Resource-based View: International Business & Emerging Markets ESPM, October 14, 2010 Belmiro N. João PUC/SP
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Resource-based View:International Business & Emerging Markets
ESPM, October 14, 2010
Belmiro N. João
PUC/SP
Contents
• 3 Approaches
• KBV – Origins/Evolution
• Knowledge Flows and Internationalization of Brazilian MNCs in Cement Industry
• A Bibliometric Analysis (KBV + IB)
Adapted from Peng (2006)
Adapted from Yang et al. (2009)
(”Resources”)
Inputs
Resources Trivial inputs
Physical assets
Intangible assets
Technical knowledge Org knowledge Relational IPR
(capabilities?) (competencies? ) knowledge
The RBV: Key Contributions and Genealogy
Penrose
59Wernerfelt
1984
Rumelt
82,84,87,91,
Barney 86, 91
Chandler 62 Rumelt 74
”UCLA”
Alchian
Demsetz
Ouchi
Williamson
Teece
Pedigree 1. Generation 2. Generation
Montgomery &
Wernerfelt 1988
Selznick, Andrews,
Christensen
”Core competence”
(Prahalad & Hamel)
”(dynamic)
capabilities”
(Teece)
Nelson &
Winter 82
Dierickx &
Cool 89
Henderson &
Cockburn 94
Leonard-Barton 92
Mosakowski 98
Miller & Shamsie 96
Makadok 98, 99
Amit &
Shoemaker 93Conner &
Prahalad
Kogut &
Zander
Two key RBV papers that summarize and integrate the central RBV insights in SCA:
• Jay B. Barney. 1991. “Firm Resources and Sustained Competitive Advantage”, Journal of Management 17: 99-120.
• Margaret Peteraf. 1993. “The Cornerstones of Competitive Advantage: A Resource-Based View”, Strategic Management Journal 14: 179-191.
Obtaining SCA in the sense of Barney requires that the underlying resource(s) ” … must have four attributes…”
(d) there cannot be strategically equivalent substitutes for this resource that are valuable but neither rare or imperfectly imitable.”
“(a) it must be valuable;
(b) it must be rareamong a firm’s current and potential competition;
(c) it must be imperfectly imitable; and
Peteraf
“… four conditions underlie competitive advantage, all of which must be met. These include superior resources (heterogeneity within an industry), ex post limits to competition, imperfect resource mobility and ex ante limits to competition.”
• Heterogeneity: Efficiency differences.
• Ex post limits to competition: Difficulties of imitating highly efficient resource-bundles (Dierickx and Cool, 1989, MS).
• Ex ante limits to competition: Resources should be acquired at a price below their DPNV (Barney 1986, MS).
• Immobility: Resources should not have max bargaining power.
Barney and Peteraf compared
Figure 1a
The Barney 1991 framework
Figure 1b
The Peteraf 1993 framework
Value Rareness
Inimita-
bility
Non-
substituta-
bility
Hetero-
geneity
Ex post
limits to
competition
Ex ante
limits to
competition
Immobility
Sustained
competitive
advantage
Sustained
competitive
advantage
Knowledge Flows and Internationalization of Brazilian MNCs in Cement Industry
Belmiro N. João( [email protected] )
Matheus I. Oshikiri( [email protected] )
Aldo Brunhara( [email protected] )
Business Administration Post-Graduation Program of PUC/SPStrategy and International Competition Research Center
Track 6 - Learning, Knowledge and InnovationSession 3.2.9 - Knowledge and Value Creation in MNEs
AIB-2008 Milan
Objectives of the Study
General: An empirical study of the international operations of Brazilian MNCs in Cement Industry with a dynamic approach using Sveiby’s knowledge-based model (KBV- knowledge-based view),
Specific: Identify the knowledge flows in three families of intangible
assets: (+3 of 9 strategies)external structure,
internal structure, and
individual competences
Identify the transfer/conversion of knowledge between these families of intangible assets (+6 of 9 strategies)
Identify the applicability of the conceptual model
Methodology
• The Empirical Research
• 1st Phase of the study: – Literature review about RBV/KBV strategies
– Cement Industry Analysis (World, Latin & North America)• (upstream & downstream operations)
• 2nd Phase of the study:– Multiple Case Studies
• Camargo Corrêa Cimentos (CCC) & Loma Negra
• Votorantim Cimentos & St. Mary’s & Sunnawee
– Semi-structured Interviews : • Managers, Top Executives & Partners
– Period: • December-2005 to April-2006 (re-interview in 2007)
REFERENCES• Core Competence /Resource Based View (RBV)
– PRAHALAD & HAMEL, 1990
– COLLIS & MONTGOMERY, 1995
– BARNEY & ARIKAN, 2001
• Knowledge Based View (KBV)– DEMSETZ, 1991
– GRANT, 1996
– SPENDER, 1996
• Dynamic Approach of KBV
– Sveiby, Linard & Dvorsky (2002)
– Sveiby (2001)
TrunkBasic
Products
Cement, mortar and lime. Concrete (conventional,
shotcrete, fibre, heavy, paving, high performance etc)
Roots Organizational
Competences
Strategic location, cutting-edge technology, professional
management, long-term operations and
contracts (supplies, energy and logistics)
BranchesBusiness
Units
Camargo Correa Group: Camargo Corrêa Cimentos,
Loma Negra, Cementos del Plata, Itacamba Cemento S.A,
Yguazu Cementos S.A..
Votorantim Group: Votorantim Cimentos, St Mary’s
Cement, St Mary’s CBM, Suwannee American Cement,
Trinity Materials, Badger Cement Products, S&W Materials Inc.
FruitsEnd
ProductsGrey cement, white cement, non-structural
white cement, basic and special concrete, lime.
TREE ORGANIZATION
Table1: Competence Tree for Brazilian MNCs in Cement Industry
Core Competences
Intangible Assets Families
Relations with Customers, Suppliers and Partners, Universities, etc.
They form basis of its reputation ( and image) of a company.
Patents, Concepts, Models, Information Systems, Process (back-
office tools); internal networks, Communications flows, Culture and
Staff teams (IT, HR and Accounting)
Professional and Technical personnel view and also the staff
team members and managerial team that may influence
Customers
External Structure:
Internal Structure:
Individual Competences:
Strategy # 3.
Knowledge transfer
/conversions from
external struture to
individual competence
Strategy # 2.
Knowledge
Transfer
/conversions
from individual
competence to
external
structure
Strategy # 1.
Knowledge Transfer
/conversions between
individuals
Strategy # 4.
Knowledge Tranfer
/conversions from
individual
competence to
internal structure
Strategy # 5.
Knowledge Transfer
/conversions from internal
struture to individual
competences
Strategy # 9.
Knowledge Transfer
/conversions within
external structure
Strategy # 7.
Knowledge Transfer
/conversions from
external to internal
structure
Strategy # 8.
Knowledge Transfer
/conversions from
internal to external
structure Strategy # 6.
Knowledge
Transfer
/conversions within
internal struture
Strategy # 10.
MAXIMIZE THE VALUE CREATION
(SEE THE WHOLE)
EXTERNAL
STRUCTURE
INDIVIUAL
COMPETENCE
INTERNAL
STRUCTURE
(TOOLS &
PROCESS)
$
CONCEPTUAL MODEL
Analysis of the three families of intangible assets (Individual
Competence)• Strategy # 1. Communication between
individuals within the corporation, team work, learning and sharing of knowledge.
• Trainees Programs w/ vision of business, strategy and process.
• Renovation for Cement corporations, strategic for positions in international operations.
• Competences desirables: – Share experience in team work; quality
thinking; continuous challenges; fluency in Spanish (Latin America) and English (North America).
• The Due Diligence Process and later (acquisition of Loma Negra) represent an example of integration of these assets.
Analysis of the three families of intangible assets (Internal & External
Structure)
• Strategy # 6. Reuse of knowledge existing within Internal Structure.
• Internal Benchmark actions and transfer to world-class standards. Strategic plans for longe range and its dissemination to all units, as also tools that are part of one of their “Business Systems”.
• Have been implemented Quality Programs (Six Sigma and Total Quality). Technical standards (ISO).
Strategy # 9.
Business Models for cement plants and technological development of theis main suppliers, specifics needs of the clients and news techniques for construction (features defined by the client).
The contracts and partnerships between companies controlled by the Cement holdings. (e.g.: Business potential generates by Ferrosur for CC Group and downstream operations for VC).
Analysis of knowledge flows between individual and external structure
• Strategy # 2.• Internet to provide distinctive service to the clients.
Monitor the location of the cement mixers via www.
• Technical knowledge for meeting specific demands made by the clients..
– Petrol Cement.– Transfer of technology in the use of coke from Brazilians
operations to the Argentinean ones.– Nuclear Power Plants.
Strategy # 3.
Learning of current and future needs of the companies within this segment sensitive to price and alterations in demand by the markets.
The understanding of the business model, the strategies and the steps made by competitiors and the main players of the market, the follow-up on the economic and political situations of the countries in which the Brazilian cement companies are active.
Analysis of knowledge flows between Internal and External
structure• Strategy # 7. This refers to what knowledge can be acquired from the external world to the internal structure, via benchmark, with regard to the competences of clients, suppliers and other shareholders, there by improving systems, tools, processes and products
• The partnership that exists between logistics operations (Ferrosur, Hutton) + Cement Companies are essential for the integrated efficiency of a cement plant,and in this case, one of its strategic drives.
• Strategy # 8.• Collaborators make use of the extranet of the
company for operations involving B2B e-commerce.
• web systems to always be in operation. • There are systems enabling monitoring by the
clients.
Analysis of Conversions between Individual Competences and the Internal Structure
• Strategy # 5.• Once the competence has been captured, it needs
to be made available to other individuals. • e-learning environment and knowledge
managemnt systemsare included in this strategy, as also are benchmarks and best practices within the units of the companies.
Strategy # 4.
The tacit knowledge stored in repositories and shared by the whole organization.
Intranet, document management systems based on the implicit knowledge of employees and external collaborators (including consultants).
The use of the management model n the dissemination of internal knowledge has na important role. e.g. Votorantim Cimentos Business System, e-library and intranets.
Conclusions• The Companies of the research presents knowledge as
a strategic resource, and the skill in its creation andapplication is na important skill for the generation of acompetitive advantage and also value for theshareholder.
• There is a connection between knowledge and thebusiness strategy for the whole of Brazilian MNCs inCement industry.
• Organizations that value the development of their corecompetences open the possibility of development of aculture that allows the creation of strategies based onknowledge, creating conditions so that a competitiveadvantage may be obtained, and so that value may beadded
FINAL COMMENTS
• For the cement companies the creation of measurementand monitoring of the three families of assets and thenine strategies of the construct, as used in this study,may help towards na effective advancement in thefollow-up on longe range strategic decisions.
• Within the limitations of the present research, and as asuggestion for futures studies, we propose the testing ofother KBV models (EISENHARDT & SANTOS, 2002,GRANT, 1996) or knowledge flows in Internationalbusiness (Kogut & Zander).
RBV + IB: A Bibliometric Analysis
• ISI Web of Science
• Oct 8, 2010
• Topic = Resource-Based View
• Topic = International Business
• 116 hits
RBV + IB: A Bibliometric Analysis
RBV + IB: A Bibliometric Analysis
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PENG, M
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KH, P
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BELL, J
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WEN
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BUCK, T
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Journals
Top Papers: A Bibliometric Analysis
Top Papers: A Bibliometric Analysis
A Key Paper: Citation Tree
• The Resource-Based View and International Business
• Peng, MW
• JOURNAL OF MANAGEMENT Volume: 27 Issue: 6 Pages: 803-829 Published: 2001
An Recent Paper: Citation Tree
• The internationalization of emerging market business groups: an integrated literature review
• Yaprak A (Yaprak, Attila), Karademir B (Karademir, Bahattin)
• INTERNATIONAL MARKETING REVIEW Volume: 27 Issue: 2 Pages: 245-262 Published: 2010
Resource-based View:International Business & Emerging Markets
ESPM, October 14, 2010
Thank You...
Belmiro N. João
PUC/SP
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