Unit 5 - Assignment PDF

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Discuss the resource-based view of competitive advantage. What are the characteristics of resources that may yield sustainable competitive advantage? Describe the role that Information systems can play in creating sustainable competitive advantage. Briefly comment on Carr’s ‘It Doesn’t Matter’ argument, offer your thoughts.

The resource-based theory is a model that sees resources as key to superior firm performance. If a resource exhibits VRIO attributes, the resource enables the firm to gain and sustain competitive advantage decisions of any business which could be changing over time due to change in environment (Ketchen et al., 2012). It is an approach to achieving competitive advantage that emerged in 1980s and 1990s, after the major works published by Wernerfelt, B. (“The Resource-Based View of the Firm”), Prahalad and Hamel (“The Core Competence of The Corporation”), Barney, J. (“Firm resources and sustained competitive advantage”) and others (Jurevicius, 2013). The supporters of this view argue that organizations should look inside the corporate to seek out the sources of competitive advantage rather than watching competitive environment for it. According to RBV proponents, it's far more feasible to take advantage of external opportunities using existing resources during a new way instead of trying to accumulate new skills for every different opportunity. In RBV model, resources are given the main role in helping companies to realize higher organizational performance

Source: https://strategicmanagementinsight.com/topics/resource-based-view.html RBV asserts that firms accumulate crucial resources and capabilities over time and intrinsically are absorbed by the market incrementally. The power to achieve international and global markets may be a function of the interior capabilities of the firm. the idea of internal capabilities are often traced to evolutionary economics. Evolutionary economics deals with the study of processes that transform economies of firms, institutions, industries, employment, production, trade and growth within, through the actions of diverse agents from experience and interactions, using evolutionary methodology. the idea points to the unleashing of institutional innovation through the generation and testing of ideas which aids discovery of latest knowledge which accumulates more value for the prices incurred than competing alternatives. As a result, creation of latest knowledge results in the event of organizational capabilities, consisting of critical competences and embedded routines. These firm resources successively cause superior performance, particularly in highly competitive or challenging environments.

Nicholas Carr raised a point that the IT has become very ubiquitous and cheap with no longer a competitive advantage for the business. While focusing the fact that IT can’t be ignored, he emphasized the strategic importance of IT as it has been diminished. He stated that companies are running in the risk of overspending with no cheaper alternatives evaluation and this could be

seen by various failed IT projects over the years (Carr, 2003). He also raises a crucial point regarding the risks IT would create and suggested the companies to focus on vulnerabilities a slightest of disruption in availability of technology could cause huge losses. He asserted on not spending big amount in IT as it would not lead to profits and advised the leaders to focus on cost savings and efficiencies and incremental approach in order to improve organization structure, products and services. IT should not be seen as the grounds for building a way to competitive advantage or go extremely defensive by reducing IT costs but instead trace the middle ground for investing in IT and couple it with innovative business processes, skills and people power to gain market differentiation (Carr, 2003).

REFERENCE Gallaugher, J. (2015). Information Systems: A Manager's Guide to Harnessing Technology. Licensed under a Creative Commons Attribution-NonCommercial-Share Alike 4.0 International License.

Jurevicius,

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(2013).

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McManus, J. (2020). Strategic Management: A Resource Based View. Retrieved from https://www.macmillanihe.com/blog/post/strategic-management-mcmanus/ Carr, N. (2003, May). IT doesn’t matter. Harvard Business Review, Retrieved from https://hbr.org/2003/05/it-doesnt-matter...