The objective of this paper is to incorporate the entrepreneurial view point into the framework of the resource-based view of strategic management. We firstly attempt to make a brief survey of the conceptual framework of the RBV, and formulize it in a static sense by contrasting it with the competitive forces approach.Secondly, we conduct a critical assessment of the RBV from a dynamic point of view.
The concept of entrepreneur’s ability is distilled by this assessment, and the objective of corporate strategy is clarified as well. Finally, we suggest a new perspective of the RBV by amending it from an entrepreneurial viewpoint. Keywords: resource-based view, entrepreneurship, disequilibrium, capability, strategic management RITSUMEIKAN INTERNATIONAL AFFAIRS Vol. 3, pp. 125-150 (2005). * Associate Professor, Faculty of Business Administration, Ritsumeikan University 126 RITSUMEIKAN INTERNATIONAL AFFAIRSVol. 3 INTRODUCTION “The pivot on which everything turns”. (J. A. Schumpeter) Although the resource-based view (RBV) has emerged as one of the substantial theories of strategic management, it is said that it has overlooked the role of entrepreneurial strategies and entrepreneurial abilities as one of the crucial sources of the competitive advantage of a firm.
Even today, when entrepreneurship research is in demand, most economic research, and consequently much of strategic management research, views entrepreneurship as the “specter which haunts economic model”. Baumol, 1997: 17) The main objective of this paper is to amend the RBV of strategic management from a dynamic point of view, in order to make up its insufficiency. Many scholars have attempted to investigate into the mechanism of sustainable competitive advantage of a firm through the RBV with original concepts such as ‘core competence’ (e. g. , Hamel & Praharad, 1994), ‘dynamic capability’ (e. g. , Teece, Pisano & Shuen, 1997) ‘VRIO framework’ (Barney, 2002), ‘capability lifecycle’ (Helfat & Peteraf, 2003), and ‘routine and skills’ (e.
Nelson & Winter, 1982), however, little work in RBV has been made to grasp the role of entrepreneurship as the crucial source of competitive advantage, despite the abilities of the entrepreneur are undoubtedly the principal human resource possessed by a firm (see Alvarez & Barney, 2000 for an exception). This paper attempts to incorporate the theory of entrepreneurship into the RBV of strategic management, while critically dealing with the RBV from an entrepreneurial viewpoint. The paper is divided into three parts. First, a brief survey is given of the conceptual framework of the RBV.It is helpful for us to grasp the characteristics of its framework by contrasting it with the competitive forces approach (CFA) presented by Porter (1980) because it is said that the CFA explores the source of sustainable competitive advantage in the external environment of the firm (i.
, attractiveness of industry where they are located), while the RBV pays attention to the internal resources of the firm (i. e. , the heterogeneous resources that a firm possesses). Second, we clarify the objectives of corporate strategy through a critical 2005The Critical Assessment of the Resource-Based View of Strategic Management TOKUDA 127 assessment of the RBV from both a static and a dynamic point of view. Barney’s fundamental concept of the RBV is examined. Third, we suggest a new perspective of the RBV by amending it from an entrepreneurial viewpoint. . STRATEGY AND EXTERNAL ENVIRONMENT OF A FIRM Traditional research on strategic management suggests that firms need to seek a strategic fit between the external environment, for example opportunities and threats, and internal resources, for example strengths and weaknesses (e.
, Andrews, 1967; Itami, 1987).
However, considerable emphasis has usually been given to a firm’s competitive environment and its competitive position (Das & Teng, 2000). Considering the source of sustainable competitive advantage of a firm, it is widely accepted that the dominant viewpoint in the strategic management theory throughout the 1980s was the CFA presented by Porter (1980). His conceptual framework was mainly based on the structure-conduct-performance paradigm of the theory of industrial organization (Bain, 1959; Mason, 1949).It is no exaggeration to say that Porter (1980) specifically brings a concept of ‘competition’ for the first time in strategic management theory. 1) The most innovative part of his work in this field is that he constructs a consistent framework for thought so as to examine concrete questions like “how will a firm able to get a competitive advantage over its competitors? ” In the CFA, the industrial structure strongly influences the rules of competition, as well as the strategies potentially available to the firms belonging to that industry.Therefore the strategic issue for a firm seems to concern their competitive positioning in the industry. They seek a favor1) Broadly speaking, the strategic management theory before 1980s (pre-Porter period), which used to be called ‘business policy’, had not been a body of theory with a consistent viewpoint yet. Its object was mainly to argue the management of the diversified firm. Hence, it was generally dealing with such an argument like, “to which business should we give the priority to allocate our resources? or “from which business should we withdraw our resources? ” In this stage, the strategy was no more than the ‘citing list of procedures’ because the object of strategy went no further than merely arguing the analytical technique: growth matrix, effect of experience curve, product portfolio management, policy decision tree and so on, and the flowchart of its application which is needed when the strategy has been drawing up. For instance, Hoffer and Schendel (1978), gave a comprehensive survey of past studies on the subject.They compile variety of analytical techniques and the flowchart of its application is indicated in their work. It is not thoroughly explained, however, why the process ought to be followed by such a flowchart. 128 RITSUMEIKAN INTERNATIONAL AFFAIRS Vol. 3 able position in order to gain a monopoly rent (Teece, 1984), while avoiding involvement in competition or moderating competitive pressures by influencing industry structure and their competitors’ behavior.To help the firm find such a positioning in the industry, Porter (1980) advanced a ‘fiveforce model’. This consists of five industry-level forces: i. e. , entry barriers, threat of substitution, bargaining power of supplier, bargaining power of buyer and rivalry among industry incumbents, which determine the inherent profit potential of an industry or sub-segment of it. However, a series of empirical surveys have failed to support the link between industrial structure and the performance of a firm.Some studies show the variance in firm performance between industries is substantially less than that within industries (e. g. , Jacobson, 1988; Hansen & Wernerfelt, 1989; Rumelt, 1991). Others also identify systematic and significant performance differences among firms which belong to the same strategic group within an industry (Cool & Schendel, 1988). Research has suggested that the internal resources of a firm rather than the external environment around the firm are possibly the primary source of performance differences among firms.This result is bringing a growing number of researchers to the RBV of strategic management to explain the differences by focusing their attention on resource heterogeneity in an industry and the source of sustainable competitive advantage of the firms. 2) . STRATEGY AND INTERNAL RESOURCES OF A FIRM Since the mid 1980s, the RBV has emerged as one of the substantial theories of strategic management (Barney, 1986a; Rumelt, 1984; 2) According to Teece, et al. 1997: 514), an entry decision process of the CFA looks roughly as follows: “(1) pick an industry (based on its ‘structural attractiveness’); (2) choose an entry strategy based on conjectures about competitors’ rational strategies; (3) if not already possessed, acquire or otherwise obtain the requisite assets to compete in the market. ” From this perspective the process of identifying and developing the requisite assets is not particularly problematic. The process involves nothing more than choosing rationally among a well-defined set of investment alternatives.If assets are not already owned, they can be bought. On the contrary, the RBV assumes resource endorsement of a firm cannot equibrate through factor input markets. The entry decision process of the RBV is as follows: “(1) identify your firm’s unique resources; (2) decide in which markets those resources can earn the highest rents; and (3) decide whether the rents from those assets and most effectively utilized by (a) integrating into related market(s), (b) selling the relevant intermediate output to related firms, or (c) selling the assets themselves to a firm in related businesses. ” 005 The Critical Assessment of the Resource-Based View of Strategic Management TOKUDA 129 Wernerfelt, 1984), even though it is said that the RBV does not presently appear to meet the empirical content criterion required of a theoretical system (Bacharach, 1989; Hunt, 1991; McKelvey, 1997; Priem & Butler, 2001a,b). The increased attention to firms’ resources by researchers has seemed to be beneficial in helping to clarify the potential contributions of resources to competitive advantage, as well as to introduce strategy scholars to a number of useful descriptive theories from industrial rganization economics (e. g. , Alchian & Demsetz, 1972, on ‘teamwork’ production, or DeVany & Saving, 1983, on price as a signal of quality), and furthermore to alleviate a previous analytical overemphasis on the opportunities and threats that arise from the product side (Priem & Butler, 2001a). The RBV suggests that the resources possessed by a firm are the primary determinants of its performance, and these may contribute to a sustainable competitive advantage of the firm (e. g. Hoffer & Schendel, 1978; Wenerfelt, 1984). According to Barney (1991), the concept of resources includes all assets, capabilities, organizational processes, firm attributes, information, knowledge, etc. controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness (Barney, 1991; Daft, 1983). In the early stage of the RBV, the main concern was to identify the characteristics of resources that are not subject to imitation by competitors.If the resources possessed by a firm can easily be replicated by competitors, even though the resources are the source of competitive advantage of the firm, then the advantage will not last long. Dierickx & Cool (1989a) describe how the sustainability of a firm’s asset position hinges on how easily its resources can be substituted or imitated, and imitability is linked to the characteristics of the asset accumulation process: i. e. time compression diseconomies, asset mass efficiencies, inter-connectedness, asset erosion and casual ambiguity. In the same way, several other characteristics have been explored such as unique historical conditions, causal ambiguity (Reed & DeFillippi, 1990), social complexity, isolating mechanism and so on (Barney, 1991; Lippman & Rumelt, 1982; Rumelt, 1984). . CAPABILITY AS A SOURCE OF THE HETEROGENEITY Let us develop the concept of resources a little further.For instance, Grant (1991) notes the distinction between resources and capability as follows: 130 RITSUMEIKAN INTERNATIONAL AFFAIRS Vol. 3 Resources are inputs into the production process…[they] include items of capital equipment, skills of individual employees, patents, brand names, finance, and so on. But, on their own, few resources are productive. Productive activity requires the cooperation and coordination of teams of resources. A capability is the capacity for a team of resources to perform some task or activity. Grant, 1991: 118-19) In the same manner, Amit & Schoemaker (1993) define resources as stocks of available factors that are owned or controlled by the firm, which are converted into final products or services. Capabilities, in contrast, refer to a firm’s capacity to deploy resources, usually in combination, using organizational processes, to produce a desired effect. 3) Hence, the presence of capability enables resources to begin to be utilized, and the potential for the creation of output arises.While resources are the source of a firm’s capabilities, capabilities are the main source of its competitive advantage (Grant, 1991). The important point of this approach compared to the early stage of RBV is that, for the sake of gaining a sustainable competitive advantage, capability is regarded as more important than resources per se, and this implies that the firm-specific way of cooperation and coordination of resources causes the heterogeneity among firms in an industry. ) This thought can be theoretically traced back to Penrose’s (1959) work. According to her work, firm development is an evolutionary and cumulative process of resource learning, in which increased knowledge of the firm resources both helps create options for further expansion and increase absorptive capacity. Therefore, a major focus of her work lies in the application of resources. She regards a firm as more than an administrative unit, it is also a collection of productive resources which including both physical and 3) Stalk, et al. 1992) draw a distinction between a capability and a competence as follows: competencies and capabilities represent two different but complementary dimensions of an emerging paradigm for corporate strategy. Both concepts emphasize ‘behavioral’ aspects of strategy in contrast to the traditional structural model. But whereas core competence emphasizes technological and production expertises at specific points along the value chain, capabilities are more broadly based, encompassing the entire value chain. Inthis respect, capabilities are visible to the customer in a way that core competencies rarely are (Stalk, et. al. , 1992: 66). ) To deepen the concept of capability, Grant (1991) invokes the concept of ‘organizational routine’ from evolutionary theory (e. g. , Nelson, 1991). He views capability as a routine or a number of interacting routines, and organization as a huge network of routines. 2005 The Critical Assessment of the Resource-Based View of Strategic Management TOKUDA 131 human resources. According to Penrose, it is never ‘resources’ per se that are the ‘inputs’ in the production process, but only the ‘services’ that the resource can render, that is: “The services yielded by resources are a function of the way in which they are used? xactly the same resources when used for different purposes or in different ways and in combination with different types of or amounts of other resources provide a different service or set of services. The important distinction between resources and services is not their relative durability; rather it lies in the fact that resources consists of a bundle of potential services and can, for the most part, be define independently of their use, while services cannot be so defined, the very word ‘service’ implying a function, an activity…it is largely in this distinction that we find the source of the uniqueness of each individual firm” (1959: 25). ) The result of this is that the concept of ‘capability’ is the capacity of a firm to convert resources they possess into the ‘service’. The good services might be produced by either ‘good resources’ or ‘average capability’/ ‘average resources’ or ‘good capability’, if capability were a type of ‘score’ of capability, particular to each firm (e. g. , good firms have a high ‘capability score’). The difference, or possibly the uniqueness, of a firm largely comes from these capabilities. . VULNERABILITY OF THE RBV After having made a brief survey of the conceptual framework of the RBV by ontrasting it with the CFA, we now attempt to clarify the objective of corporate strategy through a critical assessment of the RBV. Barney’s (1991) conceptual framework of the RBV has been used6), because 5) Foss (2005) notes that while the RBV is Penrosian in its emphasis on firm-level heterogeneity, most of Penrose’s basic themes ? flexibility in an uncertain world, organizational learning as an evolutionary discovery process, path-dependency, the vision of the management team, entrepreneurship, firm differences being traceable to the efficiency with which resources are applied rather than to resources themselves, etc. seem to lie outside the orbit of the RBV, at least as its conceptual framework is clearly related to Demsetz’s (1973) competitive equilibrium model. 6) Referring to the SWOT framework, Barney defines resources as being valuable when they help seizing an opportunity in the firm’s environment or when they help neutralizing some threat in that environment, or at least shielding the firm against the threat. By resources 132 RITSUMEIKAN INTERNATIONAL AFFAIRS Vol. 3 as Priem & Butler (2001a) remark, many RBV proponents either paraphrase his statements or simply cite his articles (i. . , Barney, 1991), without an augmented definition (e. g. , Bates & Flynn, 1995; Brush & Artz, 1999; Lits, 1996; Powel, 1992a, b; Rindova & Fombrun, 1999; Yeoh & Roth, 1999), and operate under his framework in their conceptual and empirical work. 7) Barney’s (1991) remarks on the conditions that a firm produces competitive advantage8) may be paraphrased as follows: (a) resources must be valuable. (b) resources must be rare. Two points should be noted here regarding to the attributes of the competitive advantage of a firm.Firstly, Barney’s concept of ‘valuable’ is an ambiguous criterion to measure the competitive advantage of a firm. Whether the resource is valuable or not should be measured by its profitability, and thus it ought to take the form of an economic asset regardless of how tangible or intangible it is. The value of any resource should be measured by the discounted value of the expected future income stream that can be attributed to it. 9) In the RBV the valuable attribute of a firm is taken as given. The being rare, Barney seems to have a simple counting sense (as distinct from an economic sense) in mind.Firms that control valuable and rare resources possess a competitive advantage and will be able to obtain a competitive advabtage. If furthermore the relevant resources are non-imitable and non-substitutable a sustainable competitive advantage may be obtained. The non-imitability (or more correctly: “costly-to-imitate”) condition directs attention to whether (or, at which cost) competitor firms can acquire or accumulate resources with attributes and levels of attributes similar to some desired resource which produces a competitive advantage.The non-substitutability (or, “costly-to-substitute”) condition directs attention to whether (or, at which cost) competitor firms can access (different) resources that will allow them to implement the same strategies as some successful firm. According to Foss (2005), it is also these two criteria that allows Barney to define sustainable competitive advantage in terms of situations in which all attempts by competitor firms at imitating or substituting a successful firm have ceased. Thus, he notes that sustainable competitive advantage is a property of an equilibrium. ) Priem and Butler investigate whether the RBV arguments regarding competitive advantage meet the generally accepted criteria for classifying a set of statements as a theory, See Priem & Butler (2001a, b) and also Barney’s counter-argument (Barney, 2001). 8) With regard to the sustainability, he notes the resource must be imperfectly imitable, and cannot be strategically equivalent substitutes for this resource. 9) This kind of argument has been well discussed in the theory of multinational corporations (i. e. an argumentation between OLI paradigm theorists and Internalization theorists regarding the handling of ownership advantage of a firm). See, e. g. , Casson (1987). 2005 The Critical Assessment of the Resource-Based View of Strategic Management TOKUDA 133 planning and investment necessary to build up such resources are exogenous in this framework. 10) This means there is the fear that the RBV will overstate the profitability of firms exploiting these resources, because they ignore the cost of acquisition and accumulation.Therefore it is impossible for the RBV to explain why firms invest in such a valuable resource rather than in other type of resources (i. e. , Barney is conducting a cross sectional analysis of what the firms currently has, he is not discussing what they would need to do to obtain more or different resources in the future. Barney focuses here on content while other RBV authors have focused on process. He is not trying to explain “why firms invest”, he is trying to explain what firms have accumulated as of a specific point in time.However, other RBV researchers have considered “why” and “how”). In addition, if the firms want to realize their competitive advantage or maximize their profit from the resources they possess, they have to take into account of the demand-side characteristics that influence on the final price of their output. The values of resources are determined by demandside characteristics, and those are also exogenous to the RBV model (Priem & Butler, 2001a, b).We never have a priori information on the competitive advantage among firms that will result in super-normal profit, on the contrary, we know a posteriori the existence of the competitive advantage by virtue of the existence of super-normal profit. After all, the emphasis is on how to sustain such a valuable resource over the long term without adequate appreciation of its economic value. Therefore it is open to criticism that the RBV contains a theory of sustainability but not a theory of competitive advantage (Priem & Butler, 2001b).Secondly, the concept of a ‘rare’ resource does not necessarily ensure the competitive advantage of the firm, even if that resource generates a large ‘rent’ due to its relative scarcity. Rents are the prices of services yielded by resources (Lewin & Phelan, 2002). In this phase rent is noth10) According to Petaraf (1993: 180), “Firms with superior resources will earn rents… It may be understood most clearly by assuming that firms with superior firms with superior resources have low average costs than other firms”. We understand that superior resources may earn Ricardian type of rents, however in order to analyze the source of firm ustainable competitive advantage over rivalry, we should put not a ‘rent’ but a profitability’ in question. And we cannot understand her ground why ‘superior resources’ go to ‘a low cost position’ (1993: 180). Superior resources must have accompanied a lot of investment until then due to its superiority, even though which is such an intangible assets as ‘organizational culture (i. e. , Barney, 1986b), thus we cannot necessarily to say ‘firms with superior firms with superior resources have low average costs than other firms’. 134RITSUMEIKAN INTERNATIONAL AFFAIRS Vol. 3 ing more than the rental price of the service of the resource whether it is rare or not. After remunerating all the factors of production, no profit has been left to the firm (Demsetz, 1973; Barney, 1986a; Rumelt, 1987). If there is a firm gaining profit from the resource, it is simply that the firm squeezes some part of the rent from the owner of the resources. Many RBV researchers identify the concept of ‘rent’ (e. g. , Mahoney & Pandian, 1992; Petaraf, 1993; Rumelt, 1987), that is expressed in various forms, i. e. Ricardian rent, Marshallian rent, Paretian rent, and quasirent, as those, which accrue from the relative differentiation of resources a firm control (We have to bear in mind the fact that rent will be paid even though all of land is homogeneous or even if the land is not fertile. Rent is not paid due to the relative difference of the land’s fertility but by the fact that land is merely scarce (Lewin & Phelan, 2002). The difference in fertility reflects in the difference in rental rates, however, the rental rate is nothing to do with the profitability of a firm.The owner of any resources just asks for the rents: i. e. , wage, rent, and interest, according to its rate). They consider the concept of ‘competition’ as the states that firms compete in factors of production markets over the relative advantage of the resources they acquire or accumulate, rather than compete in final-product markets over the price of their products and services. However, from the static point of view, all of the relative advantages of these resources ought to be compensated for their owner. And the source of competitive advantage of the firm remains only by their monopoly rent.In this case alone, a firm would be able to gain super-normal profit at the cost of social welfare. It follows from what has been said, that the RBV contains the conditions of sustainability, but it does not fulfill the conditions for acquiring and realizing a competitive advantage. 11) 11) According to Foss (2005), Barney (1991) singles out two necessary “primitives” that must obtain for SCA to exist, namely heterogeneity and immobility, however, the relation between these two “primitives” and the four other conditions of sustainable competitive advantage (i. e. resources being rare, valuable, costly to imitate and costly to substitute) is not made clear. The implication of Barney’s discussion is that the four latter are collectively sufficient for SCA, and if they (all) obtain, heterogeneity and immobility also obtain. However, the four conditions are not all necessary, whereas immobility and heterogeneity are. In other words, possessing resources that are rare, valuable, costly to imitate and costly to substitute is not the only way to gain and sustain competitive advantages, as long as the relevant ways conform to the criteria of resources being immobile and heterogeneous.This, however, is not clarified in Barney’s paper. 2005 The Critical Assessment of the Resource-Based View of Strategic Management TOKUDA 135 . THE RBV’S FORTE Given that the RBV is nothing more than an indication of the condition for competitive firms to sustain their advantage, how can we investigate the academic value in the RBV in terms of explaining the source of the competitive advantage of a firm? By examining Barney’s (1986a, 2001) esearch, we see that he might recognize the existence of super-normal profit and the source of competitive advantage besides valuable and rare resources. The ‘strategic factor market imperfection’ is the key concept for finding the academic value in the RBV. The strategic factor markets are developed when a firm requires the acquisition of resources in order to implement its strategy (Barney, 1986a). These markets are where firms buy and sell the resources necessary to implement their strategies (Barney, 1986a; Hirshleifer, 1980).Hence the economic performance of the firms depends not only on the returns from their strategies but also on the cost of buying the resources from these markets to implement those strategies. And the costs of those resources are determined by the characteristics of the factor markets. It is leading us that valuable and rare resources are not the source of competitive advantage or above normal return if the cost of acquiring or developing these resources equals the value they create when used to conceive of and implement a strategy.However, there is an implied possibility that the competitive advantage may come from the imperfections in strategic factor markets. Different firms in these markets will have different expectations about the future value of a strategy, which creates this imperfection (Barney, 1986a), and the owners of the firm also have different expectations about the future return of their resources (Barney, 2001). Therefore, different expectations toward the resources produce the possibility of a competitive advantage for a firm.This kind of competitive advantage, named ‘economic rents’ by Barney, reflect the creative and entrepreneurial ability of firms to discover how to generate value with their resources in ways that other firms and outside owners cannot anticipate (Barney, 1986a, 2001). Firms which intend to obtain a competitive advantage must be consistently better informed concerning the future value of these resources than other firms. 12) 12) Peteraf (1993) argues that ex ante limits to competition is a condition for the existence and endurance of competitive advantage. Because of ex ante uncertainty about the future 36 RITSUMEIKAN INTERNATIONAL AFFAIRS Vol. 3 Examining the Barney’s concept of ‘strategic factor market imperfection’, we are able to interpret that the characteristics of ‘competition’ are not in the world of static states (equilibrium), but in the world of dynamic processes of change (disequilibrium). As mentioned above, no rents emerge in the world of static states. If the price of any resource reflects the discounted value of its expected future earnings, and if everyone shares the same correct expectations, then that price includes all correctly anticipated value components.It is nothing to say that ex ante values will turn out to be equal to ex post values. There will be no room for super-normal profit. Unless there is a difference between the ex post value of a venture and the ex ante cost of acquiring the necessary resources, the entrepreneurial rents are zero (Rumelt, 1987; Peteraf, 1993). In a dynamic sense, such a situation cannot exist because a price of any resource does not reflect the discounted value of its expected future earnings, so everyone does not share the same correct expectations towards it and the price includes all correctly anticipated value components.The possibility of profit comes from ex ante uncertainty of the resource’s certain (real) value, the probability of profit comes from ex post realization of its certain value. In this sense, the size of super-normal profit, thus the competitive advantage of a firm, depends on the difference between the ex ante cost of resources and the ex post value of them. This suggests that to acquire a competitive advantage is no more and no less than to obtain the entrepreneurial rents. The CA depends on how to exploit the factor markets disequilibrium, i. e. the firm’s skill (accuracy) at perceiving the future value of resources. We may say that the academic values can be found in the RBV when we view it in a dynamic context. value of the resources to be bought or developed today, only firms with entrepreneurial insight or luck make the right investment decisions and are rewarded by entrepreneurial rents (Barney, 1986; Wernerfelt & Montgomery, 1986). Also, ex post limits to competition (i. e. , isolating mechanisms) protects the strategic assets and capabilities from being imitated. Isolating mechanisms allow a firm to sustain its competitive dvantage. Isolating mechanisms Rumelt (1984: 568) such as casual ambiguity, specialized assets, switching and search costs, team-bodied skills, reputation and image and legal restrictions on entry are the reasons why markets fail. In the absence of isolating mechanisms and market imperfections, resources would be mobile, and no firm could achieve competitive advantage and positive returns (like in perfect competition). By pointing these mechanisms out, Rumelt (1984) highlights ‘why firms exist’ and then concentrates on ‘why firms are heterogeneous’. 2005The Critical Assessment of the Resource-Based View of Strategic Management TOKUDA 137 . ABILITY OF ENTREPRENEUR AS A SOURCE OF THE HETEROGENEITY In the dynamic world, the heterogeneous perceptions are more important than the heterogeneous resources per se (Lewin, 2005; Lewin & Phelan, 2002). As a matter of course, such perception originates in the asymmetric information among firms. This drives us, logically, to the situation that the ‘entrepreneurship’ and also the ability to perceive market imperfection of information have to be incorporated into the RBV.How to best evade the market imperfection or how to make good use of that imperfection is very strategic decision made by a firm to gain a super-normal profit. 13) And of course, the one who will be in charge of this strategic task is an entrepreneur. 14) As an aside, even if it is logical to represent the entrepreneurship in t