Entrepreneurial resources
Sharon A. Alvarez and Jay B. Barney
Resources are financial, physical, human, and organizational assets used by a firm to develop, manufacture, and deliver products or services to its customers (Barney, 1995).
Entrepreneurial resources are the tangible and intangible assets firms use to exploit competi tive imperfections in markets. Examples of entrepreneurial resources include physical assets (e.g., a new technology), financial resources (e.g., capital from prior business endeavors), individual resources (e.g., a person’s knowledge about a market imperfection or his/her cognitive capabilities), and organizational resources (e.g., teamwork and cooperation among several people working together to exploit a market imperfec tion).
Competitive imperfections in markets exist when information about technology, demand, or other determinants of competition in an in dustry are not widely understood by people or firms operating in that industry. Efforts to ex ploit these imperfections usually require the al location of entrepreneurial resources. However, exploiting a market imperfection will only be a source of competitive advantage if the resources used to exploit that imperfection are valuable and rare and efficiently organized. Market im perfections can only be a source of sustained competitive advantage if the resources used to exploit them are valuable, rare, and costly to imitate and efficiently organized.
While all types of entrepreneurial resources can meet the criteria of valuable, rare, costly to imitate, and efficiently organized, those re sources that are path dependent (as demon strated by a resource’s historical evolution), socially complex (e.g., organizational phenom ena such as reputation, trust, and teamwork), or causally ambiguous (i.e., the uncertainty regarding the causes of efficiency differences) are most likely to be the source of sustained competitive advantage.
Certainly, there are organizational differences between resources that firms exploit to gain competitive advantage and resources that are used to exploit competitive imperfections. Ques tions examining the differences in how firms organize these resources to earn economic rents should prove to be fruitful ground for future research. Determining if firm performance dif ferences are explained by resource differences, industry differences, differences in time, or by luck is another question worthy of scholarly inquiry. Finally, what is the relationship am ong resources and how do these relationships matter? Studying these and related issues should yield important insights about entrepreneurial resources and the role they play in ventures’ success.
Bibliography
Barney, J. B. (1995). Looking inside for competitive advantage. Academy of Management Executive, 9 (4): 49 61.
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