Theory in RBV

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a) Penrose, 1959. "Theory of the Growth of the Firm".

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Theme:
1) The internal resources of a firm - the productive services available to a firm from its own resources, particularly the productive services available from management with experience within the firm.
2) As management tries to make the best use of the resources available, a truly 'dynamic' interacting process occurs which encourages continuous growth but limits the rate of growth.
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RQ: Assuming that some firms can grow, what principles will govern their growth, and how fast and how long can they grow? Alternatively, assuming that there are opportunities for expansion in an economy, what determines the kind of firm that will take advantage of them and to what extent?
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What is a "firm":
a) Economics: Price (p) and Output (q) --> Optimal size problem.(Size=output)
b) The Firm as an administrative organization (central management)
c) The Firm as a collection of productive resources.

-- Resources: physical resources and human resources.

-- Services yielded by resources

-- The size of a firm should be measured with respect to the present value of the total of its resources used for its own productive purposes.
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The motivation of the firm:
a) The profit motive: The financial and investment decisions of firms are controlled by a desire to increase total long-run profits.
b) Growth and profits become equivalent as the criteria for the selection of investment programs.
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Inherited Resources and the Direction of Expansion
1) Firm Growth: External and Internal inducement / obstacles
- Internal obstacles arise when services (in particular the managerial capacity and the technical skills) required for expansion are not available in sufficient amounts within the firm.
- Internal inducements arise largely from the existence of a pool of unused productive services, resources, and special knowledge.
2) The continuing availability of unused services:强调人与资产的循环互动,相互推动,相互开发.
a) So long as any resources are not used fully in current operations, there is an incentive for a firm to find a way of using them more fully.
b) No "equilibrium position"
Indivisibility of resources: There's always unused services
In the process of utilizing unused services, new types of resources will always be added to the firm's collection of resources.
c)
'Idle' services and 'specialized' services: Specialization leads to higher common multiplies, higher common multiplies leads to greater specialization. -- Specialization --> Diversification --> Specialization......
d) New services will also become available from existing resources.
Interaction between personnel and material resources: Not only can the personnel of a firm render heterogeneous varieties of services, but also the material resources can be used in different ways, if the people who work with them get different ideas.
e) The creation of new productive services. The services that resources will yield depend on the capacities of the men using them, but the development of the capacities of men is partly shaped by the resources men deal with.
3) Demand and Resources

Demand is a necessary condition of entrepreneurial interest in any product, but the original incentive to a great deal of innovation can be found in a firm's desire to use its existing resources more efficiently.
4) The Direction of Expansion
New combinations previously acquired or inherited resources and other resources which must be obtained from the market.

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b) Wernerfelt, 1984. "A Resource-Based View of the firm".

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Theme: to look at firms in terms of resources rather than products; & Sequential entry.
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Resource: anything which could be thought of as a strength or weakness of a given firm. Definition: Tangible or intangible assets which are tied semi-permanently to the firm.
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1. Resource and profitability
1) General effect: monopolistic bargaining power, substitution
2) First Mover Advantage - Resource position barriers (VS. entry barrier- entry barrier是针对incumbent和potential entrants,未考虑diversifier.)
3) Attractive resources (difficult for others to catch up)
4) Mergers and Acquisitions: to trade otherwise non-marketable resources and to buy or sell resources in bundles.
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2. Dynamic resource management
1) The resource-product matrix
2) Sequential entry - to develop the resource in one market and then to enter other markets from a position of strength.
3) Exploit and develop - a balance between exploitation of existing resources and development of new ones.
4) Stepping stones - diversification step must be evaluated in terms of short-term balance effect and long-term function as stepping stones to further expansion.