This paper was originally prepared as a basis for a lecture when I received an honorary doctorate at the Copenhagen Business School. I am grateful to Nicolai Foss for suggesting that I pursue independent publication to reinvigorate foundational research in strategic management. An anonymous referee greatly aided the exposition.
Small forces and large firms: Foundations of the RBV†
Article first published online: 11 FEB 2013
Copyright © 2013 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 34, Issue 6, pages 635–643, June 2013
How to Cite
Wernerfelt, B. (2013), Small forces and large firms: Foundations of the RBV. Strat. Mgmt. J., 34: 635–643. doi: 10.1002/smj.2043
- Issue published online: 15 APR 2013
- Article first published online: 11 FEB 2013
- Accepted manuscript online: 24 JAN 2013 09:28AM EST
- Manuscript Accepted: 20 DEC 2012
- Manuscript Revised: 11 DEC 2012
- Manuscript Received: 2 JUL 2012
- resource-based view;
- theory of the firm;
The article presents a synthesis of several papers I have written, mostly in the economics literature, since the publication of ‘A resource-based view of the firm’ (Wernerfelt, 1984). The starting point is a very small force: the reduction in bargaining costs when several bargains are pooled into one. I show how one can construct a theory of the firm based on this force and defend the theory by arguing that it makes predictions consistent with several stylized facts. In addition, the theory suggests that firms should decide on their strategy and scope based on excess capacity of productive resources—exactly like the RBV.