitive advantage for a firm. The resources must be valuable, rare, inimitable and immobile across firms. Since resources are more often common than rare, more homogenous than heterogeneous and more mobile than immobile, then firms have to combine the resources in order to develop rare and difficult to imitate processes that will act as a source of sustainable competitive advantage. In an industry where resources are common and mobile, a firm therefore needs to build competencies in order to convert these common and mobile resources into processes that are rare and immobile to create a source of sustainable competitive advantage for the firm. A problem therefore exists for firms in a homogenous industry where resources are shared and are neither rare nor heterogeneous across firms in the industry to develop sources of sustainable competitive advantage. In order for these firms to develop sources of competitive advantage with the resources available to them, they would need to develop core competencies to turn the non rare homogenous resources into rare and heterogeneous processes that competitors cannot imitate. The development of these competencies is the product of organizational cultures and values formed over time which can be explained by institutional theory. Further, a firm may not own the resources they need to form a source of sustainable competitive advantage. These resources may be owned by other firms not controlled by the firm in need of these resources which is a premise of the institutional theory. While this is acknowledged from the existing literature, there is also lack of an integrated theoretical model to demonstrate how diverse theories explaining firm strategic behaviour may be utilized to enable firms build sustainable competitive advantage. This paper proposes an integrated theoretical model for linking firm resources with core competencies and sustainable competitive advantage while providing for the role of the firm's external environment. The proposed model integrates the postulates of the RBV, RDT, Institutional Theory and Porter's five forces Model. The emerging theoretical propositions and implications for future research are discussed.

Reconceptualising the principles of Penrose’s (1959) theory and the resource based view of the firm

“…The dynamic capabilities perspective overcomes some of the issues of the RBV by proposing that capabilities enable the integration and use of resources to the organisations benefit (Teece et al , 1997), with Wu (2007) arguing that they act as mediators between resources and performance and Carrick (2016) arguing that they enable the development of further resources. Kabue and Kilika (2016) argue that firms must turn ordinary resources into rare processes that are hard to imitate, therefore also suggesting that there is a step between resources and firm success that must be considered. Eisenhardt and Martin (2000) argue that dynamic capabilities can be made up of things such as product development and strategic decision making.…”

Technology Implementation in SMEs

“…Companies that have no competitiveness will be abandoned by the market. Because not having competitiveness means not having excellence, and not superior means there is no reason for a company to survive in the competitive market for the long term (Kabue & Kilika, 2016). Competitiveness relates to how the effectiveness of an organization in the competitive market, compared to other organizations that offer the same or similar products or services.…”

The Relationship between Strategic Capabilities and Academic Performance: An Empirical Evidence from Sudan

“…As mentioned by Barney (1991), strategic assets should meet the following standards: for valuable resources to be strategic, they should have the power to enhance the effectiveness and efficiency of the firm; rare, non-substitutable and inimitable resources. Previous studies (see for instance, Ismail et al, 2012;Kiru, 2015;Kabue and Kilika, 2016) have shown that resources could be regarded as the basis for accomplishing and maintaining competitive advantage. This will eventually lead to superior organizational performance.…”