These conditions lead to the development of a distinctive competitive advantage for the organization.
Obviously, if we look at this model, many of the statements are logical ones. An organization will create a competitive advantage on the market if it possesses one or more internal resources that are not available to other companies. This will create the economic value added that will make the difference on the market.
As we can see from the previous descriptions, the main difference between the Industrial/Organization Paradigm of Strategy Model and the Resource-Based View Model is related to the models' focus.
The I/O Model bases its focus on the external environment and on evaluations of opportunities and threats on the market, as well as the competition and relationships with other entities present on the market. The competitive advantage for an organization, following the I/O Model, results from the way it is able to speculate competitive relationships on the market and to improve external mechanisms such as distribution, customer retention processes etc.
On the other hand, the Resource-Based View Model bases its focus on the internal plan and on the internal development of the organization. In this sense, the model looks for internal elements able to generate a competitive advantage for the company on the market. Key resources such as HR or managerial resources...
As such, both of these models propose means by which the organization can gain a competitive advantage on the market, a competitive advantage that can lead to increased profitability and better market performances. However, while one of the models proposes that external factors are essential in gaining a competitive advantage, the other suggests that the internal key resources can make the difference between organizations on the market.
Bibliography
1. Wernerfelt, B. (1984), the Resource-Based View of the Firm. Strategic Management Journal; 5, (2), pp. 171-180
2. Rumelt, D.P., (1984), Towards a Strategic Theory of the Firm. Alternative theories of the firm; 2002, (2) pp. 286-300, Elgar Reference Collection. International Library of Critical Writings in Economics, vol. 154.
3. Porter, Michael. (1983). The Contributions of Industrial Organization to Strategic Management. Academy of Management Review. Vol. 6, No. 4 Pages
4. Kotelnikov, Vadim. Resource - Based View (RBV) of Firms. On the Internet at http://www.1000ventures.com/business_guide/mgmt_stategic_resource-based.html.Last retrieved on August 8, 2007
