ResourceBased

The resource-based view (RBV) is a theoretical framework in strategic management that explains why firms differ in performance by focusing on their internal resources and capabilities. It posits that heterogeneity in resource endowments can lead to sustained competitive advantage when those resources are valuable, rare, difficult to imitate, and organized to capture value. The RBV traces its origins to Birger Wernerfelt’s 1984 work and was further developed and popularized by Jay B. Barney in the early 1990s, who formalized the link between firm resources and long-run performance.

Resources are the firm’s assets, both tangible and intangible, including physical assets, financial resources, human capital, organizational processes, and reputational capital. Capabilities refer to the firm’s routines and abilities to deploy, integrate, and reconfigure resources to meet changing demands. The RBV often uses the VRIN (or VRIO) criteria to assess whether a resource can sustain competitive advantage: Valuable, Rare, Inimitable, and Non-substitutable (with Organization sometimes added to form VRIO).

Strategically, the RBV encourages firms to identify unique, hard-to-imitate resources and to develop complementary capabilities that exploit them. It emphasizes internal development and resource optimization over external benchmarking alone, influencing decisions on investment in core competencies, intellectual property, human capital, and organizational processes. The approach has implications for diversification, alliances, and the protection of strategic assets.

Criticisms include limited attention to external industry structure and dynamic market changes, potential tautology in defining resources by their performance, and challenges in measuring value and imitability. Extensions such as dynamic capabilities seek to address adaptation to change, while the RBV remains a foundational lens for understanding sources of sustainable advantage in many industries.