Resource-Based View of the Firm to Strategic Management - Essay Example

Resource-Based View of the Firm to Strategic Management Strategic thinking and strategic management are the most important activities undertaken by global business. How skillfully business activities are carried out will determine the eventual long-term success or failure of the organization. Recent years, many international companies (MNEs and TNCs) introduce resource-based approach to management in order to improve organizational performance and respond to changing economic conditions within global environment.

The relevance of the resource-based view can be explained by increasing importance of strategic vision of the organization and increasing role of fast response to changes affected international environment. In general, the concept of resource-based view is founded on the belief expressed by Campbell (1997) that competitive advantage is obtained if a company can obtain and develop resources (and human resources) which enable it to learn faster and apply its learning more effectively than its rivals.

The Resource-based strategy can develop strategic capability. The strategic goal will be to "create firms which are more intelligent and flexible than their competitors" (Grant 116) by hiring and developing more talented staff and by extending their skills base. Using this approach to strategic management, international companies gain competitive advantage by conceiving new ways of conducting activities, introducing new methods, technologies, inputs or channels of distribution. A convincing rationale for resource-based strategy for the global environment has been produced by Grant: "When the external environment is in a state of flux, the firm's own resources and capabilities may be a much more stable basis on which to define its identity" (Grant, 115).

In line with intellectual capital theory, resource-based theory emphasizes that investment in people adds to their value to the companies of any sector. According to Campbell (1997) the goals of the resource-based view is to improve resource capability - achieving strategic fit between resources and opportunities available within international environment, and obtain added value from the effective use of resources. The resource-based view allows international companies to evaluate current situation and takes into account possible threats and challenges affected global business.

Only in this case, a global business will be properly prepared to face the demands of a changing environment and response to change through people employed by it. In the light of these developments it is not surprising to find many theories which attempt to outline and explain cultural similarities and differences among societies. The idea of the resource-based view incorporates all the functions applied on the national level but pays more attention to cultural differences and diversity. In sum, the resource-based view becomes of even greater importance when entering into strategic alliances with organizations in other countries and when departments in different countries (such as research and development) have to work closely together.

The resource-based view helps companies to organise resources in accordance with the needs of the company and global environment. References1. Campbell, D.J. (1997). Organizations and the Business Environment. Oxford: Butterworth-Heinemann. 2. Grant, R.M. (1991). The resourced-based theory of competitive advantage. California Management Review, 33 (2), 114-35.