A bottom-up role of information asymmetry: opening the black-box of firms’ resource allocation mechanism

Purpose Drawing on the concept of resource-based theory of the firm; the purpose of this study is to analyze the influence of firms’ strategic approaches on the firm performance via indirect effect using a multilevel, bottom-up approach. Design/methodology/approach Using the survey method, the present study obtains data from 104 diversified manufacturing firms and analyzes the bottom-up effect of firms’ strategic approach on efficient resource allocation using Mplus. Findings Given the prevailing conditions, the study found that the motive of most firms is growth rather than risk mitigation or collaboration in the manufacturing sector of Pakistan. Furthermore, the study found that the bottom-level employees’ information asymmetry has a significant impact on the strategic resource allocation decision, which can lead to resource allocation inefficiency. Research limitations/implications Despite making a unique contribution, the present study has few limitations requiring researchers’ attention to in the forthcoming. These include a low amount of data, self-reporting technique and failure to include all the possible reason that could cause resource allocation inefficiency. Practical implications The present research has potential applications for managers of the manufacturing industry. First, the study alerts managers about the challenges of resource allocation. At the same time, this study provides critical implication for managing bottom-level employees. Originality/value The current study has made a sizable impression in the literature of resource-based theory of the firm by recommending a model that augments the theoretical foundation of strategic management of the firm. So, closely considering these insights would be helping for the firms for allocating resources efficiently in the manufacturing industry.

What Would the Field of Strategic Management Look Like if it Took the Stakeholder Perspective Seriously?

This chapter considers how core strategic management theories (resource-based theory, positioning theory and the theory of the firm) could be impacted by incorporating stakeholder considerations. Resource-based theory would need to adopt a model of profit appropriation in which stakeholders in addition to shareholders would have residual claims on a firm’s profits. Positioning theory’s traditional focus on threats would broaden to a focus on stakeholder-generated opportunities for profit generation. And stakeholder logic brings into question the importance of a theory of the firm for strategic management theory. These ideas (and others) are explored in this chapter as well as the implications for strategic management topics such as corporate diversification, mergers and acquisitions, and corporate governance. Last, the chapter briefly considers some broader implications for other fields of scholarship that use and apply strategic management theories to develop applications and explain phenomena of interest in their own respective fields.

Resource-Based Theory and the Value Creation Framework

This article explains how viewing resource-based theory within Brandenburger and Stuart’s value creation framework adds clarity to the theory as a whole and to its essential elements including the definition of its dependent variables, its approach to value creation, and its approach to the appropriation of economic value. Building on this foundation, the article addresses several questions about resource-based theory: Is it a theory or a view? Is resource-based theory tautological? Is resource-based theory static? How important are stakeholders within resource-based theory? Does resource-based theory constitute a theory of the firm? Does resource-based theory acknowledge industry structure’s role in explaining firm performance? Does resource-based theory incorporate uncertainty? Does resource-based theory have strong managerial implications? In accomplishing these tasks, the article sets the stage for the further evolution and application of resource-based theory.

The Emergence of Resource-Based Theory: A Personal Journey

I have recently been encouraged to share my personal reflections on the emergence of resource-based theory. In many ways, I have been reluctant to do so, at least in print, since any such effort would necessarily reflect my idiosyncratic view of this history. A complete discussion of both the people involved in the development of resource-based theory and the context within which this theory developed in the field of management would, I suspect, require the objective eye of a third party. In this way, I certainly do not qualify to write such a history. However, when the 30th anniversary of the publication of the Special Theory Forum on Resource-Based Theory in the Journal of Management came around, I thought it might be time to put down on paper—a quaintly old-fashioned phrase—my own recollections of this history. In doing so, I decided to make no pretense that this is an objective or rigorous historical effort. Rather, these are the reflections of a strategic management scholar, coming toward the end of his career, about a time, now over 30 years ago, when resource-based theory did not yet exist. I have not tried to verify my reflections by appeal to historical documents, except for any papers I and others have published. I did pass this essay by many of the people mentioned in it—to see if my memories were consistent with their memories—but that is as far as I have gone in verifying the “facts” I share in this essay.

EXPLORING COGNITIVE RENT : A STRATEGY FOR COUNTERING ALGORITHMS

Covid-19 and the increasing risk of disruption caused by algorithms have led companies to reconsider their market strategy and seek out new competitive advantages. Building up cognitive rent could be one way of achieving this, as long as businesses are able to successfully explore and exploit the knowledge they acquire. This article focuses exclusively on exploring and acquiring cognitive rent, using the resource-based theory of the firm that considers knowledge as a way to drive a company’s ability to compete. Cognitive rent offers theoretical, operational, and strategic elements that enable organisations to improve the quantity and the quality of their resources. This potentially provides inroads for new competitive advantage and protection against the risk of market platformisation.