A contingency approach to resource‐creation processes

• DOI: http://doi.org/10.1111/j.1468-2370.2006.00127.x
• Author: Cliff Bowman,Nardine Collier
• Published date: 01 December 2006
• Date: 01 December 2006

International Journal of Management Reviews Volume 8 Issue 4 pp. 191–211 191

© Blackwell Publishing Ltd 2006, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA

International Journal of Management Reviews (2006)

doi: 10.1111/j.1468-2370.2006.00127.x

Blackwell Publishing LtdOxford, UKIJMRInternational Journal of Management Reviews1460-8545© Blackwell Publishing Ltd 2006

84ORIGINAL ARTICLEA contingency approach to resource-creation processesXX

A contingency approach

to resource-creation

processes

Cliff Bowman and Nardine Collier

The resource-based view has provided valuable insights into sources of competitive

advantage, but little attention has been paid to the processes of resource creation. To

address this shortcoming, this paper reviews the strategy process literature, explaining the

theoretical positions and assumptions that underpin different types of process. It then

examines the mechanisms by which resources have been found to be created; luck, resource

picking, internal development and alliances. Next, a series of resource-creation pathways

that illustrate the different routes firm inputs might take on the way to becoming unique

and valuable resources is developed. These pathways are also discussed in terms of the

strategy processes through which they are developed, and the appropriate resource-creation

processes. The review is then extended with the introduction of two contingent variables −

task complexity and environmental stability – and the resource-creation processes that are

congruent with different combinations of these variables are explored. From this review, one

is able to identify the combination of complex task and stable environment likely to be the

most conducive to resource creation. Finally, the paper explores opportunities that firms

might have to engineer stability and complexity in some parts of their operations with the

aim of developing a resource-based advantage.

Introduction

Our experience of working with executives

suggests to us that the resource-based view

(RBV) of the firm (Barney 1986a; Peteraf 1993;

Priem and Butler 2001a; Wernerfelt 1984) is

of great interest to practitioners. However, they

are often frustrated by the lack of prescriptive

guidelines emerging from the view. Barney

(2001a), a founding contributor to the RBV,

explains that an approach to strategy which

can be undertaken from a RBV perspective is

for a firm first to identify its resource stock,

and then apply to this stock a framework to

assess value, rarity, imitability and exploitative

potential. A decision is then made as to whether

the resource is a strength or weakness, with

the findings of this assessment applied to a value

chain (Barney 2001a). Barney (2001a) presents

a strong starting point for practitioners

because the first stage in proactively manag-

ing resources must be to identify and under-

stand the nature of those resources. However,

we believe that we can build on Barney’s

(2001a) insight by adopting a contingency

approach to resource-creation processes.

192 © Blackwell Publishing Ltd 2006

A contingency approach to resource-creation processes

The lack of an understanding of resource-

creation processes is not just a concern for

managers. In the recent discussion between

Priem and Butler (2001a,b) and Barney (2001b),

one of the arguments that arose was whether

the RBV has a prescriptive ability. Priem and

Butler (2001a) question whether the RBV

is able to develop ‘actionable prescriptions’,

arguing that solely advising practitioners to

identify resources is not helpful or operational.

They suggest that in any discussion of pre-

scription, context should be considered (Priem

and Butler 2001a). Barney (2001b) countered

that the fundamental logic supporting the

RBV does have practical implications for

managers, and they can use the theories behind

it to facilitate their firm’s development, for

example as a means to identify areas where

potential is not fully used. However, he endorsed

Priem and Butler’s (2001a) stress on context,

emphasizing that prescriptions can be based

around understanding firm-specific resources

and, as such, RBV logic can be used to evaluate

any resource in a given context (Barney 2001b).

In other research, Rugman and Verbeke

(2002) summarize the RBV, as a prescriptive

approach, as having four characteristics: (1) a

firm aims to achieve sustained superior returns;

(2) sustained superior returns are attained from

competencies and capabilities via resources

and/or their combination; (3) the heterogen-

eity among firms in terms of resources, com-

petencies and capabilities is compounded by

isolating mechanisms (Rumelt 1984) and

uncertain imitability (Lippman and Rumelt

1982); and (4) innovations, especially in the

form of new resource combinations, contribute

to sustained superior returns. However, there

is little guidance as to how firms might achieve

these positions.

In progressing a contingency approach to

resource creation, we agree with both Barney

(2001b) and Priem and Butler (2001a). With

Barney (2001b) because we too believe that

the RBV is an extremely useful tool for man-

agers, specifically in aiding them to under-

stand and then develop their own firms better.

However we also agree with Priem and Butler

(2001a), because we feel that the RBV litera-

ture currently lacks any meaningful or useful

prescriptions that practitioners can use to move

their firms forward. From a theoretical per-

spective, our knowledge of the resource-creation

processes, and the task and environmental con-

texts that particular processes would thrive

in, are both underdeveloped in the RBV. If we

had a clearer understanding of how resource

advantages can be built up in particular cir-

cumstances, we may be able to offer a clearer

view of resource-creation processes.

In addressing the issues outlined above

from the RBV, our paper commences with a

review of Van de Ven and Poole’s perspective

on strategy processes (Van de Ven 1992; Van

de Ven and Poole 1995). We then summarize

what the RBV has to say about the processes

of resource creation. To achieve a contingency

and process view of resource development, we

present an explanation of different resource-

creation pathways that a firm might pursue,

which we connect to the Van de Ven and

Poole (1995) strategy process constructs. We

then introduce context into the theory devel-

opment, on the assumption that different con-

tingent circumstances will require different

resource development pathways and processes.

In line with most prior contingency theories,

we have selected task complexity and

environmental dynamism as the focus for

our concept development. We identify resource

development processes that are congruent

with particular states of these variables, e.g.

complex tasks in stable environments. We

then suggest that some firms may be able to

develop deeper and more sustained advan-

tages by augmenting the appropriate con-

gruent processes with incongruent practices.

A Perspective on Strategy Processes

When exploring strategy processes, we need

to be clear about the theoretical position and

assumptions underpinning these processes.

The reason for this is because academics have

historically employed different definitions of

strategy processes, using a range of concepts