Competitive dynamics and economic learning: an extended resource-based view

In this paper a conceptual framework for the analysis of economic learning is developed. Economic learning, by analogy with organizational learning, results in the development of competences, or capabilities, which rest on a foundation of economic resources, from which value is generated, and economic routines, through which resources are utilized. It is the mobility of resources, and their exchange and production dynamics, along evolutionary pathways, which underpins the plausibility of a notion of economic learning. The paper elaborates this framework as a “resource-based view” of the economy, as an extension of the resource-based view (RBV) of the firm. This framework turns out to be surprisingly productive of insights. In the first place, it generates an account of firms as encapsulated bundles of resources, which reproduces the strategic insights of the conventional resource-based view of the firm, namely that firms base their success in their distinctive competences which are grounded in their resources and routines. But it does so without remaining trapped in an “internalist” perspective, which has to date been a serious limitation on the wider application of the RBV. On the contrary, an extended resource-based perspective sees firms as being able to draw on a wide array of external resources, through both market-mediated transactions and through various kinds of resource exchange and resource leverage relations that link firms in value-chains that criss-cross the economy. Unlike the conventional RBV, which remains tied to the analysis of the resource choices of incumbents, this extended view applies as much to challengers as to incumbents, generating an evolutionary perspective on the competitive dynamics through which industrial sectors rise and fall. The framework developed generates an account of the resource dynamics that underpin production of goods and services – including resource propagation, diffusion and recombination. These processes encompass evolutionary pressures, experienced through resource variation, selection and retention. Entrepreneurial initiatives take the form of resource recombinations, while resource innovation captures the creation of new economic resources, such as technological standards. Such a perspective brings into focus the resource cycles that drive real economies, as well as the resource specialization and configuration, within firms and between firms, that translates into enhanced or diminished economic performance. Within such a framework, the capturing and accelerated diffusion of resources, and the development of economic routines for efficiently utilizing resources, turns out to have a convenient interpretation as “economic learning.” The resulting synthesis, which is here characterized as an “extended” resource-based view of economic dynamics, is fundamentally Schumpeterian, Penrosian and Richardsonian in inspiration. It is Schumpeterian in its emphasis on the restless dynamics of resources. It is Penrosian in its view of firms’ capabilities being built from a resource base, and put to use in generating value through organizational routines. It is Richardsonian in its view that economic performance ultimately depends on the changing configuration of resources in the economy, both within and between firms. This extended resource-based view promises to take the analysis of competitive dynamics further along the new, empirically-based path that has already been blazed by evolutionary and dynamic capabilities approaches to economics.