The Resource-Based View and Its Use in Strategic Human Resource Management Research: The Elegant and Inglorious

Abstract

Barney’s elaboration on the resource-based view had a major impact on research in strategic human resource management (SHRM) and beyond. In this article, I reflect on its influence and use in SHRM research and analyze the strengths and limitations of the original work. I also review various spinoffs and expansions of the original work as well as trends in empirical SHRM research.

Keywords

resource-based view strategic human capital strategic HRM

The 30-year anniversary of Barney’s (1991) exposition on the resource-based view (RBV) is an opportune time to reflect on the impact of the perspective on my own research career but also the role it has played in shaping my research areas of choice. As a research student in the mid-1990s, I have the sense of “coming of age” in the RBV era. Although my initial topic choices were in the area of organizational behavior, a twist of fate and an opportunity led me in the direction of a dissertation project in the nascent and rapidly growing area of strategic human resource management (SHRM). My idea was to look at how different facets of compensation systems in organizations independently and jointly related to dimensions of organizational performance. It was an idea in need of theory. After revisiting the reading lists from my seminars and taking advice from my faculty advisors, I, like thousands of others in the following years, landed on the RBV to help explain why certain combinations of compensation practices might be associated with dimensions of organizational performance. Postgraduation, the dissertation ultimately landed in the dustbin of history, and my research moved in different directions. Over the years, though, my coauthors and I occasionally engaged with the RBV in our work on the macro aspects of HRM. Most recently, we applied the RBV in a study of how human capital depletion through turnover is associated with the loss of competitive advantage, especially among organizations that had invested heavily in that capital (Shaw, Park, & Kim, 2013).

Although others are certainly more qualified RBV subject-matter experts, I have been a fan of the perspective but also intrigued by its shortcomings all these years. I followed the various critiques of the RBV closely (e.g., Kaufman, 2015; Priem & Butler, 2001a, 2001b) as well as Barney’s occasional responses (e.g., Barney, 2001; Barney & Mackey, 2016). I also found the various offshoots and extensions of the RBV useful and interesting (e.g., Chadwick & Dabu, 2009; Colbert, 2004; Nyberg, Moliterno, Hale, & Lepak, 2014) and tracked the use and development of the RBV in empirical work in SHRM as well (e.g., Boxall & Steeneveld, 1999; Carmeli & Schaubroeck, 2005). Finally, as noted, I found it useful not only occasionally in my research program but also frequently in teaching HRM topics, especially at the executive level.

In this essay, I offer some reflections on the RBV and its use in SHRM research. I comment on what I refer to as the elegance or beauty of the perspective as well as some ingloriousness of the original exposition. In doing so, I engage with the critiques of the RBV and offer some commentary on areas where my views align with and diverge from the presumed limitations. I then reflect on how it has been used and its strengths and weaknesses in application for SHRM research. The purpose of the essay is to offer a collection of thoughts and reflections while using samples of articles that build on, criticize, or use RBV thinking. The reviewed literature is not exhaustive or even representative; indeed, such an effort would not be possible in a reflection paper given the vast literature even within HRM. Rather, the cited literature is designed to be illustrative of certain key points.

RBV: The Elegant and Inglorious

In public presentations on writing and publishing, Jay Barney likes to make the point that your paper is about one thing. My own version of this is that you should be able to state your intended contribution in a single, simple sentence—viz., the one-sentence contribution statement. I believe that some of the attractiveness of the RBV and its rapid adoption and application across subdisciplines can be traced, in part, to the simplicity, elegance, and perhaps beauty of the core idea—“organizational resources that are valuable, rare, difficult to imitate and non-substitutable can yield sustained competitive advantage” (Meyer, 1991: 823). Indeed, many prevailing theories, perspectives, and views in the literature survive and thrive because they can be expressed with easy-to-understand, broadly applicable tenets, often in a single statement. For example, the core ideas in widely used theories such as equity (e.g., Adams, 1963; people value fairness and are motivated to maintain the fair distribution of resources with relational partners), institutional (e.g., Meyer & Rowan, 1977; organizations gain legitimacy and ultimately survive by conforming to the rules and belief systems in their environments), conservation of resources (e.g., Hobfoll, 1989; the loss of individually valued resources drives people into a state of stress), and prospect (e.g., Kahneman & Tversky, 1979; losses loom larger than gains) theories are simply expressed and understandable. These perspectives, like the RBV, have an elegance about them that promotes their spread and adoption.

Beyond this, the perspective was noteworthy at the time because it relaxed two assumptions that undergirded thinking in strategic management. The first assumption was that firms in a given industry were assumed to be “identical in terms of the strategically relevant resources they control and the strategies they pursue” (Barney, 1991: 100). The second was resources were highly mobile and therefore any emerging pattern of heterogeneous resources and the advantage that would be associated with resource superiority would quickly dissipate. Holding these assumptions allowed theoretical modeling that led to the advancement of strengths, weaknesses, opportunities, and threats analysis (or SWOT; Lamb, 1984), the five forces model (Porter, 1980), and other variants. Of course, certain constants are needed to build theoretical arguments. But, on their face, these conventions belied the reality of competing business organizations, a point granted even by RBV critics (e.g., Priem & Butler, 2001a). One might suggest in good humor that the assumption of resource homogeneity likely was developed by someone who had never set foot in more than one organization in an industry.

In my view, further adherence to these unrealistic assumptions would have severely constrained scholarly advancement in strategic management going forward. As a result, Barney as well as other RBV theorists (e.g., Rumelt, 1984; Wernerfelt, 1984) should be applauded for their part in taking the conceptual side of the literature forward and broadening the base and scope of empirical research that evokes the RBV. Freed from these restrictions, the field developed in a more realistic theoretical and, in my view better, empirical fashion. I would contend that the development of resource-based theorizing also improved the quality of teaching in strategic management and SHRM. Although SWOT and five-forces frameworks continue to be used in instruction, convincing practitioners that they must assume resource homogeneity to apply them, when they know well from their experience the reality of resource heterogeneity, has the perfume of a detached ivory tower. Thus, the second beauty of the RBV was its straightforward and more realistic description of the reality of firms competing against each other in a given industry. The 1991 article also included the most comprehensive elucidation of the potential value to certain firms generated from resource heterogeneity and the stickiness of these resources in an industry.

Despite these strengths, the RBV is not without its detractors and the original formulation contains some conceptual blind spots. This is not surprising; certainly I am not casting stones. I would contend that if any researcher examined one of their own works critically after three decades, numerous areas of improvement could be identified. Perhaps the most comprehensive of the critiques was levied by Priem and Butler (2001a) in their award-winning deconstruction of the view. In my view, although the essay includes several cogent points, the primary point of contention centered on conceptual overlap between the definitions of firm’s resources and competitive advantage. Barney (1991) offered all-encompassing conceptual definitions of both firm resources and competitive advantage. In lieu of using the construct labels, Priem and Butler (2001a) astutely substituted the construct definitions into the elegant, simple statement noted above, which revealed in their view (and in my view, something close to) a tautology. Barney (1991) defined resources using Daft’s (1983; all assets, capabilities, organizational processes, firm attributes, information, knowledge, etc. controlled by a firm that enable the firm to conceive of and implement strategies that improve efficiency and effectiveness) and Hitt and Ireland’s (1986; firm attributes that may enable firms to conceive of and implement value-creating strategies) definitions. In contrast, he defined competitive advantage as “implementing a value creating strategy not simultaneously being implemented by any current or potential competitors” (Barney, 1991: 102). Although these statements of conceptual space are not completely overlapping—the former suggests the ability to develop value-creating strategies while the latter involves the actual implementation of these value-creating strategies—the point is well made.

Although certain critics believe that this and other points of concern render the RBV “hopelessly irredeemable” (Lado, Boyd, Wright, & Kroll, 2006: 116), Priem and Butler (2001a) concluded with a more sanguine outlook. In particular, they offered suggestions for further refinement and improvement in the RBV including the adoption of a more traditional, less overlapping, definition of competitive advantage, for example, as sustained above average returns for a firm in a given industry (Schoemaker, 1990). Doing so would have been the most straightforward way of resolving the conceptual conundrum and would have also been consistent with the empirical literature writ large, as financial- or profit-based operationalizations of sustained competitive advantage dominate the empirical RBV literature (Newbert, 2014).

But, as the RBV evolved and produced various offshoots and extensions, Barney and colleagues held true to the original conceptualization of valuable, rare, imperfectly inimitable, and nonsubstitutable resources and later substituted organization (the right processes and systems for exploiting value in resources) for rare in the VRIN (hence VRIO) categorization (Barney & Clark, 2007). Thus, in lieu of taking Priem and Butler’s suggestion to narrow the conceptual space of firm resources, later extensions of the RBV retained the all-inclusiveness found in the original, albeit with some modifications.

Moreover, for competitive advantage, Barney and colleagues not only retained the original definition but seemed to embellish and broadened it over time. In later writings, Barney and Clark (2007) again emphasize the conceptual space of the view’s dependent variable as a something far more encompassing than profit-based measures. They later refined their description of the 1991 definition, which Kaufman (2015: 524) summarized as the “relative comparison of total value created from production (producer plus consumer surplus) across different firms . . . in subjective estimated dollars (i.e., consumer’s willingness to pay) that cannot be captured in standard accounting.”

In my view, the elegance and the ingloriousness of the RBV are likely opposite sides of the same coin. The great popularity of the RBV in strategic management, human resource management, as well as its adoption for use in related fields such as operations management (e.g., Cox, 1996), marketing (e.g., Hunt & Morgan, 1995), and management information systems (Mata, Fuerst, & Barney, 1995) could likely not have been achieved without the elegant statement of principles; the broad, sweeping ideas; and the vast conceptual variables that encompass a firm’s physical, organizational, human, and other resources (abilities to strategize). In addition, the sustained competitive advantage-dependent construct yields itself amenable to many operationalizations of performance, advantage, and success within and across disciplines. I believe it is safe to say that more narrowly defined, and perhaps more precise, conceptual definitions would have resulted in less copious uptake of the RBV in empirical work, fewer attempts to rework parts of the model or offer theoretical revisions post-1991, and a more limited adoption, perhaps mostly within the field of strategic management.

The RBV in SHRM Research

The RBV’s popularity outside of strategic management is arguably the highest within the SHRM community. As treatises on the strategic potential of human resource management began in earnest in the mid-1980s (many point to Devanna, Fombrun, and Tichy’s [1984] as the founding work; for a review, see also Delery and Shaw [2001]), the burgeoning field lacked a comprehensive theoretical perspective. Rather, the field was guided by some prescriptive, but not necessarily theoretical, views. For example, Schuler and Jackson (1987) outlined a “needed role behaviors” perspective on the link between competitive strategies and HRM. These authors assumed equifinality of different competitive strategies (e.g., innovation, quality-enhancement, and cost reduction) and performance. The key was that the choice of a competitive strategy required a different set of role behaviors from employees. A cost reduction strategy, they argued, requires a focus on efficiency and getting more out of less, quality enhancement requires deep commitment to customer service, and innovation needs risk taking and flexibility. The view suggests that once a competitive strategy is implemented, organizations that adopt a set of HRM practices that encourage or reinforce the needed role behaviors required by that strategy would be successful. Firms that misalign their HRM practices and strategy will not. This perspective, often referred to as the behavioral perspective (e.g., Delery & Roumpi, 2017; Wright & McMahan, 1992), was logical but did not provide a compelling theoretical foundation for the study of HRM practices and competitive advantage.

In 1992, Wright and McMahan included the RBV among a list of other perspectives that had relevance in HRM studies, but as the macro HRM community transitioned to a systems view in the middle 1990s, the RBV took hold as the dominant conceptual foundation for HRM research. Notably, although the middle 1990s were perhaps best known for applications of strategic typologies such as Miles and Snow’s (1978; e.g., Delery & Doty, 1996), by the early 2000s these approaches had essentially been abandoned (or considered obsolete; Chadwick & Cappelli, 1999) and the RBV dominated the empirical and even conceptual (e.g., Colbert, 2004) landscape. Indeed, just 10 years after Barney (1991), Wright, Dunford, and Snell (2001) conducted a detailed trace of the influence of the RBV in SHRM research. They declared after the review that the RBV was in the dominant position.

Harking back to the conceptual breadth of the RBV, my interpretation is that SHRM researchers from many substreams found what they needed in the RBV. In particular, the focus on organizational and human resources within the RBV allow researchers interested in best HRM practices, bundles or systems of HRM practices, or human capital to make arguments about VRIO and underlying subconstructs of causal ambiguity, path dependence, and social complexity. Boxall (1998) referred to these streams as the organizational process advantage stream and the human capital advantage stream, respectively. Certain researchers, for example, focused on combinations or systems of HRM practices and how these bundles associated with organizational performance (e.g., see Wright, McMahan, & McWilliams, 1994, for an early application). Because of system complexity, the notions of value, rareness, and inimitable range were good fits to explain why bundles might be more effective than individual best practices. Moreover, the underlying notions of path dependency (or the sequence of events that led to a certain combination of practices) and causal ambiguity for explaining why other organizations would have difficulty in imitation (and perhaps why the firm itself may not understand the precise source of the success) were seen as rich explanatory ideas. Even for presumed “best” HRM practices, Barney and Wright (1998) and others argued that they could be a source of sustained competitive advantage because rival firms may not know about the practices, they may be slow to implement or mimic them, and/or they may implement them poorly.

Another subset of the literature includes researchers that are interested in human capital resources, rather than HRM practices, as the potential source of competitive advantage (e.g., Campbell, Coff, & Kryscynski, 2012). The emphasis on human capital resources is based on the idea that, over time, rival organizations should be able to imitate the set of practices (e.g., pay-for-performance, formalized performance appraisal, or selective staffing) adopted by a focal firm but unique characteristics and combinations of characteristics across key individuals are more challenging to imitate (Delery & Roumpi, 2017). This stream of research, in particular, has led to a set of theories and conceptual works aimed at understanding how human capital accumulations or human capital resources can be antecedent to competitive advantage (Campbell et al., 2012; Nyberg et al., 2014; Ployhart & Moliterno, 2011), extensions or refinements of the RBV applied solely to the study of SHRM (e.g., Colbert, 2004; Delery & Roumpi, 2017), and suggested alternatives to the RBV (Kaufman, 2015).

As others (e.g., Delery & Roumpi, 2017) have noted, SHRM researchers most commonly apply the RBV as a broad overarching theoretical framework. In the empirical literature, there are numerous examples where the specific predictions made seem somewhat detached from the VRIO framework or the logic undergirding the notions of social complexity, causal ambiguity, and path dependence. I suspect this is also the case in strategic management. As a result, there are relatively few studies in the SHRM literature where specific predictions, and whether they are supported, yield information regarding the veracity or the falseness of the logic of the theory. This is certainly a weakness of the empirical literature in HRM. Operationalizing ethereal concepts like inimitability, social complexity, and causal ambiguity can be a challenge. This may be partially responsible for the typical broad-level application. But Barney (2001) offers several suggestions for studies that could put aspects of RBV under the scrutiny of falsifiability, and certain studies do make these attempts. For example, Carmeli and Schaubroeck (2005) operationalize HR capital as well as the distinctive value of the HR capital using leader perceptions. Although there may be some limitations of their approach, it is a laudable attempt to test aspects of the RBV in the SHRM context directly. I would encourage more researchers to devise ways of doing so going forward.

Conclusion

Despite limitations, my evaluation of the RBV is net positive. In the HRM subliterature, there may be relatively few direct tests of the view, and such tests may be rather difficult to construct, but we should credit Barney’s (1991) original work for its elegance, originality, and influence, with an eye toward its limitations. I will close by highlighting two important advancements in HRM that can be traced, in part, back to the RBV. First, the perspective has motivated and inspired researchers to conduct hundreds of empirical studies on the link between HRM and dimensions of organizational performance. The resulting voluminous literature allowed researchers to conduct large-scale meta-analytic examinations in later years. These attempts have established the direction (positive) and magnitude of the relationship between HRM and performance measures (e.g., Combs, Liu, Grant, & Ketchen, 2006; Crook, Todd, Combs, Woehr, & Ketchen, 2011; Jiang, Lepak, Hu, & Baer, 2012). The resulting empirical summaries and the large databank of information are useful not only for scientific inquiry but also for teaching HRM and explaining the role HRM may play in helping organizations sustain competitive advantage. Had the RBV not serendipitously arrived on the scene at roughly the same time SHRM emerged as a subfield, the resulting empirical literature may have been much smaller and cumulated findings less useful. My view is that although we may not know as of yet all of the “whys” and “hows” undergirding the relationship between HRM practices and competitive advantage, knowing that they are related and making judgments about the practical magnitude of those relationships is valuable in and of itself.

Second, interest in the original RBV works and the later detailed critiques of the view (e.g., Kaufman, 2015; Priem & Butler, 2001a, 2001b) planted the seeds for a surfeit of midrange theories and conceptualizations focused on distinctive human capital, human capital resources, demand- and supply-side mobility constraints, and complexity (e.g., Chadwick & Dabu, 2009; Colbert, 2004; Delery & Roumpi, 2017; Nyberg et al., 2014; Ployhart & Moliterno, 2011), many of which contain readily testable ideas. Because of their narrower focus, these works likely will not supplant the RBV as primary models, but their specificity and testability are important and valuable for the field. Had the original RBV works not appeared some 30 years ago, it is possible that these midrange theories would not have existed either. Although some believe the field has lost momentum and perhaps was “going in circles” conceptually (Delery & Roumpi, 2017: 1), there is now a broader base of resource-based theories for empirical researchers to build on. We should credit the Barney (2001) treatise for a seeding role in these recent advancements.

Footnotes

ORCID iD

Jason D. Shaw

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