Resource-based theory: empirical research*

In 1916, Albert Einstein predicted the existence of gravity waves. Given how small these waves were supposed to be—10 of a millimeter—Einstein was convinced that this implication of his general theory of relativity would never be examined directly. Initially, the existence of these waves was only examined indirectly, by observing that pulsars were losing mass at a rate consistent with the existence of gravity waves. However, more recently, a new generation of wave detection technology has been introduced. Drawing on the computing power of thousands of personal computers linked in a voluntary network, physicists now believe that it may be possible to directly observe gravity waves, though it may take many years to refine the technology and complete the data analysis (Lafferty 2005). Godfrey and Hill (1995) observed that resource-based theory—along with TCE and agency theory—incorporated difficult to observe concepts as independent variables. These authors wondered if it would ever be possible to directly test resource-based theory. Initially, they reasoned, resource based empirical work would have to focus on examining the observable implications of a firm’s resources and capabilities, rather than examining those resources directly. However, more recently, several scholars have begun to develop techniques for measuring at least some aspects of these previously difficult to observe concepts. Although it may take many years to refine this measurement technology and complete the data analysis, there is now a growing belief that it may be possible to measure resources and capabilities and therefore to directly test the implications of resource-based theory (Dutta, Narasimhan, and Rajiv 2005).