The Entrepreneurship of Resource-Based Theory

Posted: 17 Nov 2009

See all articles by Sharon Alvarez

Sharon Alvarez

University of Pittsburgh - Katz Graduate School of Business

Lowell W. Busenitz

University of Oklahoma - Michael F. Price College of Business

Date Written: 2001

Abstract

Develops and applied the ideas of the resource-based theory to entrepreneurship; both share the same level of analysis, the firm. Extends the concepts of resources to include the various cognitive abilities possessed by the individual entrepreneur to create and combine new heterogenous resources. The first goal of this analysis is to describe activities and skills that can be seen as resources. These include opportunity seeking behavior, combining and organizing resources, assembling the resources into a firm, and creating heterogeneous outputs through the firm that are superior to the market. Entrepreneurial cognition facilitates competitive advantage through opportunity discovery and development of the firm through its early stages. The entrepreneur efficiently coordinates and integrates knowledge, and converts insights and inputs into heterogenous outputs. Second, by using resources as the unit of analysis, the study builds a theory for entrepreneurship that can span the range of micro to macro issues. The theory building draws on four conditions of the resource-based theory: resource heterogeneity, ex post limits to competition, imperfect factor mobility, and ex ante limits to competition. A firm's competitive advantage is seen to consist of its unique bundle of resources. Ex post limits to competition reflect cognitive differences (cognition, competition, opportunity recognition), strategic complementarity, causal ambiguity, uncertainty, and information asymmetries. A firm's assets are inimitable because they are socially complex and path dependent. Ex ante limits to competition create a sustainable advantageous position. Integration of these resources can help to identify the distinctive domain of entrepreneurship. (TNM)

Keywords: Entrepreneurship research, Competitive advantages, Market competition, Opportunity recognition, Opportunity development, Resource management, Resource model, Cognition, Cognitive theory

Suggested Citation

Alvarez, Sharon and Busenitz, Lowell W., The Entrepreneurship of Resource-Based Theory (2001). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1506318

Sharon Alvarez (Contact Author)

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States

Lowell W. Busenitz

University of Oklahoma - Michael F. Price College of Business ( email )

307 West Brooks
Norman, OK 73019-4004
United States

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