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Limitations of Resource Based View of the Firm
Andrey Mazkun
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What are the limitations of RBV? Can anyone clearly explain it? Thanks. (...) Read more? Sign up for free
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Limitations of RBV
Christos Papadimas, Manager, Canada, Member
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One limitation of the RBV theory is based on the inability to compile an empirical study to measure performance. Due to the heterogeneity of the companies, it is hard to impossible to compile a homogeneous sample.
Furthermore, the RBV does not consider the demand side of the market. A company might have the resources and capabilities to produce competitively but who is the customer/consumer?
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Limitation of RBV
Warren Miller, CPA, CFA, United States, Member
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The limitation of the RBV is that it's applied on an entity-specific basis. Therefore, it is not generalizable.
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Limitation of RBV
Maryam Bidmeshgipour, Student (Other), Malaysia, Member
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I agree with Warren on this limitation of RBV. As a result there is still no generalized tool that is able to measure it.
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Limitations of RBV
Warren Miller, CPA, CFA, United States, Member
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I respectfully disagree, Maryam. There is a tool that can measure capabilities, whose development is central to deploying the RBV. That tool is Jay Barney's VRINO (valuable, rare, inimitable, non-substitutable, organizationally aligned) framework.
Asking five questions (one for each letter in the acronym) will help gauge the durability of a capability and also its staying power against other capabilities in the competitive domain (industry or strategic group). I use it all the time, and it is powerful.
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