Principles of Effectual Entrepreneurship and the Resource-Based View of Strategy - Essay Example

In the long run, strategic management is about maintaining and creating a sustained competitive advantage (SCA). Strategies might be demarcated as plans for developing SCA. Therefore, SCA is the main thing that scholars of strategic management seek to clarify. It is defined as the organizational ability to build and appropriate more value than the opposition on a continuous basis. However, it must be noted that a firm having an SCA does not mean superiority in economic performance; instead, SCA is a possibility for such a performance, which might or might not be realized. Entrepreneurial organizations vary in form and constituent from their enormous and well-established counterparts.

Alternatively, they are viewed as more practical, better risk-takers, and not as much official as their big counterparts. Instead, they suffer or at least appear to, from their distinctive features of smallness and newness. Being small and new, they time and again lack the necessary resources to develop and survive competitive advantage. We can examine the exclusive characteristics of entrepreneurial organizations through two distinct theoretical lenses, namely the resource-based view and resource dependence theory (Peng 2001).

In the present version, the resource-based view of strategy is considered by finding the potential to build and appropriate more value than the opposition to the resource benefits of organizations and the features of these sources. It focuses on the competitive advantage created by the organization from its distinctive set of resources. An organization is said to possess a competitive advantage when it is executing a value constructing a strategy that is not executed by any potential or current competitors.

Furthermore, in the resource-dependent theory, the view is that an organizational survival depends on its capability to gain control over the resources in the environment. It states that exterior pressure, for instance, social forces, regulation, and competition will make organizations hunt for environmental connections. Therefore, organizations should stretch out to their exterior environment and supportive affiliations so as to get desired resources. Strategic coalitions are a significant conduit for enabling the flow of resources. Nevertheless, entrepreneurial organizations encounter distinctive challenges in their efforts to search for cooperative connections with alike but superior organizations. Possible alliance associates assume that this firm’s resource dependence needs them to hunt for partners. As a result of the deficiency of resources and small history, resource and dependency entrepreneurial organizations, for example, trying to take along their innovation to the market are frequently left with one choice: to take part in cooperative affiliations with organizations with complementary assets and capabilities (Foss et al. 2008).