Resource Based Perspective
This chapter gives a detailed overview of the resource based perspective and how this may be relevant in the management of facilities and support services.
The manner in which organisations use their resources to achieve and/or sustain a desired level of performance positions this research within a resource based framework. This perspective considers organisational competence and capabilities in terms of the use of resources. .
Traditionally the resources considered within this approach have been
'… financial, physical, human, organisational, technological and intangible' citing Grant (1991 and Hofer and Schendel 1978)
In considering resource deployment, organisations need to identify the key resources and how these can be used to enhance their critical capabilities. . Over time, such an understanding will allow an organisation to exploit these competencies to gain maximum advantage.
With respect to services, these form part of the organisations intangible assets and resources. This is highlighted by Pitt and Clarke (1999), who propose that
'Organizational competence implies a co-ordinated, collective skill or capacity. Resource based thinking about the firm equates capability with the firm's exploitation of its tangible and intangible value-generating assets and resources. Intangible assets include the personal knowledge of individuals and collective knowledge lodged in the firm's architecture of internal and external relationships. This knowledge is manifest in the firm's dynamic, innovative routines and outputs, including its reputation. .
Underpinning the core competencies are a range of operational capabilities, defined by Winter as
' a high-level routine (or collection of routines) that, together with its implementing input flows, confers upon an organization's management a set of decision options for producing significant outputs of a particular type'.
Thus, organisational capabilities are determined by how the organisation adapts and configures its resources to achieve a desired outcome, or desired level of performance. Therefore, by varying the input resources, an evaluation can be made of the impact on performance and, if appropriate, once a desired level is reached, measurements can be checked to ensure that the output level is sustained over time.
Helfat and Peteraf (2003) suggest that in order to qualify as a capability an activity must
'work in a reliable manner. Taking a first cut at an activity, does not constitute a capability'
'a minimum level of functionality that permits repeated, reliable performance of an activity'.
What constitutes a capability will be dependent on which service process is under consideration. The resources that form part of the capability can be tangible or intangible. Capabilities can be achieved at either individual or team level. Dynamic in nature, they are context and time specific, and therefore subject to regular review, as part of the performance measurement and management process. , 2002).
A fundamental element of determining and measuring performance consistency and reliability over time ie performance capability, is the use of an objective and robust assessment methodology. There are a wide range of performance measurement and management methodologies available, which take both a strategic or operational focus. Specifically, six methodologies have been selected within this research to assess facilities management and support services, in order to determine whether any methodology is particularly appropriate for a given service or group of services that share common characteristics, for example a common customer base or on an individual service basis. The specific methodologies being
Operational:
Benchmarking.
Control charts/statistical process control.
Data Envelopment Analysis.
Six Sigma.
Strategic:
Balanced Scorecard.
Performance Prism.
Organisational capabilities may change over time for a variety of reasons, for example new technology, change in staff or management practice. Helfat and Peteraf (2003) propose that because of their dynamic nature organisational capabilities have a life cycle, initially going through the stages of founding, development, and maturity. Development occurs over time and may end because
'capabilities may have inherent limits to what any team could achieve with available technologies, inputs, workers, and state of managerial practice. Teams also may satisfice and cease capability development at some level of skilfulness which the team perceives as good enough. The team leaders (managers) may make the final decision to cease capability development'.
Having reached the stage of maturity, Helfat and Peteraf (2003) suggest that the subsequent stages in the capability life may include,
'retirement (death), retrenchment, renewal, replication, redeployment, and recombination'.
Much of the research surrounding the use of performance measurement and management methodologies propose that organisations should use such techniques to achieve continuous improvement. However, this poses the question as to whether continuous improvement is either realistic or (always) necessary? The capability life cycle appears to support and broaden the viewpoint of continuous development, within a more realistic framework. It accepts that activities considered a capability at one stage may become obsolete or require significant change to retain that status at some future date, and recognises the service provider can and does have a substantial impact on the capability of the service process.
Processes can and should be developed, monitored, and reviewed and amended in order to optimise use of operational resources and to provide a level of service that either satisfies, or at least does not dissatisfy, its customers. In terms of 'capability', this would move the process from founding, through development to maturity. Therefore if the service has been developed and at maturity level is optimising resource usage and meeting customer expectations, it may not be worthwhile seeking to change it. From a resource based view, such changes would seem unwarranted. Realistically it would appear more relevant to measure and review service provision and amend this when changes in context suggests that change is required, for example to exploit new ways of working through new technology, or changing customer requirements.
Summary
The manner in which organisations use its resources to achieve and/or sustain a desired level of performance positions this research within a resource based framework.
Specifically, the resource based concept considers how an organisation deploys its resources as part of the service process to achieve a desired level of performance, and the development of service competencies and process capabilities which underpin the variation in performance levels. Such competencies and capabilities may allow an organisation to achieve competitive advenage for the core business, or in the case of support services to ensure that although not seeking such advantage themselves, they do not prove a source of disadvantage to the core business.
Local authorities have a requirement to demonstrate accountability, stakeholder value and customer satisfaction. Furthermore, and set within a context of on going resource constraints and increasingly demanding and knowledgeable customers/stakeholders, service managers will also need to ensure that they use their resources in a way which is innovative, learning, and has a 'market orientation' .
Whilst competition for some services within the public sector, may be less than for private sector counterparts, if public sector organisations, or services within them, fail to sustain their 'competitive advantages, for non statutory services, such as the soft FM services may either be transferred to another provider or removed from the portfolio of services which the local authority is responsible for. Therefore it is key that managers determine which are their most 'profitable' resources - or capabilities in their stakeholder's view. Lockett, et al highlight that it is key therefore that managers not only 'understand the functionality of their resources, they must also comprehend the capacity for usage their resources permit . How the organisation, or service manager deploys their resources is an essential component of their overall capability, ie the ability to 'undertake a productive activity, which is created through the simultaneous deployment of resources and factors of production' , cited in . An understanding of how to use the resources/capabilities will better enable a service provider to meet stakeholder demand. Only by assessing the resources utilised will the manager be able to determine if the service provision is tenable. As suggested by Lockett, Thompson et al (2009) an assessment of a particular level of service performance, and its associated resources, enables a manager to make sense of an manage the ' known unknowns' and hence be aware of its strengths and weaknesses. The customer/stakeholder will be interested in the organisation/service manager's ability to satisfy their wants, in a time of resource constraints, using the minimum possible resources, or at least not being wasteful of resources.
Eisenhardt, K. M. and J. A. Martin (2000). "Dynamic Capabilities: What are they." Strategic Management Journal 21: 1105-1121.
Foss, N. J. (1997). Resources Firm and Strategies - A Reader in the Resource BAsed Perspective, Oxford University Press.
Helfat, C. E. and M. A. Peteraf (2003). "The Dymanic Resource-Based View: Capability Lifecycles." Strategic Management Journal 24: 997-1010.
Henri, J.-F. (2006). "Management Control Systems and Strategy: A resource based perspective " Accounting, Organizations and Society 31: 529-558.
Lockett, A., S. Thompson, et al. (2009). "The development of the resource-based view of the firm: A critical appraisal." International Journal of Management Reviews 11(1): 9-28.
Over the last 20 years, the resource-based view (RBV) has reached a pre-eminent position among theories in the field of strategy, but debate continues as to its precise nature. This paper contributes to the debate by critically reviewing the development of the RBV to date. The critical appraisal examines the development of the RBV in terms of theory, method, empirical evidence and practical insights. It is contended that the permeable and eclectic nature of the RBV stems from its being a theory about what firms are and how they function, and that its popularity is due to an absence of limiting behavioural assumptions. Finally, the authors provide their own subjective views on where they think RBV scholars should focus their efforts in the future.
Mahoney, J. T. (1995). "The Management of Resources and the Resource of Management." Journal of Business Research 33: 91-101.
Pitt, M. and K. Clarke (1999). "Competing on Competence: A knowledge perspective on the management of strategic innovation." Technology Analysis & Strategic Management 11(3): 301-316.
Teece, D., G. Pisano, et al. (1997). "Dynamic Capabilities and strategic management." Strategic Management Journal 18(7): 509-533.
Teece, D. J., G. Pisano, et al. (1997). "Dynamic Capabilities and strategic management " Strategic Management Journal 18: 509-533.
Winter, S. G. (2000). "The Satisficing Principle in Capability Learning." Strategic Management Journal 21: 981-996.
Winter, S. G. and M. Zollo (1999). From Organisational Routines to dynamic capabilities, The Wharton School, Philadelphia.
Zott, C. (2003). "Dynamic capabilities and the emergency of intra-industry differential firm performance: insights from a simulation study." Strategic Management Journal 24: 97-125.
