A Resource-Based Analysis of the Conditions for the Emergence of Profits
- 1 December 2008
- journal article
- research article
- Published by SAGE Publications in Journal of Management
- Vol. 34 (6), 1110-1126
- https://doi.org/10.1177/0149206308324323
Abstract
The resource-based view (RBV) has been successful in explaining the sustainability of competitive advantages based on the characteristics of individual resources but less so for understanding firm profitability and the reasons why profits may emerge. This article investigates the three conditions for a set of resources to create collectively greater returns that they demand from the firm, thus resulting in above-normal profits for its shareholders. These conditions for profitability are (a) value uncertainty, (b) resources specificity, and (c) firm-level innovation. Rather than owners of inherently superior knowledge or resources with limited bargaining power as usually portrayed in the RBV, profitable firms are fundamentally better combiners and developers of resources in the face of uncertainty.Keywords
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