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

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

Journal of Business Research, 2020, vol. 118, issue C, 363-377

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.

Keywords: Exploration; Exploitation; CEO’s entrepreneurial orientation (CEO EO); CEO’s market orientation (CEO MO); Long-term performance (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:118:y:2020:i:c:p:363-377

DOI: 10.1016/j.jbusres.2020.07.001

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