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What is the relevance of the resource-based view of the firm to strategic management in a
global environment?
The resource-based theory or resource-based view (RBV) of firms is a concept of business
strategy highlights the need for a fit between the external market context in which a
company operates and its internal capabilities. This view of strategy has a coherence and
integrative role that places it well ahead of other mechanisms of strategic decision making.
RBV is grounded in the perspective that a firms internal environment, in terms of its
resources and capabilities, is more critical to the determination of strategic action than the
external environment (Kotelnikov, n.d.).
RBV suggests that organizations are packages of tangible and intangible resources. Thus, it
can be assumed that intangible resources, like employees and the reputations of
organizations are becoming equally as important as the fixed assets that businesses
actually own (Wheelen & Hunger, 2006, p. 106). RBV suggests that a firms unique
resources and capabilities provide the basis for a strategy. The strategy chosen should
allow firms to best exploit core competencies relative to opportunities in the external
environment.
According to RBV, competitive advantage is derived from the ability to combine and
exploit combinations of resources and capabilities. Sustainable competitive advantage is
then a continuous process of developing existing and creating new resources and
capabilities to respond to rapidly changing market conditions.
