This
theory, originated by E. Penrose in her 1959 work “The theory of the growth of
the Firm” (New York Wiley) began to be employed and developed in management
terms, in mid 1980s by J. Barney and K. Conner (Dollinger 2006: 537-538) . The
theory in entrepreneurship context holds that entrepreneurship is facilitated
when there are capabilities and resources which the entrepreneur either
possesses or can acquire and deploy in sustainable manner. It is only with
appropriate resources and capabilities that can be deployed in a sustainable
manner over a long term can an entrepreneurial firm achieve sustainable
competitive advantage and success.
If
though a good understanding of the resource potentials; through good vision,
intuition and creative act, an entrepreneur chooses a particular industry where
resources that are valuable, rare, hard to copy (or inimitable) and resources
that are non-substitutable, the entrepreneur, will not only be able to succeed,
he will above all, be able to enjoy long term competitive advantage and
economic success.
Without
sustainable competitive advantage, entrepreneurial quickly obliterate the
successful outcome of the initial effort. Sustainable competitive advantage
comes when entrepreneurs and entrepreneurial firms possess and utilize
resources and capabilities that are:
(i)
Valuable –because
these resources occurring within the environment as opportunity, effectively
and efficiently facilitate the implementation of the strategy.
(ii)
Rare-because the
resources are not enough to go round among competitors or those wishing to
enter into competition.
(iii)
Hard to copy-
because those who are competitors as well as those wishing to compete, cannot
duplicate the resource.
(iv)
Non-substitutable
–because no other resource can be used successfully as alternative.
Resources
that are useful in entrepreneurial context include:
·
Physical
resources
·
Reputational
resources
·
Organizational
resources
·
Financial resources
·
Intellectual and
Human resources
·
Technological
resources
Armed
with these resources in appropriate mix, an entrepreneur as well as an
entrepreneurial organization will achieve success and enjoy sustainable
competitive advantage in choosing areas of effort.