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A commentary essay on “Resources prospectively: How actors mobilize resources in business settings”
Journal of Business Research 65 (2012) 175–176
Contents lists available at ScienceDirect
Journal of Business Research
A commentary essay on “Resources prospectively: How actors mobilize resources in business settings” Anna-Greta Nyström ⁎ Åbo Akademi University, School of Business and Economics, Henrikinkatu 7, 20500 Turku, Finland
a r t i c l e
i n f o
Article history: Received 1 July 2009 Received in revised form 1 August 2010 Accepted 1 December 2010 Keywords: Resources Relationships Roles Mobilizing
a b s t r a c t This commentary essay explores the topic of mobilizing resources and specifically addresses the article “Resources prospectively: How actors mobilize resources in business settings” (Finch et al., in this issue). This article views access to resources as the foundation for interaction between firms and as mediated via developing business relationships. The article by Finch, Wagner and Hynes adds insights into this particular context by investigating the role of the individual in mobilizing resources and initiating a discussion on how resources are created. © 2011 Elsevier Inc. All rights reserved.
1. Introduction The topic of resource interaction and specifically mobilizing resources is multidimensional in many ways. The ARA-model (Håkansson and Snehota, 1995) is based on five characteristics. Firstly, actors (defined as either an individual, a group of people, a division within a firm, a firm, a group of firms or any type of organization) control resources. Secondly, actors develop relationships through resource exchange processes. Thirdly, actors base their activities on control over resources. Fourthly, actors are goal oriented in the sense that they aim at increasing control over the network and fifthly, actors have differential knowledge about activities, resources and actors in the network. The aim of the model has been to give a picture of the most important factors concerning single business relationships and how they are related to a larger business network. The model shows that business relationships allow firms to exploit and develop their own resource base by linking it to the mobilized resource of other actors (Turnbull and Wilson, 1989).
2. Reasons for entering business relationships The reason for entering into business relationships can, therefore, be linked to resource acquisition needs and their fulfillment through interactions with other actors (Donaldson and O'Toole, 2007). This perspective has been proposed as both an outcome and a further
⁎ Tel.: + 358 2 215 3521; fax: + 358 2 215 4806. E-mail address: anna-greta.nystrom@abo.fi. 0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2011.05.018
development of the resource-based view (Barney, 1991; Wernerfelt, 1984). However, the resource-based view and the industrial network approach differs in terms of the latter emphasizing the firm's constant interaction with other firms, and that its resources interact with other firms’ resources. Dubois and Torvatn (2002) argue that as a result of this interaction, resources are shaped and adapted to each other. Consequently, the firms try to utilize and understand this resource interaction with the goal to adapt its boundaries towards these other actors. The article by Finch, Wagner and Hynes puts special focus on the resource layer - so far, only a small number of studies have focused specifically upon the resource layer, mainly in investigating resource development, resource activation and resource utilization (e.g. Håkansson and Waluszewski, 2002; Harrison and Håkansson, 2006; Hjelmgren and Dubois, 2002; Holmen, 2001; Wedin, 2001). The resource-based view and specifically the findings of Penrose (1959) contribute largely to our understanding of what resources are and stand for, how they are categorized and tells of their function in business settings. According to Håkansson (1987), resources consist of (1) physical assets (machinery, material etc.), (2) financial assets and (3) human assets (labor, knowledge and relationships). Knowledge and experience of resources are vital for the company. By combining resources new knowledge can emerge which gives possibilities for new and improved combinations. New information on how to handle resources can provide companies with competitive advantages as they change or break old activity cycles and lead to development and change in the network. Håkansson furthermore points out that resources have value only in combination with other resources. Resources have no intrinsic value, an argument proposed by Penrose already in 1959; the service rendered by a resource is the primary concern. However, how exactly do resources come to create value for firms? We still need more
176
A.-G. Nyström / Journal of Business Research 65 (2012) 175–176
research reporting and describing exactly what resources mean in different settings and for different firms, how they are constructed, understood and made visible, as well as the role resources play in business network dynamics. The article by Finch et al. does not directly address this issue, but indirectly the authors lead us to a set of interesting and important questions. They clearly indicate that the topic of mobilizing resources needs further research. By linking the discussion of mobilizing resources with the underlying reasons, that is, transforming social capital into economic capital, the authors have found an interesting research gap. Namely, how exactly do resources arise? Can the process of creating resources through interaction be made visible? The article supports the notion that resources are created in interaction between individuals, both on a firm and on an industrial level. The question that arises out of this statement is, however, when exactly does a resource become a resource and to whom (which business network actors)? 3. Combining Resources Ivens et al. (2009) as well as Ritter and Gemünden (2003) suggest that the effectiveness of a firm's performance is directly dependent on its ability to create value through combining resources, also those that it does not own. This means that business relationships themselves become critical resources. Hjelmgren and Dubois (2002) argue that this assumption implies two things. First, resources cannot be analyzed as isolated items, and second, the connections or ties between resources are of central importance for any understanding of their development. Hence, there is always a sensemaking process (cf. Weick, 1979, 1995; Weick and Sutcliffe, 2005) connected to each and every resource identified in inter-organizational interaction, as we are dealing with individuals in every situation; human beings that interpret their environment and create their reality. This view also corresponds with the notion of resources and their features never being fully understood in advance (cf. Baraldi and Strömsten, 2009). Rather, only using the resources makes possible knowing the resource. The understanding of a resource item and what it means and symbolizes, or into which kind of benefit it transforms for any actor in the business relationship or network, emerges through interaction, and interaction between actors leads to knowledge of resources available to those actors. Only through interaction can the potential and whole picture unfold, especially of intangible resources such as human assets. One might ask whether firms then are forced to interact in order to find and/or create resources, especially in times of change and, for instance, technological breakthroughs that force actors to enter new domains or broaden their offerings. Understanding how resources are created and talked into existence would therefore provide valuable information on the dynamics of business relationships as well as resource combination and activation. Also, the article raises the question of the meaning of the business setting in understanding the mobilization of resources. The authors combine social and economic capital, indicating that social capital can be a prerequisite for mobilizing resources. Drawing upon social capital, actors may create resources as they interact based on ties they have created. The cases described in the article also highlight this issue well. However, in the article, it is not always clear what the focal resource in each case is — can a project management and communications system (a software product), that enables the sharing of knowledge, be viewed as a resource or is it the knowledge sharing in itself that should be considered a resource? Knowledge is a resource, but on the other hand, one can assume that knowledge sharing is a prerequisite for any relationship, and communication is (or should be) natural at least between actors within the same business unit, firm or industry specific organization. All cases presented in the article have communication and
knowledge sharing in common, as well as the fact that the individual is the one doing the mobilizing. An important way to complement this article can be thicker descriptions of what mobilizing resources means and, especially, how resources are created and shaped through social interaction (the social and economic capital dimension). What kinds of resources are created in interaction? The article by Finch et al. describes abstract resources and one can assume that their indirect benefits exist, but merely as a result of communication between individuals within the firm (two cases) and individuals representing different firms (one case). Thus, further research might focus on logically explaining how resources become economical and calculable. Knowledge sharing can result in new products or business concepts, which in turn has the potential to become resources for those actors involved. Again, interaction creates the resource when individuals have gone through the process of understanding, learning and evaluating the potential of that particular resource, may it be a physical artifact, an abstract idea or a financial asset. The most important contribution of the article is, not only that resources are created during the course of interaction, but also that this is exemplified on the level of the individual as a business actor. The article therefore adds valuable input to research about business network dynamics. The article offers a different perspective on resource interaction, as it does not address the interaction of resources per se; but the article proposes that interaction creates resources rather than the resource/resources being the reason for interaction in the first place. Understanding the logic behind such a notion offers valuable information as to, for instance, managing networks of resources. The article furthermore describes how knowledge-sharing is the key when it comes to value-creation and the development of strategic capabilities within the firm as well as between firms. For further research, the role of the individual and the process of creating resources in interaction should be the main focus concerning the topic of resource interaction.
References Baraldi E, Strömsten T. Controlling and combining resources in networks — from Uppsala to Stanford and back again: the case of a biotech innovation. Ind Mark Manage 2009;38:541–52. Barney JB. Firm resources and sustained competitive advantage. J Manage 1991;17: 99–120. Donaldson B, O'Toole T. Strategic market relationships2nd ed. Chichester, West Sussex: John Wiley & Sons Ltd; 2007. Dubois A, Torvatn T. Towards a network theory of the firm. J Custom Behav 2002;1(3): 433–48. Harrison D, Håkansson H. Activation in research networks: a comparative study of ports. J Bus Ind Mark 2006;21(4):231–8. Hjelmgren D, Dubois A. Resource development and interaction — the function of partial connections. Proceedings of the 18th Annual IMP Conference, Dijon, France; 2002. Holmen, E. (2001). Notes on a conceptualisation of resource-related embeddedness of interorganisational product development. Dissertation, Institute for Marketing, University of Southern Denmark, Denmark. Håkansson H. Industrial technological development: a network approach. London: Croom Helm; 1987. Håkansson H, Snehota I. Developing relationships in business networks. London: Routledge; 1995. Håkansson H, Waluszewski A. Managing technological development — IKEA, the environment and technology. London: Routledge; 2002. Ivens BS, Pardo C, Salle R, Cova B. Relationship keyness: the underlying concept for different forms of key relationship management. Ind Mark Manage 2009;38:513–9. Penrose E. The theory of the growth of the firm. Oxford: Basil Blackwell; 1959. Ritter T, Gemünden HG. Network competence: its impact on innovation success and its antecedents. J Bus Res 2003;56(9):745–55. Turnbull PW, Wilson D. Developing and protecting profitable customer relationships. Ind Mark Manage 1989;18:1–6. Wedin, T. (2001). Networks and demand. The use of electricity in an industrial process. Dissertation, Department of Business Studies, Uppsala University, Sweden. Weick KE. The social psychology of organisation2nd ed. . New York: Random House; 1979. Weick KE. Sensemaking in organizations. Thousand Oaks, CA: Sage Publications; 1995. Weick KE, Sutcliffe KM. Organizing and the process of sensemaking. Organiz Sci 2005;16(4):409–21. Wernerfelt B. A resource-based view of the firm. Strateg Manage J 1984;5(2):171–80.
Contents lists available at ScienceDirect
Journal of Business Research
A commentary essay on “Resources prospectively: How actors mobilize resources in business settings” Anna-Greta Nyström ⁎ Åbo Akademi University, School of Business and Economics, Henrikinkatu 7, 20500 Turku, Finland
a r t i c l e
i n f o
Article history: Received 1 July 2009 Received in revised form 1 August 2010 Accepted 1 December 2010 Keywords: Resources Relationships Roles Mobilizing
a b s t r a c t This commentary essay explores the topic of mobilizing resources and specifically addresses the article “Resources prospectively: How actors mobilize resources in business settings” (Finch et al., in this issue). This article views access to resources as the foundation for interaction between firms and as mediated via developing business relationships. The article by Finch, Wagner and Hynes adds insights into this particular context by investigating the role of the individual in mobilizing resources and initiating a discussion on how resources are created. © 2011 Elsevier Inc. All rights reserved.
1. Introduction The topic of resource interaction and specifically mobilizing resources is multidimensional in many ways. The ARA-model (Håkansson and Snehota, 1995) is based on five characteristics. Firstly, actors (defined as either an individual, a group of people, a division within a firm, a firm, a group of firms or any type of organization) control resources. Secondly, actors develop relationships through resource exchange processes. Thirdly, actors base their activities on control over resources. Fourthly, actors are goal oriented in the sense that they aim at increasing control over the network and fifthly, actors have differential knowledge about activities, resources and actors in the network. The aim of the model has been to give a picture of the most important factors concerning single business relationships and how they are related to a larger business network. The model shows that business relationships allow firms to exploit and develop their own resource base by linking it to the mobilized resource of other actors (Turnbull and Wilson, 1989).
2. Reasons for entering business relationships The reason for entering into business relationships can, therefore, be linked to resource acquisition needs and their fulfillment through interactions with other actors (Donaldson and O'Toole, 2007). This perspective has been proposed as both an outcome and a further
⁎ Tel.: + 358 2 215 3521; fax: + 358 2 215 4806. E-mail address: anna-greta.nystrom@abo.fi. 0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2011.05.018
development of the resource-based view (Barney, 1991; Wernerfelt, 1984). However, the resource-based view and the industrial network approach differs in terms of the latter emphasizing the firm's constant interaction with other firms, and that its resources interact with other firms’ resources. Dubois and Torvatn (2002) argue that as a result of this interaction, resources are shaped and adapted to each other. Consequently, the firms try to utilize and understand this resource interaction with the goal to adapt its boundaries towards these other actors. The article by Finch, Wagner and Hynes puts special focus on the resource layer - so far, only a small number of studies have focused specifically upon the resource layer, mainly in investigating resource development, resource activation and resource utilization (e.g. Håkansson and Waluszewski, 2002; Harrison and Håkansson, 2006; Hjelmgren and Dubois, 2002; Holmen, 2001; Wedin, 2001). The resource-based view and specifically the findings of Penrose (1959) contribute largely to our understanding of what resources are and stand for, how they are categorized and tells of their function in business settings. According to Håkansson (1987), resources consist of (1) physical assets (machinery, material etc.), (2) financial assets and (3) human assets (labor, knowledge and relationships). Knowledge and experience of resources are vital for the company. By combining resources new knowledge can emerge which gives possibilities for new and improved combinations. New information on how to handle resources can provide companies with competitive advantages as they change or break old activity cycles and lead to development and change in the network. Håkansson furthermore points out that resources have value only in combination with other resources. Resources have no intrinsic value, an argument proposed by Penrose already in 1959; the service rendered by a resource is the primary concern. However, how exactly do resources come to create value for firms? We still need more
176
A.-G. Nyström / Journal of Business Research 65 (2012) 175–176
research reporting and describing exactly what resources mean in different settings and for different firms, how they are constructed, understood and made visible, as well as the role resources play in business network dynamics. The article by Finch et al. does not directly address this issue, but indirectly the authors lead us to a set of interesting and important questions. They clearly indicate that the topic of mobilizing resources needs further research. By linking the discussion of mobilizing resources with the underlying reasons, that is, transforming social capital into economic capital, the authors have found an interesting research gap. Namely, how exactly do resources arise? Can the process of creating resources through interaction be made visible? The article supports the notion that resources are created in interaction between individuals, both on a firm and on an industrial level. The question that arises out of this statement is, however, when exactly does a resource become a resource and to whom (which business network actors)? 3. Combining Resources Ivens et al. (2009) as well as Ritter and Gemünden (2003) suggest that the effectiveness of a firm's performance is directly dependent on its ability to create value through combining resources, also those that it does not own. This means that business relationships themselves become critical resources. Hjelmgren and Dubois (2002) argue that this assumption implies two things. First, resources cannot be analyzed as isolated items, and second, the connections or ties between resources are of central importance for any understanding of their development. Hence, there is always a sensemaking process (cf. Weick, 1979, 1995; Weick and Sutcliffe, 2005) connected to each and every resource identified in inter-organizational interaction, as we are dealing with individuals in every situation; human beings that interpret their environment and create their reality. This view also corresponds with the notion of resources and their features never being fully understood in advance (cf. Baraldi and Strömsten, 2009). Rather, only using the resources makes possible knowing the resource. The understanding of a resource item and what it means and symbolizes, or into which kind of benefit it transforms for any actor in the business relationship or network, emerges through interaction, and interaction between actors leads to knowledge of resources available to those actors. Only through interaction can the potential and whole picture unfold, especially of intangible resources such as human assets. One might ask whether firms then are forced to interact in order to find and/or create resources, especially in times of change and, for instance, technological breakthroughs that force actors to enter new domains or broaden their offerings. Understanding how resources are created and talked into existence would therefore provide valuable information on the dynamics of business relationships as well as resource combination and activation. Also, the article raises the question of the meaning of the business setting in understanding the mobilization of resources. The authors combine social and economic capital, indicating that social capital can be a prerequisite for mobilizing resources. Drawing upon social capital, actors may create resources as they interact based on ties they have created. The cases described in the article also highlight this issue well. However, in the article, it is not always clear what the focal resource in each case is — can a project management and communications system (a software product), that enables the sharing of knowledge, be viewed as a resource or is it the knowledge sharing in itself that should be considered a resource? Knowledge is a resource, but on the other hand, one can assume that knowledge sharing is a prerequisite for any relationship, and communication is (or should be) natural at least between actors within the same business unit, firm or industry specific organization. All cases presented in the article have communication and
knowledge sharing in common, as well as the fact that the individual is the one doing the mobilizing. An important way to complement this article can be thicker descriptions of what mobilizing resources means and, especially, how resources are created and shaped through social interaction (the social and economic capital dimension). What kinds of resources are created in interaction? The article by Finch et al. describes abstract resources and one can assume that their indirect benefits exist, but merely as a result of communication between individuals within the firm (two cases) and individuals representing different firms (one case). Thus, further research might focus on logically explaining how resources become economical and calculable. Knowledge sharing can result in new products or business concepts, which in turn has the potential to become resources for those actors involved. Again, interaction creates the resource when individuals have gone through the process of understanding, learning and evaluating the potential of that particular resource, may it be a physical artifact, an abstract idea or a financial asset. The most important contribution of the article is, not only that resources are created during the course of interaction, but also that this is exemplified on the level of the individual as a business actor. The article therefore adds valuable input to research about business network dynamics. The article offers a different perspective on resource interaction, as it does not address the interaction of resources per se; but the article proposes that interaction creates resources rather than the resource/resources being the reason for interaction in the first place. Understanding the logic behind such a notion offers valuable information as to, for instance, managing networks of resources. The article furthermore describes how knowledge-sharing is the key when it comes to value-creation and the development of strategic capabilities within the firm as well as between firms. For further research, the role of the individual and the process of creating resources in interaction should be the main focus concerning the topic of resource interaction.
References Baraldi E, Strömsten T. Controlling and combining resources in networks — from Uppsala to Stanford and back again: the case of a biotech innovation. Ind Mark Manage 2009;38:541–52. Barney JB. Firm resources and sustained competitive advantage. J Manage 1991;17: 99–120. Donaldson B, O'Toole T. Strategic market relationships2nd ed. Chichester, West Sussex: John Wiley & Sons Ltd; 2007. Dubois A, Torvatn T. Towards a network theory of the firm. J Custom Behav 2002;1(3): 433–48. Harrison D, Håkansson H. Activation in research networks: a comparative study of ports. J Bus Ind Mark 2006;21(4):231–8. Hjelmgren D, Dubois A. Resource development and interaction — the function of partial connections. Proceedings of the 18th Annual IMP Conference, Dijon, France; 2002. Holmen, E. (2001). Notes on a conceptualisation of resource-related embeddedness of interorganisational product development. Dissertation, Institute for Marketing, University of Southern Denmark, Denmark. Håkansson H. Industrial technological development: a network approach. London: Croom Helm; 1987. Håkansson H, Snehota I. Developing relationships in business networks. London: Routledge; 1995. Håkansson H, Waluszewski A. Managing technological development — IKEA, the environment and technology. London: Routledge; 2002. Ivens BS, Pardo C, Salle R, Cova B. Relationship keyness: the underlying concept for different forms of key relationship management. Ind Mark Manage 2009;38:513–9. Penrose E. The theory of the growth of the firm. Oxford: Basil Blackwell; 1959. Ritter T, Gemünden HG. Network competence: its impact on innovation success and its antecedents. J Bus Res 2003;56(9):745–55. Turnbull PW, Wilson D. Developing and protecting profitable customer relationships. Ind Mark Manage 1989;18:1–6. Wedin, T. (2001). Networks and demand. The use of electricity in an industrial process. Dissertation, Department of Business Studies, Uppsala University, Sweden. Weick KE. The social psychology of organisation2nd ed. . New York: Random House; 1979. Weick KE. Sensemaking in organizations. Thousand Oaks, CA: Sage Publications; 1995. Weick KE, Sutcliffe KM. Organizing and the process of sensemaking. Organiz Sci 2005;16(4):409–21. Wernerfelt B. A resource-based view of the firm. Strateg Manage J 1984;5(2):171–80.