Abstract
Purpose – This paper aims to argue that the principal components of the Resource-Based View (RBV) as a theory of sustained competitive advantage are not a sufficient basis for a complete and consistent theory of firm behaviour. Two missing elements are value theory and accountability mechanisms.
Design/methodology/approach – The paper proposes a link between value theory and accountability using a Resource Value-Resource Risk perspective as an alternative to the Capital Asset Pricing Model. The link operates first from the labour process, where value is created but is imperfectly observable by intra-firm mechanisms of organizational control and outside governance arrangements without incurring monitoring costs. Second, it operates through contractual arrangements which impose fixed cost structures on activities with variable revenues.
Findings – The paper thereby explains how value originates in risky and difficult to monitor productive processes and is transmitted as rents to organizational and capital market constituents. It then reviews recent contributions to the RBV, arguing that the proposed new approach overcomes gaps inherent in the alternatives, and thus offers a more complete and integrated view of firm behaviour.
Originality/value – The RBV can become a coherent theory of firm behaviour, if it adopts and can integrate the labour theory of value, associated measures of risk arising from the labour process and mechanisms of accountability.
Design/methodology/approach – The paper proposes a link between value theory and accountability using a Resource Value-Resource Risk perspective as an alternative to the Capital Asset Pricing Model. The link operates first from the labour process, where value is created but is imperfectly observable by intra-firm mechanisms of organizational control and outside governance arrangements without incurring monitoring costs. Second, it operates through contractual arrangements which impose fixed cost structures on activities with variable revenues.
Findings – The paper thereby explains how value originates in risky and difficult to monitor productive processes and is transmitted as rents to organizational and capital market constituents. It then reviews recent contributions to the RBV, arguing that the proposed new approach overcomes gaps inherent in the alternatives, and thus offers a more complete and integrated view of firm behaviour.
Originality/value – The RBV can become a coherent theory of firm behaviour, if it adopts and can integrate the labour theory of value, associated measures of risk arising from the labour process and mechanisms of accountability.
| Original language | English |
|---|---|
| Pages (from-to) | 647-670 |
| Number of pages | 33 |
| Journal | Accounting, Auditing and Accountability Journal |
| Volume | 23 |
| Issue number | 5 |
| DOIs | |
| Publication status | Published - 2010 |
Keywords
- Resources; Risk management; Labour; Competitive advantage