Resource-Based Theory Creating and Sustaining Competitive Advantage This page intentionally left blank Resource-Based Theory Creating and Sustaining Competitive Advantage Jay B. Barney Delwyn N. Clark 1 3 GreatClarendonStreet,Oxfordox26 OxfordUniversityPressisadepartmentoftheUniversityofOxford. ItfurtherstheUniversity’sobjectiveofexcellenceinresearch,scholarship, andeducationbypublishingworldwidein Oxford NewYork Auckland CapeTown DaresSalaam HongKong Karachi KualaLumpur Madrid Melbourne MexicoCity Nairobi NewDelhi Shanghai Taipei Toronto Withofficesin Argentina Austria Brazil Chile CzechRepublic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore SouthKorea Switzerland Thailand Turkey Ukraine Vietnam OxfordisaregisteredtrademarkofOxfordUniversityPress intheUKandincertainothercountries PublishedintheUnitedStates byOxfordUniversityPressInc.,NewYork ©OxfordUniversityPress Themoralrightsoftheauthorshavebeenasserted DatabaserightOxfordUniversityPress(maker) Firstpublished2007 Allrightsreserved.Nopartofthispublicationmaybereproduced, storedinaretrievalsystem,ortransmitted,inanyformorbyanymeans, withoutthepriorpermissioninwritingofOxfordUniversityPress, orasexpresslypermittedbylaw,orundertermsagreedwiththeappropriate reprographicsrightsorganization.Enquiriesconcerningreproduction outsidethescopeoftheaboveshouldbesenttotheRightsDepartment, OxfordUniversityPress,attheaddressabove Youmustnotcirculatethisbookinanyotherbindingorcover andyoumustimposethesameconditiononanyacquirer BritishLibraryCataloguinginPublicationData Dataavailable LibraryofCongressCataloginginPublicationData Dataavailable TypesetbySPIPublisherServices,Pondicherry,India PrintedinGreatBritain onacid-freepaperby BiddlesLtd.,King’sLynn,Norfolk ISBN 978–0–19–927768–1 ISBN 978–0–19–927769–8(Pbk.) 1 3 5 7 9 10 8 6 4 2 (cid:0) PREFACE Resource-based theory is an efficiency-based explanation of sustained superior firm performance. The purpose of this book is to provide a comprehensive overview of resource-based theory from its origins to the currentstate-of-the-artresearch.Thebookstartsbydescribingthehistory of resource-based theory, its fundamental tenets, how it has and can be applied, and outlines ongoing efforts to extend and refine this theory of persistentperformancedifferences. The content of the book is organised into four parts. Part I includes threechapterswhichprovideanintroductiontoresource-basedtheory.In Chapter1,thehistoricaldevelopmentofresource-basedtheoryisoutlined, andkeytermsinthetheoryaredefinedanddiscussed.Chapter2examines the relationship between strategic factor markets and competitive advan- tagesinproductmarkets.Chapter3focusesontheattributesofresources and capabilities that enable some to be sources of sustained competitive advantage. Part II applies resource-based theory in analyzing the ability of four organizational resources and capabilities to be sources of sustained com- petitive advantage. The resources examined include organizational cul- ture (Chapter 4), trustworthiness (Chapter 5), human resource practices (Chapter6),andinformationtechnology(Chapter7). Part III shifts the unit of analysis from the competitive implications of specific organizational resources to the analysis of the competitive implicationsofspecificstrategicalternatives.Threecorporatestrategies— vertical integration (Chapter 8), diversification (Chapter 9), and mergers andacquisitions(Chapter10)—areexamined. Part IV presents an overview of the current state of resource-based theory.Asummaryoftheempiricalresearchtestingresource-basedtheory within strategic management and other management disciplines is pro- vided in Chapter 11. Finally, opportunities for extending and expanding resource-basedtheoryinfutureareproposedinChapter12. vi PREFACE Many of the chapters in this book are based on previously published materials taken from a wide variety of articles, book chapters, and books published over the last twenty years. Some chapters draw on several such sources, while others have been written specifically for this book. In each case, care has been taken to use the common language, definitions, and assumptionsthathaveemergedinresource-basedtheoryoverthesetwenty years.Inthissense,thecontentsofthisbookrepresentboththehistoryof resource-based theory and its current state of development. It also helps definewhatwethinkaresomeoftheimportantnextstepsintheevolution ofthistheoreticalperspective. Acknowledgements The authors would like to thank the following for permission to repro- duce published material: co-authors of paper extracts including: Asli Arikan (Chapters 1 and 11), Margie Peteraf (Chapter 1), Mark Hansen (Chapter5), Patrick Wright (Chapter 6), Francisco Mata and William Fuerst (Chapter 7), Gautam Ray and Waleed Muhanna (Chapter 7), Heli Wang(Chapter9),andTysonMackey(Chapter11);andpublishersinclud- ingBlackwellPublishers(Chapters1,3,and11),theAcademyofManage- ment (Chapters 4 and 9), Elsevier (Chapter 11), INFORMS (Chapter2), Pearson(Chapter9),theManagementInformationSystemsResearchCen- ter(Chapter7),andWiley(Chapters1,5,6,7,and10). Specialthanksalsotomanyexceptionalcolleagues,studentsandfriends who have contributed to numerous interesting and insightful conversa- tions on resource-based theory over the years; to Kathy Zwanziger for excellenteditorialsupport;toOxfordUniversityPress,UK,forprofessional assistance with this publication; to Fisher College of Business, The Ohio State University, and the University of Waikato Management School, for institutional support; and to our families for being a constant source of loveandinspiration. A special note on the cover. After rejecting several suggested covers, Professor Barney happened across a piece of work by a young, but very promisingartist/engineer—IsaacMcFadden.Isaac’sagentsnegotiatedhard PREFACE vii fortherightstothisbrilliantmulti-mediapiece,butintheend,theyagreed to let his work be included on the cover of this book. We both take great prideinintroducingIsaac’stalenttotheworld. JayB.BarneyandDelwynN.Clark October2006 This page intentionally left blank (cid:0) CONTENTS PREFACE v LISTOFFIGURES x PARTI RESOURCE-BASEDTHEORY 1 Thestrategicmanagementquestionandtheemergence ofresource-basedtheory 3 2 Strategicfactormarketsandcompetitiveadvantage 31 3 Firmresourcesandsustainedcompetitiveadvantage 49 PARTII RBTANDORGANIZATIONALCAPABILITIES 4 Cultureasasourceofsustainedcompetitiveadvantage 79 5 Trustasasourceofsustainedcompetitiveadvantage 93 6 Humanresourcesasasourceofsustainedcompetitiveadvantage 121 7 Informationtechnologyasasourceofsustainedcompetitiveadvantage 143 PARTIII RBTANDORGANIZATIONALSTRATEGIES 8 Resource-basedtheoryandverticalintegration 161 9 Resource-basedtheoryandcorporatediversification 185 10 Resource-basedtheoryandmergersandacquisitions 205 PARTIV RBT:THERESEARCHFRONTIER 11 Resource-basedtheory:empiricalresearch 221 12 Thefutureofresource-basedtheory 247 BIBLIOGRAPHY 265 INDEX 307