The Concept of Risk in RBV - An Exploratory Analysis

21 Pages Posted: 4 Oct 2007 Last revised: 27 Jan 2008

See all articles by Leonardo Cruz Basso

Leonardo Cruz Basso

Mackenzie Presbyterian University - Business Administration

Herbert Kimura

Mackenzie Presbiterian University

Carla Leal

affiliation not provided to SSRN

Date Written: October 3, 2007

Abstract

The resource-based view (RBV) appears as a more comprehensive theory than the neoclassical theory to explain value creation in the capitalist system. RBV emphasizes the role of strategic resources to the firm. Barney (1991) adopts the standpoint that the stock of strategic resources is important in the determination of the level of profitability of the firm. Barney (1991) proposes that, besides being valuable, resources should also possess the fundamental attributes of being rare, imperfectly imitable and nonsubstitutable. The objective of this work is to present an alternative concept for risk based on the concept of resource. The work is divided into three sections: in the first we present two methodologies to deal with risk in RBV, the perspective of the discounted cash flow and the perspective of real options. In the second we present an alternative risk concept (including the means of measuring it), which takes into consideration the level (sum) of resources essential to the company, as well as the volatility of this level. (We will apply the concept including a measure of risk for a sector where the innovative activity is essential).In the third we present a model based on behavioral finance of the behavior of the manager toward risk.

Keywords: Resource-based view, Risk, Idiosyncratic Risk, Innovation, Capacity to innovate

JEL Classification: D23, D21, G12, L21, M21, O31

Suggested Citation

Cruz Basso, Leonardo and Kimura, Herbert and Camargo Leal, Carla, The Concept of Risk in RBV - An Exploratory Analysis (October 3, 2007). Available at SSRN: https://ssrn.com/abstract=1019073 or http://dx.doi.org/10.2139/ssrn.1019073

Leonardo Cruz Basso (Contact Author)

Mackenzie Presbyterian University - Business Administration ( email )

Rua da Consolacao, 896 7 - andar sala 73
01302-907 Sao Paulo
Brazil
+55 11 32368597 (Phone)
+55 11 32368600 (Fax)

Herbert Kimura

Mackenzie Presbiterian University ( email )

Rua da Consolacao, 896 - 6o andar
01302-907 Sao Paulo
Brazil
+55 11 3236-8589 (Phone)
+55 11 3236-8600 (Fax)

Carla Camargo Leal

affiliation not provided to SSRN ( email )

No Address Available

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