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The Emerald Research Register for this journal is available at
http://www.emeraldinsight.com/researchregister

IJOPM
23,2

148

The current issue and full text archive of this journal is available at
http://www.emeraldinsight.com/0144-3577.htm

Applying resource-based
theory
Methods, outcomes and utility
for managers
John Mills and Ken Platts

Institute for Manufacturing, Department of Engineering,
University of Cambridge, Cambridge, UK, and

Michael Bourne

Centre for Business Performance, Cranfield School of Management,
Cranfield, Bedford, UK
Keywords Strategy, Competences, Resources, Service operations
Abstract This paper describes research on the resources that underlie a manufacturing company's
service competence in its most established product group. Published methods for identifying and
assessing resources are reviewed and, based on current theory, improvements are developed, tested
and critiqued. A historical representation of the firm's activities in its service provision over more
than ten years is used to enable grounded identification of the resources involved. Sets of theorybased questions are used to assess the value and sustainability of the resources identified. The plans
and actions that appeared to relate to the intervention are then described over the following two
years. Finally the methods are discussed from three perspectives ± first, their appropriateness;
second, the resource data they generated, and third, their apparent utility for managers.

International Journal of Operations &
Production Management
Vol. 23 No. 2, 2003
pp. 148-166
# MCB UP Limited
0144-3577
DOI 10.1108/01443570310458429

Introduction
Competence approaches to strategy making have received increasing attention
in recent times (for example Hamel and Prahalad, 1994) complementing rather
than replacing Porter's (1980, 1985) industry and hence market-based
approaches. Yet competences, capabilities and the resources which underlie
them are not new concepts. Economics research from Penrose's (1959)
pioneering theory of the growth of the firm, to evolutionary economic theory
(Nelson and Winter, 1982) and the dynamic capabilities work of Teece et al.
(1997) have all focused on the importance of a firm's tangible and intangible
resources as a basis for sustainable, competitive advantage. Indeed, it is
increasingly believed, in the economics and strategy literatures, that if firms
are to achieve a sustainable advantage a resource and competence-sensitive
strategy process or substantial ongoing good fortune (Barney, 1986) is
required. Clearly, consistent good fortune can hardly be relied upon, and hence
the managerial interest in competence and resource-based ideas.
Case studies said to illustrate the advantages of a competence perspective,
for example Prahalad and Hamel (1990), or Barney (1996), have tended to be
This paper resulted from research funded by EPSRC grant GR/K 53086 and the thoughtful
critiques of two anonymous reviewers.

based on fast-growing, successful, large companies like Canon, Honda and 3M.
One result of this focus has been an emphasis on competences and capabilities
at a corporate level with little detail on the resources on which they depended or
on how they were formed or acquired. Indeed, empirical research on resources
remains rare (Williamson, 1999). The objective of this paper is to describe,
apply and assess a set of theoretically grounded methods to help managers
take a resource-based view of their service activities.
We begin by defining terms and reviewing prior methods of resource
identification and assessment to provide a basis for the methods used in the
case. Refined methods are then applied in the case. Next the methods are
discussed from three perspectives: first, their appropriateness, second, the
resource data they generated, and third, their apparent utility for managers.
Finally, preliminary conclusions are summarized.
Definitions
In this section we define the terms ``resource'' and ``competence''.
Wernerfelt (1984), who originated the term ``resource-based view of the firm'',
defined resources as follows:
More formally, a firm's resources at a given time could be defined as those (tangible and
intangible ) assets which are tied semi-permanently to the firm (Wernerfelt, 1984, p. 172).

Thus a resource can belong to a firm, like a factory building, or be accessed by
it, for example third party design consultants or the skills and expertise of its
staff, who may be only a temporary part of the firm. Resources underlie
activities and Penrose (1959) perhaps caught the essential linkage between
them:
The services yielded by resources are a function of the way in which they are used ± exactly
the same resources when used for different purposes or in different ways and in combination
with different types or amounts of other resources provide a different service or set of services
. . . resources consist of a bundle of potential services and can, for the most part, be defined
independently of their use, while services cannot be so defined, the very word ``service''
implying a function, an activity. As we shall see, it is largely in this distinction that we find
the source of the uniqueness of each individual firm (Penrose, 1959, p. 25).

In this paper we accept Wernerfelt's (1984) definition of resources and define
competence as an activity a firm carries out in the same way as Penrose (1959)
uses the term ``service''.
However, the literature on competence encompasses many levels of analysis.
At a corporate level are the ``core competence'' ideas of Prahalad and Hamel
(1990), here the main notion is how these competences can be used to generate
new businesses. At the business unit level lie Selznick's (1957) distinctive
competences (valued by customers) and Liedtka's (1999) meta-competences (less
obvious to competitors or customers but key to supporting distinctive and core
competences). At this level the interest is in increasing the value, sustainability
and exploitation of the business unit's competences. Moving deeper into the
organization two more levels emerge ± group and individual competence ± which

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are both implicit in constructing and co-ordinating organizations (Malone and
Crowston, 1994; Pentland et al., 1999). The organizational routines of
evolutionary economics (Nelson and Winter, 1982) and the development of
competent professionals for real world environments (Eraut, 1994) both lie at this
level of analysis. Operating at either corporate or business unit level Teece et al.'s
(1997) dynamic capability framework addresses how the need for new
competences may be recognized and how resources may be re-ordered into new
competences, more applicable to present or future contexts.
In this paper we are concerned with competence at the business unit level,
but as the case and common sense suggests, this level cannot be separated from
group and individual competence, notably in the co-ordination of resources that
underlie business unit competences.
Research on identifying and assessing resources and competences
The following review describes and critiques published methods for identifying
and assessing resources and competences and devises refinements for use in the
case.
Resource identification
Resource identification can be approached from two generic perspectives
(Coates, 1996), top-down and bottom-up. Table I assembles research on the
advantages and disadvantages of these approaches.
Note that the size of the unit of analysis also affects the level of detail of the
resources found since, for equal effort, more detail can be addressed in
smaller units of analysis. The larger the unit of analysis, the more likely that
Direction of
analysis
Top-down

Bottom-up

Table I.
Pros and cons of
alternative directions of
analysis

Advantages

Disadvantages

Competences across a large, multiunit organisation may be addressed
(Prahalad and Hamel, 1990)
New corporate directions and
opportunities may be identified
(Prahalad and Hamel, 1990)
Consensus, overall, may be achieved
(Prahalad and Hamel, 1990; Marino,
1996)

Fed by perceptions of senior managers
(Coates, 1996)

Generally more reliable data (Coates,
1996)
Firmer basis for exploitation (Coates,
1996)
Capable of identifying unsuspected
and potentially valuable resources
(Mills and Lewis, 1997)

Becomes extremely time consuming if
the scope of the unit of analysis is wide
Needs to be placed in an overall
strategic context

Weaknesses may be ignored in the
search for consensus (Mills and Lewis,
1997)
A feel good exercise may result from
avoiding questioning the status quo
(Collis and Montgomery, 1995)

it will be carried out by a small group of senior managers taking a top-down
perspective.
The focus in this research has been to choose, with company directors, a
strategically important competence as the unit of analysis and carry out the
analysis with a mainly bottom-up perspective. This should lead to more
reliable data from managers and others involved in the area of interest.
Methods used by earlier writers demonstrate a common first step of
education for participants in the analysis. Resource and competence theory
were introduced through presentation and illustrated by example (Lewis, 1995;
Mills and Lewis, 1997) or provided as written material (Marino, 1996).
Next, participants, usually in a facilitated group (Lewis, 1995; Marino, 1996;
Mills and Lewis, 1997), brainstormed the resources underpinning the activities
within the unit of analysis chosen. Most researchers used a set of resource
categories to help prompt participants to think of different resource types and
so improve the comprehensiveness of the resources identified. Lewis (1995)
used the categories ``tangible resources'', ``skills, knowledge and experience''
and ``systems''. While Marino (1996) used the categories ``physical'' (e.g. plant,
equipment and finance), ``human'' (e.g. skills and experience), and
``organizational'' (e.g. reputation and internal systems). Coates (1996) did not
appear to use any resource category prompts. In contrast to group elicitation,
Hall (1993) used individual, structured interviews to identify intangible
resources. He developed 24 intangible resource examples from Coyne's (1986)
four categories ± ``regulatory, positional, functional and cultural''.
Three common steps can be identified from these four researchers.
(1) Decide the unit of analysis and the direction of analysis.
(2) Educate participants on resource and competence ideas with as many
examples as possible to tune managers to these abstract ideas.
(3) Brainstorm the resources related to the unit of analysis. A categorization
of resources is usually provided to improve the comprehensiveness of
the outcome.
Each identification method described here apparently omits an important facet
of resource-based theory ± resources, sometimes the most valuable and difficult
to imitate, are developed over time. Many writers (e.g. Wernerfelt, 1984;
Barney, 1991) have emphasised the role of path dependency and unrepeatable
historical events in building unique and valuable resources. This suggests that
examining a firm's history could help identify its resources. In this case a
method that incorporates this aspect of theory is described and applied.
Resource evaluation
Three metrics have been suggested for separating ordinary resources and
competences from the more important and potentially or actually strategic. All
researchers have agreed on ``value'' as perceived by customers as the first. But
``value'' is not easy to specify since there are many ways a resource could be

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valuable. For example, an in-house manufacturing process may have provided
product specifications at less cost than competitors and thus provided a margin
advantage. Strong brands increased margins via their ability to support
premium pricing. Long-lived personal contacts and networks with key
suppliers, customers and/or legislative authorities were examples of resources
that enabled access to and influence on customer/legislative requirements or
specifications. Scarce or rare resources also tended to be valuable, though
Barney (1996) had ``rarity'' as an additional metric to ``value''. Examples of
rarity varied from prime locations for retail stores to an intensely customer
focused culture which offered superior access to customer requirements.
The second metric concerned the ``sustainability'' of that value. How long can
the resource continue to support superior performance? There were three major
ways a resource could maintain its value, two of these related to competitors.
They should have difficulty in both copying the resource and substituting for
the advantages it provides. The third was concerned with durability; the
resource should not degrade quickly if left alone. Some resources required high
maintenance to keep their value, so withdrawal of maintenance activity could
lead to significant degradation.
The final metric concerned the degree to which a competence or resource
could be used in other markets, Barney (1996) termed this metric ``versatility''
while Lewis and Gregory (1995) used ``mobility''. Much of Prahalad and
Hamel's (1990) and Hamel and Prahalad's (1994) work emphasized the
importance of this property for enabling firms to break into new markets.
Summarizing, the most important resources and competences in a firm
would underpin or provide high value in the customer's eyes, be difficult for
competitors to copy and substitute for, and yet be easy for the holder to
replicate in markets where its benefits are also highly valued.
To assess resources, managers are asked to rate them against these metrics
using a 1-5 Likert scale (Lewis, 1995) or to achieve consensus, through
discussion, on their most valuable competences (Marino, 1996). Unfortunately,
such assessment, though based on much earnest discussion, has no audit trail,
the tangible output being two or three numbers per resource or a small number
of key competences and the fading memories of the assessors' deliberations. It
could be very difficult to justify their results when strongly challenged, see
Mills and Lewis (1997). Since new resource and competence assessments can
directly impact on the power and influence of individuals and groups it would
be unusual if there were not some disagreement on results that did not support
the status quo.
In this case, a method providing an audit trail of the thinking used to assess
``value'' and ``sustainability'' is described and used.
Research methodology
The best way to research resource analysis methods for managers is to test
them with managers on real projects relevant to their businesses. Action
research was therefore chosen as the overall research method. It combined

utility for managers, measured by actions arising from the intervention, with
the opportunity to research the problem domain in depth. The action research
used here attempted to follow Eden and Huxham's (1996) 12 contentions[1] that
distinguish action research from a consulting intervention. Great care is taken
to ensure that theory development is core to the process, and that the history
and context of the intervention are viewed as critical to the validity and
applicability of the results. Since the intention in this research is to refine and
test methods and techniques for managers we have tried to be explicit on the
bases for their design and their relation to theory.
The following five steps comprise the resource analysis:
(1) Choose a strategically important unit of analysis and the analysis
direction. Achieved through discussion with senior managers.
(2) Educate participants in resource-based ideas, using a slide presentation
and discussion with interviewees.
(3) Create a pictorial history of the past events, changes and assumptions
relevant to the unit of analysis. Drawn from individual semi-structured
interviews the picture was assembled by the researcher and checked for
temporal and content accuracy and comprehensiveness. Checking took
place in a group setting in order to increase the comprehensiveness of the
picture as reminiscences within the group spark further remembrances
(an extract from a typical chart is shown in Figure 1).
Opinions, expressed in interviews, may lead to resources concerned with
values and beliefs within the company. Researchers are tuned to listen for
such comments but this may not be the best method for accessing this
important data.
(4) Use the history and resource category prompts to brainstorm a list of
resources underpinning activities in the unit of analysis. A group of
interviewees are facilitated by a researcher using the categories in Table
II to attempt a comprehensive result. The first five resource categories
shown in Table II are standard in the literature; the sixth, ``potential
dynamic capability'' follows Teece et al.'s (1997) work and denotes
resources that can help change the resource and capability mix itself.
The categories are intended to assist resource identification, they are not
intended as a theoretical, mutually exclusive classification of resources
like ``tangible and intangible'' ± a classification that is clearly complete
but not as useful for identifying resources.
(5) Evaluate the resources. The questions ± ``How valuable?'' and ``How
sustainable?'' have been decomposed into theory-based, simpler
questions indicative of negative or positive value and degrees of
sustainability (see Figure 2). The conceptual sources for these questions
lie in the theoretical development research of Wernerfelt (1984), Dierickx
and Cool (1989), Grant (1991), Peteraf (1993) and Teece et al. (1997).
However, unsure of the comprehensiveness of the value questions and

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Figure 1.
Edited extract from the
case company's servicerelated history

Resource category

Description

Tangible resources

Buildings, plant, equipment, employees, exclusive licences,
geographic position, patents, stocks, land, debtors ± more or less
anything with a physical form
Knowledge resources, An important set of often unwritten, tacit resources which holders
skills and experience may not even know that they possess
System and procedural A wide range of tangible, documented resources from recruitment
resources
and selection systems to performance measurement and reward
systems, order processing systems etc. These documents and the
computer resources they run on are tangible. But the efficient
running of these systems requires intertwined intangible resources
like the knowledge and experience of the operators and users of the
system
Cultural resources and One type of intangible resource often developed over long periods
values
and often dependent on the attitudes of the founder(s) and past
events. This category includes memories of cathartic situations as
well as values, beliefs, preferred behaviours etc. The beliefs of
powerful individuals can be critically important resources
Network resources
Interest groups within the company, networks involving company
personnel with suppliers, customers, legislative authorities, or
advisers. We include reputation and brand in this category
A key resource area related to recognising when valuable resources
Resources with
have become out-dated or otherwise need to be changed and/or the
potential dynamic
force needed to implement that change. Examples are the beliefs of
capability
influential workers and managers, and the existence of resources,
like cash, for implementing change

expecting managers to claim that the values of certain of their resources
were not fairly indicated by the first five questions we added a sixth.
This question only needs to be answered when a dispute of this kind
occurs and no such dispute has yet occurred.
Facilitated by the researcher, the assessors answer the questions that are
relevant to the particular resource. Scores for value and sustainability are
suggested by the pattern of answers, those to the right indicating high scores.
Note that a resource or competence can score a negative value ± a weakness
rather than a strength. The overall score for value can be negative, neutral, low,
medium, high or unknown. For sustainability the score can be low, medium,
high or unknown. All resources are evaluated for value and then evaluated for
sustainability. This gives assessors the best chance of making comparable
assessments for each metric.
Case application
The company is a UK designer and manufacturer[2] of production line
equipment with the second highest world market share in its field. At the time
of the intervention its turnover was £134 million, of which over 90 per cent was

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Table II.
Categories suitable for
resource identification

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Figure 2.
Evaluation of shared
memory of a disastrous
new product
introduction

exported. Equipment was distributed via wholly owned companies and third
parties to major manufacturers in food, drink and the FMCG area more
generally. The firm had a history of strong growth and profitability borne
along by a rapidly expanding market. Four years prior to the intervention the
directors had decided to build a competitive advantage in their service
provision and had been improving this area since then. Improvements had been
co-ordinated by a ``service steering committee'' which met quarterly to review
implementation progress and decide which ideas to support. This committee
contained three directors, including the managing director, and a set of service
and service support personnel.
For the researchers this was an opportunity to increase knowledge on
resource analysis methods and outcomes, while the directors felt this was a
useful opportunity to check progress on their service provision competence.
Results
(1) Choose a strategically important unit of analysis and the analysis
direction ± early discussions had identified that ``service'' was a
strategically important area so the firm's service provision competence
naturally became the unit of analysis. It was defined more closely to
include the activities of installation, repair and maintenance, technical
support, spares and consumables provision, customer training, and
maintenance contract sales. Those involved would be members of the
steering committee, middle managers and staff involved in
implementing the recent changes, and a sample of in-house and thirdparty service personnel.
(2) Educate participants in resource-based ideas ± a presentation on
resource and competence theory was given including many practical
examples of their application.
(3) Create a pictorial history of the past events, changes and assumptions
relevant to the unit of analysis ± the history extract shown in Figure 1
contains 20 events and three opinions from a total of 83 in the full picture
covering ten years. The picture was built iteratively from semistructured interviews with eight company personnel and one third-party
distributor; document analysis; and observation (the picture was fed
back to interviewees, resulting in seven more events being added and
modifications to the temporal position of several events[3]). The history
showed a massive increase in interest, activity and investment in service
activities from 1994 when it had been discovered that the knowledge out
in the field had ``not been as good as it should have been'' (event 3). This
view was a result of the service response to a near disastrous new
product introduction (events 63 and 2). By 1996 an independent survey
placed the firm marginally ahead of competitors in service provision.
(4) Use the history and resource category prompts to brainstorm a list of
resources underpinning activities in the unit of analysis ± Table III

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Table III.
Service resources
identified and
categorised

Service resource descriptions
Service managers meeting/
group. Established 1992, has
developed from a gripe session
to a forum for ideas
Key performance measures
plus targets
Service standard and audit
system
Fault/reliability data and
analysis systems
Training programmes:
foundation and product
Shared memory of a near
disastrous new product
introduction
Taken for granted that the
product will fail
Directors believe service really
matters
Web site and service bulletins
300 service engineers
worldwide. UK service
engineers average seven years
with the company
Service steering committee
In-house developed service
system for small distributors
(workman)
Spares organisation

Systems Know-how
Values and
and
skills and
culture
procedures experience












Tangible
assets

Potential
dynamic
capability
































































shows most of the resources identified in the case. Initially 18 resources
were identified and two more were added later. The history contains
many of these resources directly. For example, in Figure 1 a service
management system has been developed called ``Workman'' (event 48).
This is a resource that is tangible; it is also a system/procedure and
embodies know-how about good service operation. In Table III it has
been named and categorized as displaying three of the resource
categories. Opinions, see Figure 1 for examples (P2, P9 and P11), may
lead to resources concerned with values and beliefs within the company.
The categorization appeared to make the resource description more
comprehensive and understandable for those not present and more
memorable for assessors. This was a particularly important aspect of

resource analysis that had received relatively little attention. Resourcebased concepts were abstract ± it was important to provide good records
of what was meant by ``resource X'', see Mills and Lewis (1997).
(5) Evaluate the resources ± Figures 2 and 3 show examples of resource
evaluations carried out by a group of directors and staff working in
service.
Example 1: Shared memory of a disastrous new product introduction
The event and its memory had had positive effects on the organisation as a
whole, see Figure 2. It had prompted careful consideration of their new product
introduction processes and service offering. They had been through an awful
experience with no scapegoats, so the memory was alive and well after five
years ± it was not degrading quickly. No competitor had this memory and
neither would one seek to copy it. The group rated both value and
sustainability high. Note that three questions are unanswered because the
group could not see their relevance to this resource.
Example 2: The directors believe service is really important (see Figure 3)
Failure of equipment meant that a production line had to stop and because of
the type of customer the firm served, reliable products and service backup were
very important to the directors. Customers like Unilever made global
assessments of equipment suppliers so one distributor could seriously damage
a firm's reputation. The directors also believed service departments should be
making profits. Product reliability was increasing so warranty costs should be
declining. However, in the field, warranty was perceived as a source of the
distributors' profit while service was seen as a cost centre. During the
evaluation the assessor group acknowledged that the strong backing from the
directors, through the service steering committee, had led to advantages in the
field that were set to increase (note the arrows in Figure 3).
This was a high value resource. However, it was fairly easy for competitors
to recognize, and hence its effect could be copied quite quickly and at
equivalent cost. The main issue was internal. If the directors stopped pushing
service improvements (or left and others with different beliefs joined) it was
likely that many of the more ``sales oriented'' third party distributors would pay
less attention to service and many of the improvements would be lost. Other
functions, like sales and manufacturing, were not convinced about the worth of
service and neither was engineering. The motivation for service improvement
rested squarely with the directors and willing service personnel. Sustainability
scored on the low side of medium. The assessors considered it was essential to
increase the sustainability of the belief that service was really important and
their efforts to do so are described later.
Discussion and preliminary conclusions
Here we consider the appropriateness of the methods, insights generated from
the data generated and their utility for managers.

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Figure 3.
Evaluation of: the
directors believe service
is really important

Appropriateness of the methods
The resource identification method appeared to improve on previously reported
methods in that the use of pictorial histories and a fuller resource category
prompt may lead to a more comprehensive result than brainstorming prompted
by more basic resource categories alone. An indication of how comprehensive
the method has been will emerge over time as case histories are updated and
previously unrecognised resources are (or are not) identified. However, the
managers involved believed that some resources, such as ``Shared memory of a
near disastrous new product introduction'' or ``Taken for granted the product
will fail'' would not have been found without the interviews used to construct
the history or the historic account itself.
Identification may be improved by building the historical picture directly
with a group rather than via individual interviews. Speed of construction could
be improved, and a group approach might help the history to be even more
comprehensive (Mills et al., 1998) owing to some memories sparking off further
remembrances. Potentially, this may be at the risk of revealing less cultural
detail since individual interviews can be safer environments for respondents
than group sessions. It is likely, therefore, that individual interviews would still
be required. Alternatively, given the importance of cultural resources, a more
focused method to unearth them might be found or developed.
The evaluation method appeared to be a significant step forward. It should be
recognised that the questions do not constitute a questionnaire, rather they are a
means of providing a theory-based language for managers to discuss abstract
ideas like resource sustainability and value. The use of multiple theory-based
questions also led to a much faster evaluation than a single question on ``value''
and ``sustainability''. Mills and Lewis (1997) record the hours spent on that
abstract endeavour. The method was also partly self-documenting so the validity
of individual answers could be checked and reviewed, as they will surely need to
be if and when unexpected results are found. The history may also have helped
resource evaluation since placing resources in a historical context may have
helped assess their comparative value and sustainability.
Insights and questions raised by the resource data
Table III shows the majority of the resources identified and it was striking that
no resource could be described by a single resource category. The data from the
study were consistent with Teece et al.'s (1997) description of resources as
``sticky bundles''. Of course we could have decomposed any of these resources
into their components, take for example the resource ``Web site and service
bulletins'' in Table III. ``Systems and procedures'' represented the regular,
defined updating process. ``Knowledge, etc.'' included the content of a bulletin
and the ``know-how'' to place it on a Web page. ``Tangible assets'' represented
the physical form of the pages on screen or as HTML coded text and pictures.
This extra step appeared to provide little increased understanding for those
concerned and tended to attenuate the importance of their combination. The
method seemed to have reached a useful level of resource description detail for

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managers and provided a means of examining resource category combinations
within empirically derived resources.
The data raise other questions:
.
Are there particular patterns in resource category combinations?
.
What is the role of strongly held beliefs in competence performance
improvement?
.
Are near disasters regularly followed by active resource generation?
.
What strategic areas emerge from this resource-based perspective?
These are all worthy of further discussion but within the confines of this paper
we concentrate on the last question as we describe the events and decisions that
followed the intervention to explore what utility managers found in the results
of these methods.
Utility for managers
A good source of evidence in this area lies in the managerial actions that
followed or occurred during an intervention. Does the resource-based view
generated by these techniques offer anything different from the more usual
market-based approaches (Hill, 1989; Mills et al., 1996)? Recall the context of the
case: this firm had deliberately invested in service provision improvement over
a four-year period. They defined what good service quality was, audited
quality standards yearly, recognised achievement in the area, improved access
to product knowledge, developed service response measurement systems,
provided systematic training, PCs for all engineers etc. What useful outputs did
the resource analysis provide and how did managers respond? The following
actions were described during interviews with the director holding
responsibility for service improvement, they are not a comprehensive list of the
company's actions in the service provision area (there is not space) and nor are
we yet sure of the success or otherwise of a number of them.
``Shared memory of a near disastrous new product introduction''. At the time
of the analysis the company was preparing for the launch of the first significant
new product since its previous near disaster. Four years after those events the
shared memory was still potent, as evidenced by the analysis of high value and
high sustainability. Directors were worrying about how they could get fast, up
to date and relevant feedback from the field on any issues that were met with
the new range. The company could control its own distribution but what about
third parties? The action was to deny distributors the new product unless they
undertook to feed back fault data in a given format. The justification for this
strong action involved explaining how disastrous it would be if this new
product encountered problems. It depended on leveraging the shared memory
in a positive way ± there were few complaints, people seemed to understand.
Indeed the memory jog seemed to persuade some distributors to hold back
sales activities until an adequate level of confidence in the product was
achieved.

During the analysis those involved had agreed how the disaster had, in a
sense, helped members of the company to ``grow up'', to realise they were not as
clever as they might have thought. A certain humility about one's achievements
was valuable, for without care disasters could easily happen and a little paranoia
often provided a stimulus for improvement. Soon after the analysis one director
reflected with the researchers what might be done to increase the sustainability
of that memory ± one suggestion was to relive it in some way ± a play would be
best but a set of presentations by those most involved could also work. The
presenters would need to tell the story and explain, and even show how they had
felt for most effect. In November 2000 the first presentation of ``The Great
Disaster of 1995'' took place. Given by five personnel at the heart of tackling the
problem and handling customer issues, it has since been repeated three times to
large audiences. This director believed strongly that the memory of ``their most
significant tribal event'' should be sustained.
``Three hundred service engineers world-wide''. Though a great deal of
infrastructural support had been provided for service engineers prior to the
intervention, some aspects of their role in providing good service had not been
covered. Consider an engineer on a repair visit ± s/he has two problems to solve.
First, fix the machine, a technical problem. Second, tackle any frustration created
by the breakdown ± a social repair involving the reputation of the product and
the company. This might consist of advice on how to maintain the machine ±
perhaps a training session for the plant's engineers, or would a service contract
be appropriate? Particular skills are required to react appropriately in these
circumstances, however, the firm and its distributors relied on an interview
backed by satisfactory references. A direct outcome of the intervention was to
revamp recruitment methods to test technical knowledge and identify
psychological traits. These tests were provided to all distributors, though it was
recognized that the psychological tests might be a poor cultural fit in some
countries. Each internal course now has formal tests of understanding built in
and trainees are helped where there are problems. These actions are designed to
increase the competence and therefore the value of each engineer to the company.
``Service managers meeting/group''. How competent were the service
managers? What special training did they need? How were they selected? Did
they have a satisfactory balance between the commercial and technical aspects of
the role? What was the profile of an ideal service manager? Focusing on this
resource and considering how they could help improve service performance
prompted directors to think of individual competence, this time of their service
managers. One outcome was to include peer to peer visits into the yearly
improvement process, transferring the service quality auditing to the service
managers. They were encouraged to find good practice in the systems,
motivational approaches etc. being used by peers, and collect them into their own
improvement plans. This action was intended to increase each service manager's
value to the company and relied on the service managers' network resource
created by regular service management meetings. They knew one another and so
this action was less threatening than it might otherwise have been.

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``Directors believe service really matters''. The directors' beliefs needed to be
justified if they were to be more widely taken up. One action was to change the
accounting system to make service a profit centre. It would be a mistake to
believe this idea was solely prompted by the intervention. The directors were
already keen to establish more transparent accounts because of warranty
concerns but the need to raise service's profile helped the case for a profit centre
approach. Now, if a salesman closes an order with an offer of ``free installation''
or ``free training'', service is paid the sales value of the particular service and
sales take a hit on their margin. Service now looks rather more important than
it did before, but changing beliefs remains a long-term proposition.
Another action concerned the consistent message that the managing director
promoted to investors and employees, for example in an interview on the latest
financial results:
Instead of schmoozing with analysts, Mr X prefers to spend up to half his time on the road in
customers' factories, accompanying his service engineers. ``You pick up more ideas from the
service side of the company than anywhere else'' he says: ``. . . in this kind of company the
sales staff will only tell you about the last customer they have visited while the service team
will have a more balanced view'' (Financial Times, 2000).

There is evidence in these actions that those involved with the tools gained a
good understanding of resource-based ideas, perhaps by seeing how external
events and managerial actions had built resources in their own context. By the
end of the project those involved readily used the language of resource-based
theory, with, as their actions show, the ideas of resource sustainability and
value exercising them most clearly.
Summarizing, a literature analysis enabled refinements in published methods
of resource identification and evaluation to be identified and implemented. The
resulting methods have been trialled using an action research approach and
enabled a number of preliminary[4] conclusions to be drawn:
.
The methods are usable though potential areas for improvement have
been identified.
.
They focus attention on the critical importance of competent staff and
their recruitment, development and motivation.
.
The identification method can reveal unsuspected valuable, context
specific resources that can be exploited in appropriate circumstances,
e.g. the shared memory resource.
.
The resource categorization helps focus attention on the drivers of change
by identifying those resources with potential dynamic capability, e.g. the
directors' belief in the importance of service.
.
They provide managers with an alternative view of their organization
that can enable resource-aware decisions which, for example, can make
important resources potentially more sustainable, e.g. spreading the
directors' belief that service is very important or the memory of a near
disaster.

Notes
1. The 12 contentions are summarized on p. 84 of Eden and Huxham's paper. It is outside the
scope of this paper to cover all 12, three examples are given concerned with the role of
theory, history and context, and the particular aims of this research.
2. Because of the confidentiality of the data presented here the company has chosen to remain
anonymous.
3. Each event is numbered, dated and contains its source. Opinions are coded with a ``P''.
4. The outcomes from three further cases support the preliminary conclusions set out here.
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