Firm resource stock, resource complementarity, and the heterogeneity in resource value

HoWook Shin () and Seung-Hyun Lee ()
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HoWook Shin: Bowling Green State University
Seung-Hyun Lee: University of Texas at Dallas

Asia Pacific Journal of Management, 2019, vol. 36, issue 3, No 4, 686 pages

Abstract: Abstract Although the central question in the resource-based view (RBV) is what determines the value of resources, it is not easy to find research on how generic resources add value. However, lack of generic resources can be detrimental for the firm. We propose that the value of a generic resource depends on the acquiring firms’ resource stocks and on the extent to which the resource complements the firms’ existing resource stocks. Specifically, we predict that a new generic resource is more valuable to firms with poorer resource stock. We also argue that cash that better complements firm resource stock than other generic resources generates larger performance improvement. We test our arguments by using data established by a natural experiment whereby resources (i.e., cash and tangible resources) are randomly disbursed to Sri Lankan microenterprises that experienced a natural disaster. Taking advantage of a difference-in-difference estimation, we find empirical support for these arguments.

Keywords: Resource value; Firm resource stock; Natural disaster; Cash; Performance improvement; Difference-in-difference (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10490-018-9564-1

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