1. © 2002 by Prentice Hall 2-1 Resource-Based Theory Buy (or acquire) resources and skills cheaply Transform (the resource or skill) into a product or service Deploy and implement (the strategy) Sell dearly (for more than you paid)

2. © 2002 by Prentice Hall 2-2 Sustainable Competitive Advantage Competitive advantage created when firms possess and employ resources that are: Valuable –Allowing exploitation of environmental opportunities Rare –Not enough for all competitors Hard to copy –Competitors cannot easily duplicate them Non-substitutable

3. © 2002 by Prentice Hall 2-3 Resource Attributes and Competitive Advantage Valuable resources Exploits opportunities Neutralizes threats Not suited to the environment - Common Creates Competitive ResourceNo Competitive Advantage Dimension Advantage

4. © 2002 by Prentice Hall 2-4 Resource Attributes and Competitive Advantage Valuable resources Exploits opportunities Neutralizes threats Not suited to the environment - Common Rare resources Unique Costly to procure Readily available Inexpensive Creates Competitive ResourceNo Competitive Advantage Dimension Advantage

5. © 2002 by Prentice Hall 2-5 Resource Attributes and Competitive Advantage Valuable resources Exploits opportunities Neutralizes threats Not suited to the environment - Common Rare resources Unique Costly to procure Readily available Inexpensive Imitable resources Unique history Causally ambiguous Socially complex Ordinary history Causality known Socially simple Creates Competitive ResourceNo Competitive Advantage Dimension Advantage

6. © 2002 by Prentice Hall 2-6 Resource Attributes and Competitive Advantage Valuable resources Exploits opportunities Neutralizes threats Not suited to the environment - Common Rare resources Unique Costly to procure Readily available Inexpensive Imitable resources Unique history Causally ambiguous Socially complex Ordinary history Causality known Socially simple Substitutable resources Not possible through: Similar modes Different modes Creates Competitive ResourceNo Competitive Advantage Dimension Advantage Not possible: Similar modes Different modes

7. © 2002 by Prentice Hall 2-7 Profit Factors - 6 Strategic Resources ResourcesValuableRare Hard-to-CopyNonsubstitutable Physicalyessometimesnot usuallysometimes Reputationalyesyesyesyes Organizationalyesyesyesyes Financialyessometimesnono Intellectualyesyesusuallysometimes Technologicalyessometimessometimessometimes

8. © 2002 by Prentice Hall 2-8 Reputational Resources  The quality of management  The use of corporate assets  The firm’s financial soundness  The firm’s value as a financial investment  The quality of products and services  Innovativeness  The ability to attract, develop, and retain top people  The extent of community and environmental responsibility

9. © 2002 by Prentice Hall 2-9 Competitive Advantage & Business Environment Factor High Tech Service Reputation for quality38%44% Customer service / product support34%35% Name recognition / profile12%37% Good management25%38% Low cost production25%13% Financial resources16%23% Customer orientation / market research19%23% Product line depth16%22% Technical superiority44% 6% Base of satisfied customers28%19% Product innovation 22%18%

10. © 2002 by Prentice Hall 2-10 A Psychological Approach Personality characteristics:  The need for achievement Problem solving orientation Goal setting Self-reliant Crave feedback Moderate risk propensity  Locus of control “Externals” (fate, chance and luck dictate results) “Internals” (personal effort dictates results)  Risk-taking propensity Not consistent among entrepreneurs

11. © 2002 by Prentice Hall 2-11 The Supply of Entrepreneurship Negative Displacement Entrepreneurship Impetus for Entrepreneurship Between Things Positive Pull Positive Push Perceptions of Desirability Situational Characteristics Entrepreneurial Event Perceptions of Feasibility

12. © 2002 by Prentice Hall 2-12 The Supply of Entrepreneurship Negative Displacement  Immigrant status  Fired  Angered, bored  Middle-aged  Divorced Entrepreneurship Impetus for Entrepreneurship Between Things  Army  School  Prison

13. © 2002 by Prentice Hall 2-13 The Supply of Entrepreneurship Positive Pull  From partner  From mentor  From investor  From customer Entrepreneurship Impetus for Entrepreneurship Positive Push  Strong father  Career  Education  Experience

14. © 2002 by Prentice Hall 2-14 The Supply of Entrepreneurship Perceptions of Desirability  Culture  Family  Colleagues  Mentors  Peers Entrepreneurship Situational Characteristics Perceptions of Feasibility  Support  Demonstration  Models  Mentors  Partners Entrepreneurial Event  Initiative taking  Consolidation of resources  Management of organization  Relative autonomy  Risk bearing

15. © 2002 by Prentice Hall 2-15 The Entrepreneur as a Human Resource: Sociological Approach Entrepreneurial inclinations propelled by: Negative displacement (losing a job, etc.) Being between things (transition from school to career, etc.) Positive pull (example made by parent, mentor, etc.) Positive push (a job, education, etc.) … and activated by situations which positively affect: Perceptions of desirability (message from culture, peers, etc. Perceptions of feasibility (demonstration, etc.) … and culminate in an entrepreneurial event