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

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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 

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018
corrected publication April/2018

Authors and Affiliations

  1. 1.College of Business AdministrationBowling Green State UniversityBowling GreenUSA
  2. 2.Organizations, Strategy, and International Management, Naveen Jindal School of ManagementUniversity of Texas at DallasRichardsonUSA

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