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Relative exploration and firm performance: Why resource-theory alone is not sufficient?

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  • Bhandari, Krishna Raj
  • Rana, Sudhir
  • Paul, Justin
  • Salo, Jari

Abstract

The resource-based theory states that having valuable, rare, inimitable, non-substitutable, and organized (VRIN-O) resources and capabilities give firms a sustainable performance. However, by integrating the attention-based view, we raise a question as to why VRIN-O resources alone are not sufficient for sustainable performance. We introduce the variable - decision-makers’ attention- as a key moderator in achieving sustainable performance so that VRIN-O/capability and capability/resource heterogeneity may last longer. To test this relationship, we examine how the needs of firms to balance their exploration and exploitation efforts, called relative exploration anchored to resource-based theory is influenced by CEO’s attention towards entrepreneurial orientation and market orientation as moderators. Using a panel data set of 269 firms listed on the Nordic NASDAQ stock exchange, we find an inverted U-shaped relationship between relative exploration and long-term performance, while the attentions of the CEO have a positive moderation effect. Thus, using the attention-based view complements the resource-based theory in explaining sustainable competitive advantage especially in the dynamic environment.

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  • Bhandari, Krishna Raj & Rana, Sudhir & Paul, Justin & Salo, Jari, 2020. "Relative exploration and firm performance: Why resource-theory alone is not sufficient?," Journal of Business Research, Elsevier, vol. 118(C), pages 363-377.
    • Handle: RePEc:eee:jbrese:v:118:y:2020:i:c:p:363-377
    DOI: 10.1016/j.jbusres.2020.07.001
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