ADMS 4900 week 3 note

Chapter 3

Analyzing internal environment

a) Internal environment analysis looks at how the bundles and organization of internal
resources and activities drive firm performance
-Resource-based view of the firm (RBV)

Resource-based view of the firm (RBV)

a) Why do firms in the same industry vary in performance over time?
b) Two critical assumptions of the RBV
1. Resource heterogeneity
2. Resource immobility

Resources
a) Tangible resources - easy to identify, touchable, can be quantify
b) Intangible resources - hard to quantify or identify
1. Intellectual properties
2. Human capital
3. Social capital

Social capital
a) What is social capital? -> web of relationships allows actors to achieve desired
outcome
b) Where does social capital come from/how does social capital come about? ->
through repeated interaction & mutual understanding
c) Types of social capital
1. Relational social capital
2. Structural social capital

Relational social capital

a) Relational social capital looks at relationships between actors
b) Strength of ties (i.e., relationships)
c) Strong ties vs weak ties

Structural social capital

a) Structural social capital looks at the structure of relationships among actors
b) At the individual level – actor’s position in the network
Centrality -> quicker access to information
Structural hole -> position to connect 2 networks, transformational
center, access to diverse info
c) At the network level
Open vs close (close -> everyone knows each other&information flows
fast, open -> members do not know each other, information flows
slow) close network is better
Organizational capabilities
a) Another factor contributing to performance difference is how firms
allocate/use/integrate resources
b) How firms allocate/use/integrate resources is related to organizational capabilities
(e.g., R&D cap, marketing cap, etc).
c) How do firms develop capabilities?

VRIO analysis

VRIO - barriers for imitation

a) Unique historical conditions
b) Causal ambiguity
c) Social complexity
d) Legal protection (e.g., patents)
e) These make imitation difficult in terms of timing and cost
f) Forms of imitation: direct duplication and substitution