The resource based view and value- the customer-based view of the firm

Journal of European Industrial Training
Emerald Article: The resource-based view and value: the customer-based
view of the firm
Val Clulow, Carol Barry, Julie Gerstman

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view of the firm", Journal of European Industrial Training, Vol. 31 Iss: 1 pp. 19 - 35
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The resource-
The resource-based view and based view and
value: the customer-based view of value
the firm
19
Val Clulow
Monash University, Churchill, Australia, and
Carol Barry and Julie Gerstman
Swinburne University of Technology, Melbourne, Australia

Abstract
Purpose – The resource-based view (RBV) explores the role of key resources, identified as intangible
assets and capabilities, in creating competitive advantage and superior performance. To a great extent
the conceptual analysis and empirical research within the RBV has focused on the firm’s perspective of
key resources and the value to the firm of these key resources. The other perspective on key resources
is to explore the value they provide to the customer. The question of interest here is whether key
resources that hold value for the firm also hold value for the customer.
Design/methodology/approach – A depth interview was trialled as an appropriate methodology
by which to begin to explore the customer perspective of key resources.
Findings – This trial suggests that further investigation of the customer perspective will provide a
clearer view of customers’ assessment of the firm’s valuable resources. The trial interview with a key
customer indicates there are subtle differences in the ranking of valued skills and capabilities between
producers and customers that if verified in further trials, have potential to better focus firms on key
resources valued by customers.
Originality/value – This trial provides insight into the process of identification of the factors that
customers regard as the firm’s valuable resources and how this influences their choice of firm.
Differences in ranking of key resources by customers compared to those of producers could lead to
re-evaluation of skills and experience background for staff recruitment purposes, and training
programs to better reflect customer valuation preferences.
Keywords Intangible assets, Competitive advantage, Resources
Paper type Research paper

Introduction
The resource-based view (RBV) of the firm is a theory that has been explored in
academic literature as a means of explaining competitive advantage and, in turn,
superior performance among firms. A central tenet of the RBV is the relationship
between customer value, competitive advantage and superior performance. The firm
can provide value to customers in many ways, such as via superior production
systems, lower cost structures and emphasis on customer service. The RBV contends
that key resources exhibiting particular characteristics enable the firm to implement
strategies which meet the needs of customers, thereby enhancing the firm’s ability to
secure a sustained competitive advantage. Key resources have been identified as Journal of European Industrial
intangible assets (such as client trust and relationships) and capabilities (such as skills Training
Vol. 31 No. 1, 2007
and knowledge). The firm’s view of advantage-creating resources has been extensively pp. 19-35
explored within the literature but there has been less attention, particularly empirical q Emerald Group Publishing Limited
0309-0590
investigation, into how customers perceive value in a firm’s resources. DOI 10.1108/03090590710721718

JEIT The RBV highlights the firm as a unique collection of resources, but the theory
31,1 emphasises that not all of these resources possess the potential to provide the firm with
a sustained competitive advantage. Early proponents of the RBV identified
characteristics of “advantage-creating” resources such as, value, rareness,
inimitability and non-substitutability (Barney, 1991), inimitability, durability,
appropriability, substitutability and competitive superiority (Collis and
20 Montgomery, 1995) and the eight criteria of Amit and Shoemaker (1993),
complementarity, scarcity, low tradability, inimitability, limited substitutability,
appropriability, durability and overlap with strategic industry factors. More recently,
these advantage-creating characteristics have parsimoniously been subsumed into the
three key criteria of value, barriers to duplication and appropriability (Fahy, 2000).
The RBV contends that the possession and identification of key resources
embodying these essential features, along with their effective development and
deployment, allows the firm to achieve and sustain competitive advantage. Within the
RBV literature there has been a predisposition for conceptual analysis and empirical
research to focus on the firm’s perspective of key resources and the value to the firm of
these key resources. The aim of this study is to trial a research approach by which to
explore the customer perspective of key resources empirically. This research will assist
in identifying a range of factors to be included in an interview of a number of
customers, to better understand their views on the key resources of firms they value,
and hence guide the firm to a customer value delivery orientation.
This paper builds on a previous empirical study of the RBV (Clulow et al., 2003)
which investigated the firm’s perspective on key resources. In that study of a superior
performing firm in the financial services industry, a depth interview with a senior
manager of the firm posed a series of questions with respect to value, barriers to
duplication and the ability of the firm to appropriate the benefits of its key resources.
This process identified specific intangible assets and capabilities credited with
providing the firm’s competitive advantage in the funds management industry.
In this study, an approach to identifying the customer perspective of key resources
of firms in the funds management industry is trialled. Such an approach could inform a
methodology that better determines the extent to which these assets and capabilities
create value for the customer. Knowing which attributes of the firm confer value will
enhance the firm’s ability to implement value-creating strategic decisions[1].

Literature review
The RBV literature has focused on the firm’s perspective of key resources and the
value of those key resources in terms of conferring a competitive advantage reflected in
superior performance for the firm (Barney, 1991; Amit and Shoemaker, 1993; Peteraf,
1993; Fahy and Smithee, 1999). Resources possessing the essential characteristics
summarized by Fahy (2000) as value, barriers to duplication and appropriability, have
been identified in many studies as intangible assets and capabilities (e.g. Hall, 1993;
Barney and Wright, 1998; Smart and Wolfe, 2000). The competitive advantage gained
by these key intangible assets and capabilities is then reflected in superior performance
for the owners of the firm, with superior performance usually measured in financial
terms such as higher profits, increased sales or market share (Hunt and Morgan, 1995;
Collis and Montgomery, 1995; Fahy, 2002; Wilcox-King and Zeithaml, 2001). This

approach reflects traditional marketing literature which commonly addresses the The resource-
question of “the value of the customer to the firm” (Payne, 2001). based view and
In a study of a high performing firm in the financial services industry (Clulow et al.,
2003), it was found that intangible assets (client trust, reputation, networks and value
intellectual property) and capabilities (knowledge, organizational culture, skills and
experience) were valuable, unique and complex resources resulting in inimitability.
The value of these intangible assets and capabilities could be appropriated by the firm 21
because the unique combination of company philosophy, knowledge and skills of
employees and other idiosyncratic capabilities were difficult to separate or transfer. In
contrast, tangible assets whilst having value for the firm, were determined not to fit the
construct of “key resources” because they were found to be causally explicit and hence
imitable. They did not satisfy the criteria fundamental to the achievement of a
sustainable competitive advantage. Further, the strategic role of management was
found to be integral to the identification, development and deployment of key resources
and their impact on competitive advantage and superior performance (see Figure 1).
The source of value from the RBV perspective is that value flows from resources
that possess specific attributes. The direct causal links between assets and capabilities
exhibiting the desired attributes and the value customers perceive them to provide has,
however, not been a focal point of the RBV and hence has not been tested for its

Figure 1.
A resource-based view of
customer value and its
relationship to sustainable
competitive advantage

JEIT alignment with customers’ assessment of value. Since a major emphasis of marketing
31,1 strategy is an emphasis on value creation for customers, an understanding of the
customer’s perspective of resources is critical to advance research and prescriptive
implications. There is a need to develop and articulate a sequence that begins with the
customer’s perception of valuable resources and then explores the implications of this
perspective for marketing strategy.
22 In Figure 1, the line-heading “Value” identifies how key resources develop value
according to the RBV. The arrow linking “value” with “sustainable competitive
advantage” and “value to client” draws attention to the presumption in the theory that
value from a firm’s deployment of key resources concurs with a customer’s assessment
of value. This presumption needs further validation and can be explored by asking
how key resources add value for the customer. The question of interest here is whether
key resources that hold value for the firm also hold value for the customer, or whether
the value attributed by each is necessarily different. The value of intangible resources
and capabilities from the customer’s perspective is thus the aspect of the model to be
explored further. The link in the RBV model between the value of key resources and
the firm’s attainment of a sustained competitive advantage may be explicated by an
understanding of how customers make value assessments.
Knowing which resources customers value would enable the firm to re-orient focus
to those assets in order to sustain their competitive advantage, and to develop
customer value related capabilities. From a customer’s perspective, a firm offers and
delivers a range of services generated from its unique resources. As Penrose described
over four decades ago, “It is the heterogeneity . . . of the productive services available or
potentially available from its resources that gives each firm its unique character”
(Penrose, 1959, pp. 75, 77). The heterogeneity, imperfect mobility and inimitability of
intangible assets and capabilities provide firms with the ability to create “unique
character” that enables a market offering of value to customers. Or, in the words of
Hunt and Derozier (2004, p. 14):
. . . a resource is “valuable” when it contributes to a firm’s ability to efficiently and/or
effectively produce a marketplace offering that has value for some market segment or
segments.
The concept of value and its many facets has been explored extensively within
marketing and management literature. As described by Woodruff (1997, p. 141), the
term value can be used in the contexts of “superior customer value”, “high-value
customers” and “value of an organization”, among many others. A significant
contribution to the discussion of customer value was provided by Payne (2001) in a
substantial review of the value literature and the many perspectives of the value
concept. Most of these value concepts consider the firm’s perspective and this approach
is mirrored in much of the value literature (see for example Prahalad and Hamel, 1990;
Black and Boal, 1994; Miller and Shamsie, 1996). However, as Payne et al. (2000, p. 260)
indicate:
. . . concentrating on how much value (in the form of profits) an organization can extract from
its customers, without understanding what customers value from the organization and
providing it, is not sustainable in a competitive environment.

Despite the broad range of views in the value literature, and the scope for further study, The resource-
the focus of this inquiry is the relevance to the customer of the RBV’s explanation of based view and
how the firm’s key resources create customer value.
In their discussion of the linkages between the RBV and marketing, Srivastava et al. value
(2001) argue for a focus on the customer in analysing the competitive advantage of
superior performing firms. An “overarching” purpose of their discussion was to
“. . .highlight the importance of the need for far more detailed analysis of the 23
resource-competitive advantage connection” and that “. . .RBV research must always
endeavour to identify precisely what customer value in the form of specific attributes,
benefits, attitudes and network effects is intended, generated and sustained – a
challenge often neglected if not ignored in most RBV research” (Srivastava et al., 2001,
p. 795). To systematically identify how resources create value to customers the authors
proposed the use of “process-driven and case-rich methodologies” (Srivastava et al.,
2001, p. 796). Applying “case-rich methodologies” is appropriate when considering the
way capabilities are deployed “to leverage the firm specific value-added” (Wang and
Lo, 2004, p. 44). The need to differentiate between markets and contexts requires
managers to “develop a customer strategy that focuses on a unique market segment or
has a distinctly differentiated value proposition” (Slater, 1997, p. 164). This need to
recognise differences is reinforced by the well established observation of Penrose (1959,
p. 75) that each firm has a unique character and implies there is a need to recognise firm
idiosyncrasies.
Recent literature reveals an awareness of insufficient explanation about the process
of the transformation of key resources into value experienced and understood by
customers (Srivastava et al., 2001; Wang and Lo, 2004). In an attempt to add to
understanding on this issue, Srivastava et al. proposed adopting “links to marketing”
by beginning with how value is assessed by customers and understanding the
customer value creation process to support a marketing strategy. These links
recognised there are multiple forms of resources that may create customer value and it
is useful to distinguish between relational and intellectual market-based assets and
capabilities as two sources of customer value. Relational assets are external as they are
relationships between a customer and provider; intellectual assets are internal in that
they are embedded within individuals in the form of knowledge and know-how
(Srivastava et. al., 2001, p. 782).
Other relevant studies addressing the customer perspective of value are
summarized by Wang and Lo (2004) in a conceptual model which is aimed at
closing an “obvious research gap between what the resource-based view advocates . . .
and what the service management view emphasizes, such as customer perceived
quality, customer satisfaction and customer value” (Wang and Lo, 2004, p. 48). Wang
and Lo developed their model from a theoretical assessment of a wide range of
explanations and discussions of customer value measures. The study attempted to
distinguish the key resources that influence customer-focused performance.
Organizational learning, strategic flexibility and specific types of core competencies
are the key resources identified. The relevant core competences of employees include
being technologically astute, interactive and flexible. They suggested that the model be
tested on business managers and customers to confirm the relevance of the proposed
influences identified (Wang and Lo, 2004, p. 41).

JEIT Taking account of the need identified by others for new studies that begin to explore
31,1 the customer’s view as it relates to the RBV and recent conceptualisations in this
regard, a study was designed to extend our understanding of how to explore the
customer’s perspective to better inform human resources practice.

Methodology
24 The aims of this conceptual study were to trial a research approach to explore the
customer’s value assessment of a firm’s resources, and to use the results to test the
method of enquiry and advise on further investigation of the customer perspective. The
research approach involved an in-depth interview of a key informant. Interviewing is
“one of the most common and powerful ways in which to understand fellow humans.”
(Fontana and Frey, 2005, p. 697). The use of expert interviewees is a specific form of
applying a semi-structured interview within qualitative research. If well chosen, an
expert interviewee is not a single case but represents a group of specific experts (Rubin
and Rubin, 1995, p. 91) and the results of this trial, although not considered
generalisable, will inform further research. The research outcome sought to identify a
range of resources regarded by the customer as the firm’s valuable resources through
exploring the following research question:
RQ. How do customers value the resources identified within the RBV as valuable
from the firm’s perspective?
The technique proposed to elicit customer information is to select key informants
whose opinion on value provides insight to the customer perspective and to conduct
in-depth interviews to explore their views. According to Woodruff (1997, p. 144) this
technique “ . . .uses in-depth personal interviews to get customers to take the
interviewer on a ‘tour’ . . . to understand better what happens during product use”. This
process has the advantage of providing scope for customers to explain how they assess
the key resources of a firm and to inquire if factors other than key resources contribute
to a customer’s value assessment. Given the unique and idiosyncratic nature of
intangible assets and capabilities it is clear “ . . .that large sample, multi-industry,
single time period samples using secondary sources of data will not help disentangle
the key factors” (Rouse and Daellenbach, 1999, p. 487).
According to Lockett and Thompson (2001, p. 740) “It may be that many of the
insights of the RBV, particularly where less tangible resources are involved, can only
be explored using a case approach . . . (which) . . . involves trading off some of the
generalisability obtainable from large-sample econometric work for a greater
appreciation of the complexity of organizations.”

The interview
A trial interview schedule was developed to test the appropriateness of the framework
and the legitimacy of the line of enquiry. The proposed trial research design allows us
to examine how customers perceive that key resources provide value to them and the
importance of this value to their choice of firm.
The semi-structured interview design (Cassell and Symon, 1994; Malhotra et al.,
1996; Yin, 1994) was developed through a number of iterations by the authors and
reflects the broad issues generated from the RBV literature. The schedule of questions
(Table I) is designed to elicit customers’ views of how key resources and tangible assets

The resource-
Issue Question Rationale
based view and
Tangible assets (e.g. land, How do you rate the Tangible assets are not always value
buildings, equipment) importance of tangible assets considered “key resources” in the RBV,
in choosing a service because they are readily replicated by
provider? competitors. This question reviews the
relevance of tangible assets in 25
providing value from a customer’s
perspective
Intangible assets (client trust, How do you rate the The more specific the intangible assets
firm reputation, intellectual importance of intangible are to the firm, the more they are
property, relationships) assets in choosing a service regarded as “key resources” in the
provider? RBV. The importance and value placed
on intangible assets by the customer is
sought
Capabilities (organizational How do you rate the The RBV claims that a firm’s culture,
culture, organizational importance of capabilities organizational history, managerial
history, knowledge, when choosing a service skills and team-embodied knowledge
managerial skill, and team- provider? provide a firm’s capabilities. The
embodied skills) customer’s value assessment of
capabilities is sought.
To what extent do you value The RBV views the role of
the role of management in management as one of overseeing the
choosing a service provider? development and deployment of
resources. This question aims to
identify the customer’s view on the
importance of the role of management
The RBV develops concepts What other factors do you This question is to allow customers to
and sources of value from the value and consider important identify any further sources of value Table I.
firm’s perspective in choosing a service other than those considered in the RBV Interview schedule and
provider? rationale

create value for them, and the nature and importance attributed to this value. The issue
addressed by each question and its rationale is indicated in the table and relates to
elements from the RBV indicated in Figure 1. The “relational” and “intellectual” assets
proposed by Srivastava et al. (2001) are captured in the issues “intangible assets” and
“capabilities”. The key resources identified by Wang and Lo (2004) were noted as
possible valued resources (organizational learning, strategic flexibility and specific
types of core competencies including being technologically astute, interactive and
flexible). These were expected to become apparent if pertinent to the interviewee
during the discussions of “intangible assets” and “capabilities”, or the open-ended
question to identify “any other factors” considered as important measures of value to
the customer.
The questions proposed in Table I related to the contributing factors of value as
explained in the RBV and focus on key resources. A question to validate the
importance of “tangible assets” from a customer view was also included, even though
the firm in the previous study had rated tangible assets as inappropriate to be
considered key resources. Two further questions were included in the schedule. The
first related to capabilities and sought to affirm if the strategic role of management in

JEIT the deployment of key resources (identified in the previous study by Clulow et al., 2003)
31,1 adds value for the customer. The second additional question was to enable sufficient
opportunity for the customer to introduce further perceived sources of value in the firm
that may not previously have been identified in the RBV model.
By posing the same broad questions to the customer as were put to the firm (Clulow
et al., 2003) the possibility of a comparison of what provides “value” to each was
26 created. To allow valid comparisons with the previous study, the questions proposed
are as close to the original questions as possible.

The participant
A customer of a number of consistently high performing firms in the Australian
wholesale funds management industry was approached and a senior manager agreed
to be interviewed in the trial. The aim in this interview was to seek accurate
information from a reliable and knowledgeable customer, and in this respect the study
supported the view of Day and Nedungadi (1994, p. 35) that a single informant who
was “. . . the most knowledgeable about the competitive and market environment”
would be the most reliable source. The main criteria used to select a key informant
were “ . . . the expected validity of their descriptions of the phenomena and the
anticipated extent of cooperation in providing these data . . . . ” (Glick et al., 1990, p.
303). The validity of the informant as “key” was supported by his long experience in
the funds management industry and his senior role as a customer of a number of
successful wholesale fund managers. In this role he is responsible for choosing firms to
invest and manage members’ funds. The informant (Mr P) was an enthusiastic
participant in the study and showed a willingness to openly discuss the selection
process he adopted for choosing firms.

Exploratory data collection
The data collection process followed the same approach used in the previous study
(Clulow et al., 2003), in which the director of the firm was interviewed. The two-hour
interview was tape recorded with the agreement of the participant. The nature of a
depth interview which required self-revelation and reflection on the part of both the
researchers and the interviewee created a sense of anticipation (Kram, 1986). The
interview sequence was semi-structured in an effort to cover a number of issues, yet
retain a more conversational style and build rapport with the interviewee (Malhotra
et al., 1996). By posing a series of questions to the customer with respect to value, based
on those indicated in Table I, data was gathered to address the section of the model
highlighted in Figure 1.
The researchers engaged with the interviewee to the extent of exploring his ideas
fully, but remained focussed on the elements needing to be covered. The researchers
brought to bear interview strategies known to encourage both positive and negative
comments (Crabtree and Miller, 1992), and to elicit particular examples based in
experience, to explain comments and also to gain a personal, internalised account of the
customer’s perspective. It was important to build trust early in the interview, to
encourage authentic commentary and self-revelation. The interviewee was reassured
of the confidential nature of the material and the researchers’ undertaking to maintain
his anonymity.

The customer’s responses to the questions posed in Table I are discussed and The resource-
related to the literature on the RBV, with particular reference to the model (Barry et al., based view and
2005) and including concepts espoused by Srivastava et al. (2001) and Wang and Lo
(2004). value
Interpreting meaning from the interview data was managed by the researchers
working through the transcript and clustering or coding the interviewee’s comments
into broad themes (Miles and Huberman, 1994). These generally followed the 27
framework of the interview schedule, however comments pertaining to more than one
section have been reported in the section considered most relevant.
Following the identification of major themes within the interview, the examples of
comments relevant to each major theme were collated to enable links to be made to the
model (Miles and Huberman, 1984; Yin, 1994) and to note those falling outside the
model. There is a wide recognition of the complexity of qualitative data analysis
(Patton, 1990; Stake, 2000; Yin, 1994) and the need for inter-rater reliability to increase
the validity of findings. All three researchers were therefore involved independently in
this interpretive process.
The interviewers endeavoured to remain open to ideas and concepts that fell outside
the broad structure but which offered further insight into the client’s views on key
resources and their relationship to customer value (Glaser and Strauss, 1967; Miles and
Huberman, 1994).

Presentation and discussion of trial results
The data has been systematically analysed and reported relative to each of the issues
noted in Table I. A summary of the customer’s perspective is presented in Table II.
Mr P identified three principal factors he regarded as important in his selection of
fund managers. The three factors are the people, the process and performance. In the
view of Mr P the three factors are interconnected, in that skilled analysts are able to
select better performing stocks because they have appropriate processes in place,
which in turn creates superior performance.
The people Mr P values most are analysts who exhibit extraordinary stock picking
abilities and this ability is an over-riding criterion in the selection process he uses for
fund managers. Firms who place undue emphasis on presentation and “marketing-type
people” rather than well-trained analysts do not provide value to Mr P.
Mr P identified the causal ambiguity generated by not knowing exactly how the
process used to select a portfolio creates a unique style and value from the customer’s
perspective. Causal ambiguity is a key barrier to entry in the RBV theory (Figure 1,
Row 2).
Performance or “the bottom line” is regarded as essential, and the customer’s
attraction to superior analysts was based on his belief that these analytical skills
translated into above normal profits.
On the basis of the importance to the customer of the three factors people, process
and performance, further questions on each aspect are suggested in Table III for a
revised interview schedule as a basis for further research.
The trial has provided insight from the customer’s perspective and informs the
proposed adapted interview schedule.

JEIT
Customer value indicators from
31,1 Issue Question interview

Tangible assets (e.g. land, How do you rate the “My view is that, the old adage, the
buildings, equipment) importance of tangible assets thicker the carpet, the thinner the
in choosing a service dividends” (135-136)
28 provider? “(D) has been brilliant – absolutely
brilliant stock pickers. Now they send
out this little piece of paper (and) their
performance is on this little scrappy
piece of paper . . . and they’ve got some
little office over a shop” (303-306)
Intangible assets (client trust, How do you rate the “In the funds management business,
firm reputation, intellectual importance of intangible the firm’s reputation is a very fragile
property, relationships) assets in choosing a service thing. It’s often said of a batsman that
provider? he’s only as good as his last innings.
It’s a bit like this with a funds manager.
If the performance goes off, the funds
come out very quickly” (42-45)
Capabilities (organizational How do you rate the “I like the process in certain cases. One
culture, organizational importance of capabilities example is Firm C. You really can see it
history, knowledge, when choosing a service when he (Mr T) talks. He’s just got a
managerial skill, and team- provider? tremendous process. He’s got a way of
embodied skills) analysing stocks to pick winners which
I was impressed with. So I think
process is very important, and that is a
point of differentiation. He’s got a more
sophisticated way of evaluating the
stock really” (208-211)
To what extent do you value “It’s sort of trite though – that
the role of management in management’s critical. Everyone
choosing a service provider? knows that management is a critical
aspect in any successful business don’t
they? Without top management you get
nowhere. . .but you’ve really got to go a
lot further to analyse it” (796-799)
The RBV develops concepts What other factors do you “When I thought about this I thought,
Table II. and sources of value from the value and consider important well, what are the factors I look for? . . .
Summary of customer firm’s perspective in making your choice of a and they (people, process and
value indicators related to service provider? performance) were the ones that came
the RBV to mind” (398-399)

Implications
The purpose of this study was to trial a methodology which could be used to ascertain
how customers value key resources that have been identified within the RBV theory as
providing value to firms. The issues investigated can be summarized in terms of their
significance for the RBV theory and their implications for strategic management, in
particular, human resources management.

The resource-
Issue Question Rationale
based view and
Tangible assets (e.g. land, How do you rate the importance Tangible assets are not always
buildings, equipment) of tangible assets in choosing a considered “key resources” in the
value
service provider? RBV, because they are readily
replicated by competitors. This
question reviews the relevance of
tangible assets in providing value 29
from a customer’s perspective
Intangible assets (client How do you rate the importance The more specific the intangible
trust, firm reputation, of intangible assets in choosing assets are to the firm, the more they
intellectual property, a service provider? are regarded as “key resources” in the
relationships) RBV. The importance and value
placed on intangible assets by the
customer is sought
Capabilities (organizational How do you rate the importance The RBV claims that a firm’s culture,
culture, organizational of capabilities when choosing a organizational history, managerial
history, knowledge, service provider? skills and team-embodied knowledge
managerial skill, and team- provide a firm’s capabilities. The
embodied skills) customer’s value assessment of
To what extent do you value the capabilities is sought
role of management in choosing The RBV sees the role of management
a service provider? as one of overseeing the development
and deployment of resources. This
question aims to identify the
customer’s view on the importance of
the role of management
People i) How do you value the The capabilities of people, process and
contribution to a firm of performance are considered critical
individuals with specialised elements of value attributed to the
skills relative to a team of firm by the customer. Further
skilled personnel who work questions on these aspects are
together? Can these be taught recommended to more fully explore
or bought? What formal/ their importance, with multiple
informal training is available? customers
ii) Do you view staff mobility to
be a problem within the
industry? Do you have any
recommendation(s) on how to
retain skilled staff within a
firm?
Process i) How would you explain the
elements of a superior process
in this industry?
ii) Does a successful firm
necessarily have a unique
process?
Performance i) Do you think a highly
reputable firm will
necessarily be a high
performing firm?
The RBV develops What other factors do you value This question is to allow customers to
concepts and sources of and consider important in identify any further sources of value Table III.
value from the firm’s choosing a service provider? other than those considered in the Revised interview
perspective RBV schedule and rationale

JEIT Tangible assets
31,1 While the RBV recognises that tangible assets hold market value, they are also able to
be “bought” and are easily replicated by competitors, so are not regarded as “key
resources”. This position was supported in the study of the firm’s view of key resources
(Clulow et al., 2003). This trial has revealed that the customer’s view, although derived
from a different rationale, led to the same conclusion. Both views are sceptical about
30 the value of tangible assets. Mr P’s rationale was that expensive tangible assets could
be equated with “waste”, whereas the RBV identified the ease with which rivals could
imitate tangible assets. Both views imply that firms will not create value or competitive
advantage by spending excessively or out-doing their competitors on offices, decor or
other tangible trappings. The views of other customers may be gleaned from their
responses to further questions indicated under “performance” in Table III.

Intangible assets
Whereas the RBV represents “performance” as an output of the interaction between the
firm’s resources, Mr P discussed “performance” as enmeshed both in the concept of
“reputation” and within individual people, who are susceptible to being head-hunted
away from the firm. In this regard the customer view differed from that of the firm,
whose director maintained that for his superior-performing firm, intangible assets such
as reputation, trust, relationships and networks did satisfy the criteria for providing
the firm with a sustainable competitive advantage. So, whereas the RBV claims that
intangible assets are embedded in the firm, Mr P’s experience indicated that he
assigned value to the individual, even to the extent of switching firms to follow the
valued person. This implies that recruiting, training and retaining excellent staff is
essential for the firm to sustain a competitive advantage. Human resources strategies
such as bonuses, profit sharing and offering staff equity in the firm may be appropriate
managerial strategies for retaining high value staff and hence ensuring retention of
valuable customers. Questions to further explore this issue are provided in Table III.
The responses have significant implications for staff training and retention strategies
as well as effective remuneration policies.

Capabilities
Mr P equated the concept of “capabilities” with how he assigned value to “superior
stock-picking” and “sophisticated” processes which brought a form of “half art and
half science” to bear on stock selection. He recognised that different firms have
different “cultures” underlying these processes and that not all cultures provide value
to all customers. He drew the distinction between a firm whose investment culture
involved taking a longer term view (a “value” strategy), rather than targeting short
term financial returns, which is often the focus of the financial market. The customer
indicated that a value strategy would not suit all clients, and therefore would not
necessarily be a valued capability.
The customer valued the “internal” intellectual and skill-based knowledge
capabilities more so than the relational market-based assets described as “external”
by Srivastava et al. (2001, p. 782). Despite the fact that all fund managers are able to
access similar data sources and technology, Mr P emphasised it was not the
availability of these assets that provided value but the know-how demonstrated in data
analysis and application by key personnel. The team leader role of key personnel and

their ability to select and develop applications that generate superior performance The resource-
provide examples of how “organizational learning” may develop various competences based view and
that provide “strategic flexibility” for the customer and are a source of customer value
(Wang and Lo, 2004, Figure 3, p. 42). This key issue identified by the customer reflects value
the challenge of understanding customer needs, has implications for the way firms
manage and allocate their skilled staff and warrants further investigation.
31
Management
The RBV positions “management” as the key driver of the process of recognising,
developing and deploying resources into valuable activity. The importance of
“management” – identified by the firm’s director as being the “adhesive” that bonds
and strengthens the characteristic style of the firm – was considered in more
operational terms by the customer, in whose experience the principal staff were also
the best share analysts.
The customer confirmed the RBV perspective that management is critical.
“Every-one knows management is critical, don’t they?” . . . but you need to think “what
it really means in this particular funds management area” (796; 799). The customer
interpreted the term “management” from his experience as being the “principal stock
picker” who also often played a managerial role. In fact, he was unable to differentiate
the “manager” from the “firm” in some instances. Small size was identified by the
customer as a valuable factor, indicating that in small firms the influence of
management is inclusive of specific operational expertise as well as general managerial
skills. This reinforces the necessity of differentiating industries when applying the
principles of RBV to specify the sources of customer value.
In summary, the customer’s view as revealed in the trial interview was naturally
focussed on his own role as a participant in the funds management industry when
assessing and articulating the attributes of the firms he valued. Not surprisingly, he
found the conceptual model and associated terminology of the RBV somewhat
“theoretical”. His own re-conceptualisation, consisted of three “Ps” – People:
impressive stock pickers who are experienced, well trained and who bring more to the
decision than the customer himself can achieve; Process: referring to sophisticated
tasks and activities undertaken by experienced analysts in determining a portfolio; and
Performance: above-average returns on the stock selection are recognised as essential
to providing customer value. This simplified terminology has been utilized in the
adapted interview schedule (Table III) for subsequent investigations. The response of
the customer provided a “reality check” for academic research, showing how
theoretical concepts may be resisted by practitioners.

Limitations
This trial data provides an introduction to the customer perspective on the RBV and
the role of “value”, and although not considered generalisable, provides a basis for
further research. While specific to the particular case, it does provide a counterpoint to
the view of value to the firm previously explored. While interview data is
systematically analysed and reported this does require interpretive examination of the
customer’s responses and hence is open to challenge particularly when fronts or
symbolic references are included (Rubin and Rubin, 1995, p. 24). For example, when the

JEIT interviewee described the process of choosing a portfolio as “half art half science”, its
31,1 meaning indicated by the research team may not be conveyed exactly as intended.
Detail from a variety of sources would help to consolidate the extent to which the
customer’s reflection is representative. In particular, for industries with complex and
specialised products the value of extensive marketing and promotion strategies needs
investigation and analysis. Further research is necessary to test the relevance of the
32 theory of Srivastava et al. (2001), that predicts the marketing relationship of the firm to
be one of the two main channels of value to a client, and to test the theoretical model of
Wang and Lo (2004) which ranks marketing functions and relationships as a “core
competence” of the firm.
This trial investigation of the customer perspective suggests a possible
modification to the RBV model (as shown in Figure 1) to incorporate management’s
role as operational and impacting directly on the firm’s core assets and capabilities.
The RBV indicates the strategic role of management to be a process more separated
from the operational aspects of the firm’s resources. This modification is a basis for
further research.

Conclusion
A firm aspiring to achieve a sustainable competitive advantage and deliver superior
performance would benefit from feedback provided by knowledgeable key informants
from firms and customers in their industry. Fahy’s (2000) model has provided a useful
foundation from which to explore the dynamics of the RBV from different perspectives.
Empirical testing of Fahy’s conceptual model from the perspective of the firm (Clulow
et al., 2003) resulted in some adaptations demonstrated in Figure 1 and provided the
basis for a further stage of development in understanding the role of key resources. In
this study, the incorporation of the customer’s view of value into the model enhances
this exploration.
The trial study was advanced by adopting a customer focused marketing approach
to the RBV and the role of the firm’s key resources. The customer identified the most
important source of value to be derived from intellectual-based assets and capabilities
including “process-based capabilities” and skills embedded in individuals/teams with
know-how. These individuals/teams are able to apply their skills to develop a superior
process that is valued by their customers. The customer placed most value on
capabilities, and to a lesser extent on some intangible assets, rather than on tangible
assets. These exploratory results are consistent with studies that have investigated the
firm’s view of resources. The challenge for the firm is to sustain superior performance,
since over time high-performing personnel can be identified by competitors thus
increasing the risk of those key individuals being appropriated by rivals. The customer
clearly identified this risk and viewed it as a more likely occurrence than the firm was
prepared to acknowledge.
Both the firm and the customer agree that people, as both individuals and teams, are
a key source of value. They also agree that process, or how the firm develops its
strategies, differentiates firms. And there is agreement that performance is “the bottom
line”. The firm was aware that this is the yardstick by which they are assessed by the
market, and the customer’s attraction to superior stock pickers was based on the belief
that these analytical skills translated into superior performance. The revised interview

schedule (Table III) better incorporates the elements of value that most influence the The resource-
customer’s choice of firm. based view and
In summary, the areas of fundamental agreement identified in this trial were
substantive and differences in the customer’s assessment criteria largely came down to value
matters of preferred terminology and emphasis. The customer identified the problem of
trying to apply one model to all industries and instead advocated “you’ve got to get
down to specifics” (681) and account for a firm’s unique character. The differences did 33
not challenge the key elements of the RBV theory but highlighted the need to study
different firms operating within an industry and the need to consider firms in different
industry contexts. The study indicates that there are subtle differences in the ranking
of valued skills and capabilities between producers and customers that if verified in
further trials, have potential to better focus human resources practices on key
resources of most value to customers.

Note
1. The authors acknowledge that the research design of the study benefited from reviewers’
comments and conference discussion of a conceptual paper presented at the 2005 ANZMAC
conference, in Perth, Australia.

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Corresponding author
Val Clulow can be contacted at: val.clulow@buseco.monash.edu.au

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