Resourcing - Resource Management Related Issues

Obtaining the resource and Protecting the resource.


Step 1: Obtaining the resource




Traded  resources



Mathews (2003) identifies three steps in the process of strategic resource acquisition: search, acquisition and absorption. Mathews (2003)  principally discusses the external acquisition of technology and know-how and  absorption is the most demanding phase of the whole process and requires the firm to possess the capabilities to integrate the resource (new technology) with the firm’s existing resource base. Cohen and Levinthal (1990) suggest that the firm’s absorptive capacity is largely a function of the firm’s level of prior related knowledge. In consequence, even when markets for resources exist, incumbents are somehow protected from competition by firms that do not use the same resources (in particular technologies) because these firms will find it difficult to absorb the resources they might acquire on the markets.

To be source of competitive advantage for its buyer a resource traded on a market must generate rents that the firm is able to appropriate. This will be the case when the firm purchases the resource for less than its marginal productivity when used in combination with the firm’s stock of other resources (i.e. resource cospecialization, synergies and complementarities increases the resource marginal productivity). When the resource price is above the firm’s reservation price, the firm may turn to internal resource creation. The firm will be able to purchase the resource for less than its marginal productivity when it possesses superior information, has bargaining power on the resource supplier or is lucky.


The firm may choose to build the resource internally when no market for the resource exists
or when external resource acquisition is more costly than resource building. Mathews (2003),
who sees external resource acquisition as an important strategic option, compares the
potential competitive advantages and disadvantages of external sourcing with those of internal
resource building. He shows how the features of the resource accumulation process (time
compression diseconomies, asset mass efficiencies, asset stock interconnectedness, prevention
of asset erosion and causal ambiguity) may favor the internal development of resources. According to Dierickx and Cool (1989), some factors may favor the internal development of resources, but it may turn to be competitive disadvantages in some circumstances.

Competition to be first may be an important competition process when the firm that develops
first the resource can get it protected by property rights or when first-mover advantages are
significant (e.g.. learning and network effects).


Step 2: Protecting the resource

Once a firm has acquired or built a new resource, it deploys the resource in order to make it contribute to the firm’s competitive advantage. Sooner or later competitors in the product market perceive the change in the firm’s competitive advantage and wonder about its source. When competitors have been able to identify which new resource the firm has acquired or built they may consider imitating  the resource or the resource functionality through acquisition or internal building.

However, the firm’s resource or the bundle of resources in which it is integrated may be
protected by barriers to imitation. A barrier to imitation, also called isolating mechanism,
barrier to resource mobility and resource protection barrier, is a phenomenon that restrains or
obstructs imitation by competitors (Reed and Defillippi, 1990). The isolating mechanisms were discussed by Rumelt, 1984; Ghemawat, 1986; Dierickx and Cool, 1989. Some of these mechanisms are discussed here.  Causal ambiguity regarding the source(s) of competitive advantage prevents competitors from knowing exactly what to imitate and how to do it. Even if competitors have been able to identify the source(s) of the firm’s competitive advantage, imitation may be costly to carry on or to carry on rapidly. Isolating mechanisms which make imitation costly for competitors are superior
access to resources or customers (e.g. reputation and buyer switching costs), minimum efficient scale large relative to market demand, intangible barriers to imitation (causal ambiguity, dependence on historical circumstances and social complexity), and strategic fit. Imitation in the short-term may be costly because of barriers to imitation such as legal restrictions  (patents, copyrights, trademarks, and government control over enry into markets) and diseconomies of time compression. In addition to protecting the firm’s resources early-mover advantages are isolating mechanisms that increase the economic power of the first-mover’s competitive advantage over time. Besanko, Dranove and Shanley (2000) present four isolating mechanisms that fall under this category: learning curve, network externalities, reputation for quality in the sale of experience goods, and buyer switching costs. Imitation is a competition process. Barriers to imitation will have different height for
different competitors because of factors such as the competitors’ competitive aggressiveness


 All isolating mechanisms erode over time, the firm must invest to maintain the barriers that protect its resources.


Besanko, David, Dranove, David and Shanley, Mark, Economics of Strategy, 2000, USA,
John Wiley & Sons, Inc.

Cohen, Wesley and Levinthal, Daniel, “Absorptive Capacity: A New Perspective On
Learning And Innovation”, Administrative Science Quarterly, March 1990, Vol. 35, No. 1,
128-152.

Dierickx, Ingemar and Cool, Karel, “Asset Stock Accumulation and Sustainability of
Competitive Advantage”, Management Science, 1989, Vol. 35, No. 12, 1504-1513.

Mathews, John, “Strategizing by firms in the presence of markets for resources”, Industrial
and Corporate Change, 2003, Vol. 12, No. 6, 1157-1193.

Reed, Richard and Defillippi, Robert, “Causal Ambiguity, Barriers to Imitation, and
Sustainable Competitive Advantage”, The Academy of Management Review, 1990, Vol.
15, No. 1, 88-102.

Rumelt, Richard, “Towards a strategic theory of the firm”, in Lamb, R., (Ed.), Competitive
Strategic Management, Prentice-Hall, 1984, Englewood Cliffs (NJ).

Rewrite once again.

Management by Values

Management by Values (MBV) differentiates between three terms: vision, mission and other operating values.

Every company should have explicitly defined two important groups of values or shared principles.

1. The basic values associated with its vision (Where are we going?) and its mission (What for? or Why does the company exist?).

2. The instrumental or operating values associated with the organization's way of thinking and way of doing things to meet the challenges of  understanding market, new product development, producing and selling.


The differentiation between basic or final values and operating values: The basic values give meaning and cohesion to the collective effort to move the company towards where it wants to go in the long-term. They clarify the reason for its existence,  the kind of business it wants to become, the differentiation that it will provide, any. Every business company has a double mission: one economic and , the other social; the second depends clearly on the first. The economic mission  is to earn revenues and distribute the share of partners in business in timely way and retain the profit. The social mission expresses the supply of specific products or services to the society and take care of other social obligations that demand that it takes care of the people involed in its business activities on the supply and distributive sides.

The operating value determine or define its "operating culture". They are the explicit principles of action that regulate the daily conduct of individual employees in their work to achieve the vision and mission of the company. Some examples include: mutual trust, customer satisfaction, honesty, teamwork, etc.


Construction of new beliefs and values as the foundation of new structures, new processes and new
human resources policies:

Managers have to "think through" what new beliefs and values must underpin the new organization structures, new internal processes (including introduction of new technologies), new colleagues (recruitment) new human resources policies (selection, compensation, training, etc.).

MBV helps the leadership in constructing a collective sense of what the company "should be", and some freely chosen and accepted "rules of the game", to channel future action. In this way, MBV provides a way for effecting transformation and introducing coherence, across the length and breadth of the company.

MBV proposes the need to manage values, to guard them as the scarce resources they undoubtedly are. Managing values means managing the culture (behavior, artifacts, values and beliefs) of the company, strengthening it day by day and always revitalizing it, to face the unknowns of the future.


In today’s ever-increasing globalized, complex, chaotic and fast-changing world, leaders need to develop and enshrine an organizational culture based on shared values.  The values have to be selected from the bedrock of mankind and distilled by millennia of the human civilizing experience

Dolan and colleagues (Dolan et al., 2006; Dolan et al., 2008; Dolan, 2011) proposed that the set of values followed by an organization has to be a combination of three facets (or axes):
1) economicpragmatic values;
2) ethical-social values;
and 3) emotional-developmental values.


• Economic-Pragmatic Values: This group of values are necessary to sustain the various organizational subsystems by allowing them to participate in the production-consumption system. Encompassing efficiency, performance standards and discipline etc. these values guide such activities as planning, directing and controlling.

• Ethical-Social Values emerge from norms and mores as to how people should conduct themselves in public and at work and go about their personal and professional relationships. Values such as honesty, integrity, respect and loyalty belong to this group.

• Emotional-Developmental Values create impetus for action. These values are related to intrinsic motivation: optimism, passion, perceived freedom, satisfaction and happiness are a few examples of such values. Deficiency in these values hinder involvement and and organizational commitment.

Simon L. Dolan and Yochanan Altman (2012) in Managing by Values: The Leadership Spirituality Connection, advocated that the fourth axis of spiritual dimension has to be added to three groups of values.


The task of an effective leader is to select the value set that is aligned with the mission and vision of the organization and manage so that they become shared values. Leader has the ability to influence his followers but he has to use his influence in a rational way and emotional way so that the followers achieve their economic and emotional needs under his guidance as an organization.

Practicing MBV

MBV is a process for making lasting, positive performance improvements impacting their culture, strategy, processes and people.

DEFINING VALUES

Leaders have to define the values for their organization first. Vaues become the basis for decision-making and action/behavior in the organization.

COMMUNICATING VALUES

Values have to be communicated and articulated. Everyone becomes informed about the organization’s mission, vision, values and aspirations—including their importance. This may include formal and informal meetings, resource materials for individuals and printed communications. Most important is the examples set by the leaders of the organization in living the values being communicated.

ALIGNING VALUES

This step takes lot of effort and time.  Behavioral rountines that reflects the values have to be developed and the members of the organization have to be provided opportunities to exhibit the recommended behavior through role plays and actual situations. Monitoring by the leaders to identify the deviations and to correct the deviations has to be done and this responsibility is to be given more and more people so that organization wide monitoring of value reflecting behavior becomes the norm in the organization.

Management by Value has to result in behaviour change to give results.




References

Dolan, Simon L. and García, Salvador, Managing by Values in the Next Milenium: Cultural Redesign for Strategic Organizational Change (June, 2000). Available at SSRN: http://ssrn.com/abstract=237628 or http://dx.doi.org/10.2139/ssrn.237628


Managing by Values: A Corporate Guide to Living, Being Alive, and Making a Living in the 21st Century
S. Dolan, S. Garcia, B. Richley
Springer, 28-Jul-2006 - Business & Economics - 236 pages


This book develops a new framework, Management by Values (MBV), for strategic and competitive advantage. Through its step-by-step guide to implementation, it serves as a necessary strategic leadership tool whose practical application will mine market potential through its relevance to individual organizational members.
https://books.google.co.in/books?id=AdXrBNp0mlUC

Simon L. Dolan and Yochanan Altman (2012), "Managing by Values: The Leadership Spirituality Connection", PEOPLE & STRATEGY, Volume 35/Issue 4

MBV Consultant
http://www.hopenn.com/company/managing-by-values/

Managing by Values
Kenneth H. Blanchard, Michael J. O'Connor, Jim Ballard
Berrett-Koehler Publishers, 1997 - Business & Economics - 154 pages


Today's business world is characterized by increasing change - technological, cultural, social, economic, and personal - the net effect of which is increasing anxiety, insecurity, and more pressure than perhaps ever before on today's employees, managers, and business owners. Managing By Values provides a practical, proven new solution for addressing these issues. Blanchard and O'Connor provide a framework for stability, continuity, and growth in the midst of these challenges. Written in the simple, direct story format that has become a trademark of Ken Blanchard's previous books, Managing By Values builds on the mass of diverse research, experiences, and literature on organizational, group, and individual performance and satisfaction. Based on the authors' research and applied real-world experience with client organizations, Managing By Values provides a practical, proven approach for how to give your organization the gift of a promising future while also discovering a way for all of its stakeholders to be satisfied in the process.
https://books.google.co.in/books?id=G-wYcokcKn8C

Productivity Orientation

As a result of these technological and cultural trends, consumers are constantly concerned with being productive, making progress, and accomplishing more in less time—a tendency that we label “productivity orientation.”
Productivity Orientation and the
Consumption of Collectable Experiences
ANAT KEINAN and RAN KIVETZ
JOURNAL OF CONSUMER RESEARCH, Inc. ● Vol. 37 ● April 2011



Jun Ye , Jesse King , (2016) "Managing the downside effect of a productivity orientation", Journal of Services Marketing, Vol. 30 Iss: 2, pp.238 - 254

Findings
The authors find evidence of a trade-off when a productivity orientation is adopted. A productivity orientation improves frontline service employee productivity performance but indirectly harms quality performance and job satisfaction. The authors find further evidence that trust in management helps to mitigate these negative effects.

This paper suggests that a productivity orientation must be managed carefully.
http://www.emeraldinsight.com/doi/abs/10.1108/JSM-10-2014-0351

Strategic Marketing Capabilities

Strategic marketing capabilities are the firm’s capabilities involved in sensing and
relating  to the market. Firms with strong strategic marketing capabilities  (a) acquire, develop and use market information to serve their market and (b) perform activities to connect to the  key customer and channel partners.


The strategic marketing capabilities construct include the following six categories:
(1) customer-driven capabilities,
(2) competitor-driven capabilities,
(3) supplier-driven capabilities,
(4) technology-monitoring capabilities,
(5) customer-relating capabilities and
(6) supplier-relating capabilities.

As a broad classification the first four components are a part of market-driven capabilities and customer-relating and supplier-relating capabilities are a part of market-relating capabilities.