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Use of Resource-Based View and Dynamic Capabilities Theories to Develop Competitive Advantage

The resource-based view is one of the promising theories developing in strategic management in an organisation. It brings out a more organized approach to organisational level analysis by personifying an organisation as a collection of capabilities and resources (Lockett et al., 2009). This is a divergent model from the previous set of product market positions. McWilliams & Siegel (2010) adds that resource based review assumes that differences in performance across organisations are as a result of differences arising from rent-generating, valuable, organisational specific resources and capabilities that cannot be substituted or imitated easily. Accordingly, organizations do not compete with new products but rather on profound factors namely the capacity to develop the new product line. Kraaijenbrink et al., (2010) report that capabilities and resources of an organisation are a central concern in its overall strategy as well as its management of its innovations. As such, it must preserve a vibrant fit between what the environment dictates and what it has to offer.

Arend & Lévesque (2010) underlines that it is imperative for an organisation to possess essential capabilities so as to use them to its advantage and better seize and exploit the ever-changing opportunities. Given their compactness and novelty of commercial organisations, the requirement for dynamic capabilities as well as leveraging of resources and capabilities in overpowering challenges and presenting fresh advances within an industry setting can attest to be an intimidating assignment as Wong & Karia (2010) augments. As such, an organisation must be well prepared and have all resources at its disposal before venturing into it. Even though it is an achievable foot, it has its challenges which an organisation has to address before adopting it.

Dynamic capabilities are an organization’s capacity to utilise its internal data and competencies to achieve congruence with the ever changing business environment as Helfat & Peteraf (2009) states. In the simplest of terms, they are the ability to realize new methods of competitive advantage. This is a further development of the resource-based review. This provides that an organisation has to reconfigure its internal skills, internal competencies, resources as well as integrate and adapt them so as to achieve a competitive advantage. Helfat et al., (2009) adds that an organisation must be able to create purposefully, modify and extend its resource base. Before addressing the external factors, an organisation has to integrate, reconfigure and build its internal competencies. However, this requires the combination of several capabilities to work effectively for an organisation. Dynamic capabilities are expanded paradigms that explain how an organisation can gain competitive advantage.

Augier & Teece (2009) emphasize that to be winners in the global marketplace; an organisation must demonstrate timely responsiveness as well as flexible and rapid innovations to effectively redeploy and coordinate its internal competencies. This makes dynamic capabilities a useful source of competitive advantage for any organisation. Dynamic capabilities accentuate on shifting attractiveness of the environs. Importantly, it also recognises the crucial role of strategic management in suitably adapting, reconfiguring and integrating internal and external competencies, functional skills and recourses towards changing environs. This provides a comprehensible structure for any organisation to integrate its existing empirical and conceptual knowledge as swell as enable prescription as Barreto (2010) underlines. Essentially, the competitive advantage of an organisation shoots from dynamic capabilities entrenched in high-performance procedures working inside the organisation, rooted in the organization’s practices and coordinated by its history. This brings our dynamic capability as the developing paradigm in modern business that brings together several disciplines and developments.

it is necessary to note that capabilities are ready made in the market; they are built in an organisation. In the most general terms, they are organisational processes. They become embedded in the organisation over time. Importantly, they are employed to configure an institution’s resource base; they remove (or combine) the decaying resources and create new ones (Helfat & Peteraf 2009). Resource-based review and dynamic capabilities help organizations to sustain competitive advantage by performing strategically important activities better than its rivals. These theories are not about building a great product or service but creating an activity along the value chain. It’s not about money; customer or value for money but it’s about the quality of culture and the value of innovation. The value of innovation and quality of culture are inbuilt in an organisation.

Significantly, Barreto (2010) report that the dynamic capabilities of an organisation speak to the mastery, speed and process by which the organisation adapts its resources to respond to changes in the marketplace as well as to emerging opportunities. These must go hand in hand with its core competencies such as the strength of its reputation, the track record of research and development, ability to access a wider variety of markets as well as the capacity to influence the industry to achieve its aims. Using dynamic capabilities and resource based review, an organisation is fast and adapts quickly in innovating products. When this is combined with the potential of the management to successfully reorganize and bring together competencies, it produces success (Easterby‐Smith et al., 2009).

There are three identifiable main components of dynamic capabilities; these are adaptive, absorptive and innovative capabilities (Ambrosini & Bowman 2009). Adaptive capability underlines an organization’s ability to acclimatize itself in an appropriate manner through flexible resources as well as aligning the resources with the environmental changes. Hence, adaptive capability focuses on aligning internal factors with external environmental factors. Absorptive capability underpins the necessity taking external knowledge, merging it with internal knowledge and absorbing it for internal use. Innovative capability connects organisations integral innovativeness to the market centered advantage regarding new markets and products. Consequently, it explains the linkage between an organization’s capabilities and resources with its product market (Ambrosini & Bowman 2009). Basically, these three components relate performance and competitive advantage.

Essentially, resource-based view theory indicates that an organisation must have rare, non-substitutable, valuable and inimitable resources to develop sustainable competitive advantage. The success of any organisation in a competitive environment depends on its resources. As such, it must develop these resources to contribute and enable it to achieve a superior performance as well as keep floating in competitiveness in the industry. On the other hand, dynamic capabilities focus on renewing and building competencies and organisational resources to aid an organisation in achieving congruence with the changing business environment. It expounds that an organisation must continually build, configure and adapt internal competencies to achieve congruence with market opportunities.

Leadership as A Way of Managing the Different Structure

Leadership is an essential part of the management of an organisation; it brings different components of an organisation together and enables them to work together in achieving a common goal as James (2011) asserts. Leadership provides vision, communication, and motivation. It empowers individuals to be innovative and to explore different and better ways to achieving goals hence bringing out the best of them. Notably, it aligns resource development goals to strategic objectives. It creates a conducive environment where all factors sprout thereby producing success. As such, it is necessary to develop leadership dimension of problem solving, experience, personality, ability and self-awareness. This positively impacts organizations structure and consequently profitability. Hamrefors (2010) adds that leadership ensures that the human resource has the necessary expertise, ability, and experience to complete tasks. Conversely, effective leadership ensures that there is readiness in an organisation, it attracts the best resources from the market that come to help the organisation develop a competitive edge over the competitors.

Leadership contains power and influence as well as traits such as effective, cognitive and technical competencies as Schein (2010) emphasizes. They overlay leadership core (there is no leadership without the mentioned aspects), they express the existence of leadership. In addition, it is leadership that provides direction in an organisation. They foresee things that other people cannot see; they propel an organisation in all directions. They establish clear procedures and policies; these are crucial in achieving the desired results.


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