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Tautology in the Resource-Based View Tautology in the Resource-Based View and the Implications of Externally and the Implications of Externally

Determined Resource Value: Further Determined Resource Value: Further Comments Comments

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Introduction

• Tautology (from the Greek word ταυτολογία) is a formula which is true in every possible interpretation (Wikipedia)

• Tautologies are a key concept in propositional logic, where a tautology is defined as a propositional formula that is true under any possible Boolean valuation of its propositional variables (Wikipedia).

• Tautology is statement of relationship that is true by logic (Popper, 1959)

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Cont.

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Theories are nets cast to catch what we call “the world”: to rationalize, to explain, and to master it. We endeavour to make the mesh ever finer and finer (Popper, 1959: 59)

Objective

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The article was to spur discussion concerning:

(i) the degree to which the current resource-based “view” (RBV) meets the requirements of a theoretical system and (2) the promise of the RBV for future strategy research.

Discussion

RBV is not yet a theory (Priem and Butler, 2001), most products that are labeled theories actually approximate theory and that the items labeled as “not theory” could represent valuable intermediate steps in the theorizing process (Sutton and Staw, 1995).

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Cont.

At this definitional level, all strategic management theories are tautological in the way Priem and Butler describe (Barney)

Reading Porter’s (1980) chapter on the structural analysis of industries shows that he does not claim that industry attractiveness is related to firm performance. He never mentions “industry attractiveness” at all. The only place where the term appears in Porter’s 1980 book is in the appendix, concerning the GE/McKinsey matrix (Priem and Butler, 2001)

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Cont.

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Cont.

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Cont.

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Cont.

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Cont.

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How useful is the RBV?

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One way to analyze the usefulness of the RBV is by comparing its benefits to those of alternative approaches.

Three accepted alternatives for internal analysis have included the strengths and weaknesses portion (SW) of SWOT analysis, Porter’s (1985) value chain, and the RBV.

Conclusion

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We have shown that the RBV, as currently constituted, contains a theory of sustainability but not a theory of competitive advantage (i.e., value creation).

Resources, representing what can be done by the firm, and the competitive environment, representing what must be done to compete effectively in satisfying customer needs, are both essential in the strategy-making process.

Resources-based models of strategic advantage may need to be augmented by theories of the creative and entrepreneurial process.

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