The global pharmaceutical industry Essay Example

novel. For example, Selznick's (1957) notion of an organization's 'distinctive competence' closely relates to RBV. Furthermore, Chandler's (1962) concept of 'structure follows strategy', as well as Andrews' (1971) recommendation to internally evaluate strengths and weaknesses, contributed to identifying distinctive competencies.

The concept of considering a company as a collection of resources was initially presented by Penrose in 1959. According to Penrose, it is the diversity, rather than the similarity, of the productive services provided by its resources that give each company its unique characteristics. This notion of resource heterogeneity serves as the basis for the Resource-Based View (RBV) in strategic management. Wernerfelt's influential article in 1984 further popularized this perspective on resources. Wernerfelt proposed that analyzing companies based on their resources could offer distinct insights different from traditional viewpoints.

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Barney (1991) introduced a framework in 1991 that offered a more comprehensive approach to identifying the essential characteristics of firm resources for generating sustainable competitive advantage. These characteristics encompass whether resources are valuable, meaning they exploit opportunities and/or neutralize threats in a firm's environment; rare among a firm's current and potential competitors; inimitable; and non-substitutable. Numerous authors, such as Amit ; Schoemaker (1993), Mahoney ; Pandian (1992), Peteraf (1993), Rumelt (1984), and Dierickx ; Cool (1989), have adopted and expanded upon Barney's perspective by including factors such as resource durability, non-tradeability, and the idiosyncratic nature of resources.

The resource-based view of strategy has gained significant attention in the past decade, shifting the focus from an Industrial Organization (IO) economic perspective to internal firm resources as the main driver of

profitability and strategic advantage. This transition in academic and managerial attention has been influenced by multiple factors.

The rate of change regarding new products, new technology, and shifts in customer preferences has significantly increased. It is evident that a stationary observation of an evolving industry was not sufficient for devising a strategy in a progressively dynamic environment (Bettis & Hitt, 1995). Additionally, the boundaries of traditional industries are becoming less distinct as numerous industries merge or intersect, particularly in information technology-related fields (Bettis & Hitt, 1995; Hamel & Prahalad, 1994).

However, the conventional approach to strategic thinking in the IO field relies on stable industries, as do various strategic analysis tools such as competitor analysis, strategic groups, and diversification typologies. Moreover, the accelerated pace of change has compelled firms to respond more swiftly, as time is often regarded as a competitive advantage (Stalk & Hout, 1990). These factors indicate that firms may need to internally focus on identifying strategic opportunities while reevaluating their perception of industries and defining their competitors.

Resources and capabilities are important factors in determining the success of a business.

Resource-based research focuses on the concept that firms have varying strategic resources that they own and control. This differentiation is usually attributed to imperfections in the resource market, the inability to move resources, and the incapacity of firms to alter their resource stock over time. Consequently, each firm can be viewed as a unique combination of tangible and intangible resources and capabilities.

The Resource-Based View (RBV) focuses on assets that are closely tied to a company over a long period. These assets include financial, physical, human, commercial,

technological, and organizational resources that companies use to create and deliver products and services to customers. Resources can be categorized as either tangible (financial or physical) or intangible (such as employee knowledge, experiences and skills, firm reputation, brand name, and organizational procedures).

Capabilities are the firm's ability to deploy and coordinate various resources, typically combined with organizational processes, to achieve a desired outcome. These capabilities are firm-specific and developed over time through complex interactions among the firm's resources. They are information-based and intangible processes that provide enhanced productivity, strategic flexibility, and protection for the firm's final product or service.

Amit and Shoemaker (1993) differentiate a capability from a resource based on two main factors. The first factor is that a capability is unique to an organization and embedded within its processes, unlike a regular resource (Makadok, 2001). This means that if the organization were to dissolve, its capabilities would no longer exist, but its resources could potentially be acquired by a new owner.

If the Intel Corporation were to be dissolved, its microprocessor patents could still exist under new ownership. However, the company's ability to design new generations of microprocessors would likely disappear. A capability differs from a resource in that its main purpose is to enhance the effectiveness and productivity of a company's resources, serving as "intermediate goods" to help achieve its goals (Amit ; Shoemaker, 1993).

Asset accumulation is considered a developmental process.

In order to maintain competitiveness and growth, firms must continuously acquire, develop, and upgrade their resources and capabilities (Argyris, 1996a; Robins ; Wiersema, 1995; Wernerfelt ; Montgomery, 1988). One of the main challenges faced by

firms is determining the source of resources and capabilities that establish and enhance their sustainable competitive advantage. However, there has been limited discussion on how resources and capabilities are actually created in both theoretical and empirical work (Schulze, 1994; Zajac, 1992). Some researchers attribute capabilities to luck (Barney, 1986), while others believe they are the result of experiential learning by organizations (Nelson ; Winter, 1982; Singh ; Chang, 1993), and those more focused on management emphasize the role of leaders in organizations (Prahalad ; Hamel, 1991).