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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.

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Notes

  1. Of the 356 microenterprises in our sample, 20 never received resources and did not participate in the first-wave survey. To avoid bias, we exclude these 20 microenterprises from our analysis using the First-round injection and the First round after variables. For the same reason, we exclude these microenterprises from t-tests. We then put them back into the analysis with the Second-round injection and the Second round after variables since these microenterprises have at least one observation in each before (i.e., from Wave 1 to Wave 3 in this analysis) and after period.

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Authors and Affiliations

  1. College of Business Administration, Bowling Green State University, Bowling Green, OH, 43403, USA

    HoWook Shin

  2. Organizations, Strategy, and International Management, Naveen Jindal School of Management, University of Texas at Dallas, P.O. Box 830688, SM43, Richardson, TX, 75080, USA

    Seung-Hyun Lee

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  1. HoWook Shin
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  2. Seung-Hyun Lee
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Correspondence to HoWook Shin.

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Shin, H., Lee, SH. Firm resource stock, resource complementarity, and the heterogeneity in resource value. Asia Pac J Manag 36, 661–686 (2019). https://doi.org/10.1007/s10490-018-9564-1

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