Keywords

resource-based view, competitive advantage, Bayesian hierarchical methodology

Abstract

This paper argues that the gap between the theoretical utility and the practical utility of the resource-based view (RBV) may be narrowed by operationalizing the theory more consistently with Penrose's original framework. The operationalization proposed here is a twofold approach. First, the RBV may be enhanced by the explicit recognition of Penrose's two classes of resources, namely, administrative resources and productive resources. This distinction suggests a focus on the administrative decisions of managers that lead to economic performance. Second, we argue that the RBV is a theory about extraordinary performers or outliers—not averages. Therefore, the statistical methods used in applying the theory must account for individual firm differences, and not be based on means, which statistically neutralize firm differences. We propose a novel Bayesian hierarchical methodology to examine the relationship between administrative decisions and economic performance over time. We develop and explain a measure of competitive advantage that goes beyond comparisons of economic performance. This Bayesian methodology allows us to make meaningful probability statements about specific, individual firms and the effects of the administrative decisions examined in this study.

Original Publication Citation

Hansen, M.H., Perry, L.T., and Reese, C.S. (2004). A Bayesian Operationalization of the Resource-based View. Strategic Management Journal, 25: 1279-1295.

Document Type

Peer-Reviewed Article

Publication Date

2004

Publisher

Strategic Management Journal

Language

English

College

Marriott School of Business

Department

Marketing

University Standing at Time of Publication

Assistant Professor

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