The Management of Resources and the Resource of Management Joseph T. Mahoney UN~vERs~rr OF I,uNO~S, URBANA

The resource-based approach of deductive economics, the dynamic capabili- fundamental contributions of the resource-based approach. It
ties approach of strategy process, and organization theory research on is argued that researchers who wish to narrow the resource
organizational learning need to be joined in the next generation of resource- approach to a static equilibrium model run the risk of stagnation
based research. This suggested redirection of resource-based research implies with an inability to sustain interest in the conversation about
a return to a "resource-learning" theory of thefirm begun by Penrose (pub- resources. Section 2 maintains that the substantial literature on
lished 1959). A synthesis of resource-based theory and learning theory allows organizational learning provides some guidance for strategy reus
to examine how two sources offirm heterogeneity (resources and mental search on core competencies and capabilities-based competition.
models) are intertwined, j BUSN aES 1995. 33.91--101 The major thesis of the article is that the combination of
economic, behavioral, and cognitive approaches is the best way
forward in strategy. In particular, economics-based research
(the management of resources) and research on organizational
consensus is beginning to emerge in strategic manage- learning (the resource of management) need to be joined in the
ment that calls for an active attempt to increase the next generation of resource-based research.
dialogue among behavioral, cognitive, and economic
approaches to strategy issues (Amit and Schoemaker, 1993;
Barney, 1992;Eisenhardt, 1989;Mahoney, 1992b;Schoemaker, The Resource-based
1993; Zajac, 1992). In the spirit of this pluralistic and balanced Theory of the Firm
approach (Bowman, 1990; Rumelt, Schendel and Teece, 1991),
the literature on organizational learning (behavioral and Economic Rent
cognitive literature) can and should be united with the emerging Strategy is constrained by, and dependent on, the firm's resource
resource-based theory of the firm (a more economic approach), profile (Collis, 1991; Tallman, 1991). In the resource-based
Specifically, this study argues that a holistic approach, which view, the concept of strategy is considered as a "continuing
combines behavioral and cognitive logic with economic logic, search for rent" (Bowman, 1974, p. 47) and sustainability of
is necessary for advancing the theory of invisible assets (Itami rent, where rent is defined as return in excess of a resource
and Roehl, 1987) and sustainable competitive advantage, owner's alternative use costs. Resources are the basic unit of
Williamson (1991) notes the uncertainty of whether the dy- analysis (Grant, 1991b). A resource may be conveniently clasnamic
capabilities approach (Nelson and Winter, 1982; Prahalad sifted under a few headings-for example, financial, physical,
and Hamel, 1990; Rumelt, 1984; Teece, 1990)-in which human, organizational, technological, and intangible (Grant,
organizational learning should certainly be a part-and the 1991a; Hofer and Schendel, 1978)-but (the key idea is that)
resource-based approach (Barney, 1991; Conner, 1991; Peteraf, the subdivision of resources may proceed as far as is useful
1993; Wernerfelt, 1984) will play out individually or in for the problem at hand (Penrose, 1959).
combination. The argument here is that communication can In contrast to (strong form) efficient market theorists, most
and should flow freely between participants of the two resource-based theorists insist that short-term economic rents are
approaches. In fact, the two approaches naturally blend into possible (Schoemaker, 1990). Rents may be achieved by owneach
other (Mahoney and Pandian, 1992). inga valuable resource that is scarce (Ricardo, 1817). Resources
The logic of the study consists of two sections, with each yielding Ricardian rents indude ownership of valuable land,
section supporting an overriding idea. Section 1 presents the locational advantages, and various forms of property rights
(Rumdt, 1984). Second, monopoly rents may be achieved by
Address correspondence to Joseph T. Mahoney, Department of Business Administra- government protection or by collusive arrangements when bartion,
University of Illinois at Urbana, 1206 South Sixth Street, Champaign, IL 61820. riers to potential competitors are high (Conner, 1991). Third,
Journal of Business Research 33, 91-101 (1995)
© 1995 Elsevier Science Inc. ISSN 0148-2963/95/59.50
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