Resource-based approach
- Figure 9: Five-forces model after Porter (1980)
The development of the procedure model aiming to identify the demand for management support services for service recipients draws from transaction cost economics and governance aspects, extended by the resource-based view. Especially the resource-based approach covers the biggest part of the theoretical foundations for this analysis step. The resource-based approach is an economic instrument for a structured analysis of enterprise resources. Resources are considered to be company assets at a particular point of time (Barney, 1991). The literature distinguishes between human, intangible and tangible resources (see Figure 10). In general, resource analysis is conducted to work out options for strategic operations for a company (Wernerfelt, 1984). In this context, Wernerfelt (1984) combines the resource-based approach with Porter’s (1980) model of “Five Competitive Forces”. Porter’s model considers external forces affecting the market success of a company (see Figure 9).
The essential competitive forces are (see Figure 9):
- The threat of new entrants,
- The bargaining power of suppliers,
- The bargaining power of buyers and
- The threat of substitutes.
Competition within an industry results from these competitive forces. Depending on the dimension of competitive forces, the intensity of rivalry among existing firms differs. The stronger the threat from competitive forces, the less attractive is the considered branch of industry and the more difficult it becomes to achieve a sustainable competitive advantage.
By combining Porter’s Five-forces model with the resource-based approach, resources that are not available are considered to be entry barriers for a specific market. Whereas available resources represent a competitive advantage. Similarly, other authors have argued by outlining a relation between a company’s internal resources and specific competences related to competitive advantages (Grant and Nippa, 2006; Mahoney and Pandian, 1992). Competence “is a function of the resources which a firm possesses at any point in time” (Mahoney and Pandian, 1992). Therefore, internal resources and the resulting competences of a company combined with external success factors in a branch of industry determine the corporate strategy (see Figure 10). The strategy should exploit internal strengths (determined by core competences) by responding to environmental opportunities (determined by factors of the industrial sector) while neutralising external threats and avoiding internal weaknesses (Barney, 1991).
Figure 10: Connections between resources, competences and competitive advantages after Grant and Nippa (2006)
Building on this foundation, it is a company’s economic objective to generate a competitive advantage using its own resource portfolio and core competences. On the one hand, this objective can be pursued by targeting a defined goal with the use of as few resources as possible (economic minimum principle). On the other hand, the maximum possible benefit can be generated by making better use of a given range of resources (maximum principle) (Penrose, 1959). The developed procedure model within the scope of this study has one additional feature. Not only are the available resources of a single company relevant. Additionally, it needs to be considered if a combination of internally available resources together with external resources might extend the range of available resources to generate a competitive advantage for the single enterprise and ideally create a win-win situation for all actors participating in innovation cooperation projects (see as well Hamel, 1991; Gemünden et al., 1996). Nevertheless, a resource extension or resource combination is associated not only with advantages. Theoretical approaches to transaction cost economics also point out limitations (see above).
The present study applies the resource-based approach of Wernerfelt (1984) in a slightly modified form. It does not identify possible barriers to market entry, as it is done by Wernerfelt (1984). In this study, the main focus is the analysis of internal resources to identify possible weaknesses impacting on successful implementation of innovation activities due to the lack of resources. Based on an analysis of available resources, actors can come to a decision as to whether it might be necessary to integrate external resources and further actors in the innovation process (for more details on options for the organisational integration of resources and competences see Table 3).