‘Reductionistic’ and ‘Holistic’ Views of Resource‐Based Theory: A Review of the Literature

Abstract

Main message:In contrast to reductionisitc approach, a holistic approach to RBT has the ability to address the complex interrelationships among multiple organizational characteristics (e.g., resources and capabilities), competitive strategies and performance. Key points: The predominant reductionisitic approach may not be appropriate to capture the reality of a firm's performance regarding their resources, capabilities and strategies. Concurrence of RBT constructs along with competitive strategies is not universal, but a contingent one, which may vary in different contexts. Further research is required to understand the performance impact of the alignment of dynamic capabilities aligned with a firm's resources and competitive strategies. AbstractResource-Based Theory (RBT) has become an acceptable theory to describe the importance of resources and capabilities in generating high performance. Our literature review shows that there are two approaches to RBT: reductionistic and holistic. Adopting a reductionistic approach has led to an inconsistency in the findings about the relationship between RBT constructs (i.e. resources and capabilities), and their impact on performance. This paper proposes that a holistic approach to RBT has a greater power to explain the complex interrelationships between dynamic capabilities, firm's resources and competitive strategies. Through a critical review on both views, this study highlights areas in which future research is needed for greater understanding of the co-impact of a firm's internal factors and competitive strategies on performance.

Leveraging competitiveness from sustainable operations: frameworks to understand the dynamic capabilities needed to realise NRBV supply chain strategies

“…This exemplifies seminal arguments that combinations of capabilities (Lockett et al, 2009) form routines (Zollo & Winter, 2002) which ultimately form resources. This offers clarification to the complex yet fundamental role of capabilities in competitive resources that has long confused academics (Rashidirad et al, 2015). Moreover, by embedding continuous resource reconfiguration and renewal via dynamic capabilities, this study supports the plausibility of attaining NRBV resources and sustaining competitiveness.…”

“…Internal-external categorization offers further theoretical elaboration. This acknowledges the internal and external nature of competitive resources (Lockett et al, 2009) and responds to calls for distinction between the two contexts (Rashidirad et al, 2015). Along with dynamic capabilities, this highlights the important role of internal and external capabilities in resource building and reconfiguration to support competitive and sustainable operations.…”

“…The same process was undertaken in the third stage that further categorized capabilities to an internal versus external focus. This adds distinction to the exploitation of resources from internalities (Penrose, 1959) and externalities (Barney, 2001) and responds to calls for resource-based theory literature to distinguish between internal and external capabilities (Rashidirad et al, 2015). Internal-external categorization also acknowledges the significance of inbound and outbound activities in SSCM (Malhotra & Mackelprang, 2012).…”

“…The complex relationship between resources, capabilities and competitiveness is not unique to the NRBV. Rather confusion surrounds resource-based theory on the whole (Barney, 2001;Butler and Priem, 2001) and is considered the key limitation of the theory (Grant, 1991;Rashidirad et al, 2015). In particular, Lockett et al(2009) suggest that researchers have struggled with the study of resources and capabilities due to their obscure nature.…”