STRATEGIC ENTREPRENEURSHIP

TOPIC 4
ATTRIBUTES OF STRATEGIC
RESOURCES
 Strategic Entrepreneurship and Strategic Management

Source : Wheelen, T. L. and Hunger, J. D. (2000 cited in

Kuratko, D. F. & Hodgetts, R. M., 2004: 521).
 What is a RESOURCE?
 Any thing that is useful, tangible or intangible.
 Another characteristic -semi permanent or sticky; it
adheres to the venture and the entrepreneur.
 Resources can be property based or knowledge based.
 Property-based resources give the entrepreneur
“rights” and enable a firm to control its environment.
 Knowledge-based resources are more intangible, like
talent or skill. Knowledge-based resources enable the
firm to adapt to a changing environment.
 What is a RESOURCE?

 Resources can be divided into three (3) types:

 Financial resources
 Human resources
 Operating resources
 Financial Resources

 Resources which take the form of, or can be readily

converted to cash (monetary form)
 Cash- most liquid and flexible, readily to buy other
resources
 Eg: Cash in hand, overdraft facilities, loans,
outstanding debtors, investment capital, investment
in other businesses.
 Operating Resources

 The facilities which allow people to do their jobs and

used by business to deliver its outputs to the
marketplace.
 Eg: Premises, motor vehicles, production machinery,
raw materials, storage facilities, office equipment.
 Human Resources

 People and the efforts, knowledge, skill and insights

they contribute to the success of the venture
 Eg: Productive labour, technical expertise, provision
of business services, communication skills, strategic
and leadership skills
 Combination of resources
Financial

Innovative
Human New value delivered
Combination

Operating
Source: Wickham (2006)

Figure 1: Entrepreneurship and the combination of resources

Resource-Based View Theory of the Firm

 RBV-firms must access, mobilize and deploy resources

before they can generate strategic resources for firm
growth (Garnsey, 1988).
 Business performance and growth is achieved when
the firm has valuable resources and capabilities
available as a source of sustainable competitive
advantages (Mahoney, 1995; Peteraf, 1993; Garnsey,
1988; Barney, 1986; Wernerfelt, 1984).
 Resource-Based View Theory of the
Firm
Resource-based theory holds that sustainable competitive
advantage is created when firms posses and employ
resources and capabilities that are:
1. Valuable because they exploit some environmental
opportunity
2. Rare in that there are not enough for all competitors
3. Hard to copy, so that competitors cannot merely
duplicate them
4. Non-substitutable with other resources
 Strategic Resources
  
Inputs into the production process

Source of competitive advantage

Basic building blocks to a firm’s functioning

Can be combined in different ways

Provide capacity to achieve superior performance when

they are:
• Valuable
• Rare
• Inimitable

Source : Hisrich, R. D., Peters, 2009

 Strategic Resources
 Create competitive advantage.
 There is a distinction between strategic and non-
strategic, or common resources.
 Not all capital resources and assets are strategically
important.
 Strategic Resources

 Common - necessary for carrying out the firm’s usual

activities, but provide no specific advantage. E.g.
Ordinary desks, chairs, and office furniture.
 Some resources may prevent the formulation and
implementation of valuable strategies due to their
shoddiness (poor quality) and imperfections.
Attributes of Strategic Resources
1. Valuable

2. Rare

3. Imperfectly Imitable

4. Non-subtitutable
Attributes of Strategic Resources

 Valuable resources
 Resources are valuable when they help the
organization implement its strategy effectively and
efficiently, which means that in a “strengths,
weaknesses, opportunities, and threats in the
firm’s environment.
 A valuable resources is useful for the venture’s
operation. E.g. property, equipment, people, and
skills such as marketing, finance, and accounting
 Attributes of Strategic
Resources
 Rare resources
 A unique and valuable resource clearly gives a firm source of
competitive advantage.
 A resource may be considered rare when it is not widely
available to all competitors.
 If supply and demand are in equilibrium, and the price of the
resource is generally affordable, the resource will cease to be
rare.
 E.g. a good location, managers who are also considered good
leaders, or the control of natural resources like oil reserves.
Attributes of Strategic Resources
Imperfectly imitable (hard to copy)
resources
 Firms which have rare and valuable resources clearly have
advantages over firms lacking such assets.
 However, even rare resources can be obtained at some
price. If the price is so high that the firm makes no profit,
there is no source of competitive advantage, because the
firm has spent its advantage on the resource.
 Where duplication is not possible at a price low enough to
leave profits, the resource is said to be imperfectly imitable
or hard to copy
 Attributes of Strategic Resources
 Non-subtitutable resources
 Non-substitutable resources are strategic resources that
cannot be replaced by common resources.
 E.g. Firm A has a rare and valuable resources, which it uses
to implement its strategy. If firm B has common resources
that can be substituted for firm A’s valuable resources, and
these common resources do basically the same things, then
the rare and valuable resources of firm A do not confer
strategic advantage.
 In fact, if firm B can obtain common resources that threaten
firm A’s competitive advantage, then so can many other
firms, thereby ensuring that firm A has no advantage.
Attributes of Strategic Resources

 Very different resources can be substitutes for each

other.
 For example, an expert-system computer
programme may substitute for a manager.
 A charismatic leader may substitute for a well-
designed, strategic-planning system.
 A well-designed, programmed-learning module may
substitute for an inspirational teacher.
 REFERENCES
 Barney, J.B. (1991). Firm resources and sustained competitive advantage. Journal
of Management, 17,1, 99-120.
 Barringer, B and Ireland, D (2012) Entrepreneurship – Successfully Launching
New Ventures (4th Ed.). Pearson Education, Global Edition.
 Dollinger, Marc J., (2003) Entrepreneurship: Strategies and Resources, 3rd
Edition, Prentice Hall International Edition.
 Mahoney, J. 1995. The management of resources and the resource of
management. Journal of Business Research, 33, 91-101.
 Peteraf, M. (1993). The cornerstones of competitive advantage: a Resource-
Based View. Strategic Management Journal, 14 (3), 179-191.
 Kuratko, D. F., & Hodgetts, R. M. (2004). Entrepreneurship: Theory, process,
practice. Mason, Ohio: Thomson/South-Western
 Hisrich, R. D., Peters, M. P., & Shepherd, D. A. (2009). Entrepreneurship. New
York: McGraw-Hill Higher Education.
 Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management
Journal, 5, 171-80.
 Wickham, P. A. (2006) Strategic Entrepreneurship. (4th. Ed.). England: Pearson
Education Ltd.