Resource Uncertainty and Sustainable Competitive Advantage : A Resource Base Theory Perspective

Environmental uncertainty has long been acknowledged in the strategy literature. Yet, Resource-Base-Theory (RBT), which argues that sustainable competitive advantage (SCA), rent, and value are generated by the company's unique resources (VRIO), rarely addresses the uncertainty emanating from resources. By integrating resource uncertanty into RBT, we identify and define the drivers of resource uncertainty and study their impact on corporate strategy using a Markovitz-based model that integrates rent-seeking and uncertainty-avoidance. SCA and rent can be improved by managing the uncertain performance of resources. We identify two managerial roles in managing resource uncertainty: synchronizing resources to realize synergistic opportunities, and balancing resources to compensate for deviations from planned operations. Thus, we argue that management must engage actively with intra-firm "resource risk management", in addition to its environmental risk-management tasks. We trace the origins of VRIO resources, concluding that risk-taking entrepreneurs initiate Schumpeterian creative destruction waves by introducing new VRIO resources