PurposeAlmost since the inception of the resource‐based view (RBV), critics have complained that the view is weak in the prescriptive dimension. A recent statement of this critique is by Priem and Butler, who argue that the RBV does not address value creation. One aspect of this is that the link between resources and value creation is black‐boxed. The paper aims to argue that a Porterian activity analysis with a focus on activity drivers can remedy this weakness, and how it brings into focus important implementation issues that are neglected in the RBV.Design/methodology/approachThe study extends Priem and Butler's critique of the RBV by examining the RBV literature in light of Porter's activity‐based framework.FindingsThe resource‐based logic has been gainfully applied in many fields other than strategy. However, because it lacks the concept of activities, the paper argues that it has not reached its full potential in the field of strategy. Formally including the concept of activities and activity drivers addresses the prescriptive shortcomings of the RBV.Practical implicationsPorter's activity drivers are “levers” that managers can manipulate to improve firm value creation in two ways: The first method involves using activity drivers to improve the efficiency and effectiveness of individual activities. The second method involves improving the fit at the level of the firm's activity set. Managers may identify potentially rewarding competitive positions and then use competitive data regarding rivals' activities and drivers to gauge how successful their firm may be in capturing these positions.Originality/valueThis is one of the first attempts to address the prescriptive shortcomings of the RBV using a Porterian activity lens.
Purpose -The Balanced Scorecard (BSC) is widely applied as a performance measurement and strategy implementation tool by organizations. Research has revealed that the term "balanced scorecard" may be understood differently by managers both within as well as across organizations implying that the performance measurement systems implemented in organizations may not be similar to the construct envisioned by Kaplan and Norton. Using Kaplan and Norton's Balanced Scorecard construct as a basis, the paper aims to develop and test a five-level taxonomy to classify firms' performance measurement systems. Design/methodology/approach -A Balanced Scorecard taxonomy is validated using a large sample of professional accountants working in Canadian organizations. Findings -The five-level taxonomy is used to categorize the performance measurement systems of 149 organizations. It is found that 111 organizations' (74.5 percent) performance measurement systems met the criteria to be classified as a Basic Level 1 BSC, while 61 (40.9 percent) organizations have structurally complete Level 3 BSCs, and 36 (24.2 percent) organizations have fully developed Level 5 BSCs. The paper also discusses differences between Level 1 and Level 5 BSC organizations. Research limitations/implications -While many researchers assume that organizations' performance measurement systems are similar in implementation level and use, the paper demonstrates that organizations are at different levels of BSC implementation and use, a factor that should be taken into consideration when designing empirical studies to test the efficacy of Kaplan and Norton's BSC. Practical implications -The five-level BSC taxonomy scheme provides managers working with Kaplan and Norton's BSC with a tool to plan their implementation steps and then benchmark their progress towards implementing a fully developed Level 5 BSC. Originality/value -In developing and empirically validating a BSC taxonomy, the paper builds on and extends previous research on BSC implementation and its potential implications.
PurposeKnowledge‐intensive firms are growing in importance yet there are few tools to help managers to analyze and improve their performance, which this paper aims to describe.Design/methodology/approachThis paper builds on Michael Porter's strategic frameworks for industrial firms. It outlines how his frameworks, in particular the five forces and value chain, need to be modified if they are to be effectively applied to knowledge‐intensive firms.FindingsManagers of knowledge‐intensive firms need to use the old tools in new ways, if they are to improve their business models and ultimately increase their profitability.Practical implicationsThe paper outlines ways for managers of knowledge‐intensive firms to improve their firm's performance. First, managers using a revised five forces can improve their value capture by reducing bargaining power of its experts, making outsourcing of expert services more attractive, or improving their reputational status. Second, the paper outlines a continuum of business models and suggests that the appropriate choice of business model depends on the firm's problem‐solving expertise, its target clients, desired risk level and aspirations. The paper elaborates on the business model by examining choices surrounding the scope of the firm's problem‐solving activities, suggesting that these allow the firm to find profitable niches.Originality/valueThis is one of the first attempts to develop strategic tools that managers of knowledge‐intensive firms can used to increase their firm's profitability.
PurposeResearchers Kim and Mauborgne argue that firms seeking to grow in mature markets need to create new buyer value, thereby entering Blue Ocean markets, where they don't have rivals. In contrast, firms fighting rivals in bloody, Red Oceans will struggle to remain profitable. To facilitate the search for Blue Oceans the paper aims to offer managers a new tool to uncover new points of buyer differentiation.Design/methodology/approachThis paper draws from the strategy, marketing and economics literatures to illustrate how firms can enhance performance by creating Blue Oceans.FindingsThis paper suggests that one way to generate Blue Ocean strategies is to use the fundamental building blocks of value creation. Based on extensive work with value creation logics, it proposes that there are three types of value firms can offer customers: lower prices using an industrial efficiency logic; increase user connectivity with a network services logic; or enhance the offering's fit with the user needs using a knowledge intensive logic. By combining parts of two or more of the value creation logics, managers may construct innovative bundles of attributes.Practical implicationsBlue Ocean strategies are most appropriate for companies in the mature/decline phase of the product life cycle that are suffering from declining revenues and decreasing customer loyalty. Organizations facing these pressures typically attempt to increase the bottom line by increasing marketing and branding efforts while cutting costs and trying to dodge price wars. These value renovations usually meet with little success as competitors are attempting the same moves in what is largely a zero sum game. Instead of focusing on besting rivals, Kim and Mauborgne argue firms should aim for value innovation by redefining their offerings to compete in niches where there is no competition. Applying value creation logics helps managers redefine their offerings.Originality/valueThis is the first paper to outline how combining value creation logics leads to discovering Blue Oceans.
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