Grant (1991)’s resources based theory focus on the inputs into the production process and profitability of a company by exploring resources and capabilities of a company for competitive advantage. It argues that possession of strategic resources creates an excellent opportunity for competitive advantage against rivals. The Resource Based Theory (RBT) offers an approach to analysing accelerator programmes by looking at its theoretical frameworks. However, Barney (1991) looked at firm resources as physical capital (technology, location, equipment and raw material), human capital (training, experience, judgement, intelligence, relationships and insight) and organisational capital (structure, planning, controlling, coordination of systems, and internal relationships) that a firm uses to implement its strategies to achieve competitive advantage in the market (Barney, 1991). Resources are used as internal capabilities that mitigate constraints (Koponen, 2012; Smith & Stevens, 2010) in terms of human capital, financial capital, infrastructure and technology. This acknowledges contribution of resources on capabilities and strategic imperatives that enhance competitive advantage (Yunus et al. 2010; Alt & Zimmerman, 2014; Ostenwalder et al., 2005; Mahadevan, 2000, and Schweizer, 2005), as they emphasise how these help achieve sustainable competitive advantage.
Core Attributes and Characters of RBT
Competitive advantage breeds when a firm portrays unique resources according to the resource-based perspective (Conner and Prahalad, 1996; Barney 1991). Barney (1991)’s attributes for competitive advantages includes heterogeneity and immobility of resources. These are crucial for competitive advantage and value creating strategies that are not being used by other competitors in the market (Barney 1991). Heterogeneous provides competitive advantage whilst immobile ensures uniqueness and non -transferability. This mean the value of tangible and non-tangible resources must be linked to rareness, imperfectly imitable and non-substitutable (Barney, 1991), that provide an organisation with a competitive advantage that is effective and efficient, both internally and externally to outperform their competitors in the market (Hitt, et al., 2015). Thus effective strategies to improve efficiency and effectiveness help exploit opportunities and neutralise threats in the external environment are essential. Rare resources are few or no other organisations have the same resource, have a unique historical condition, are casually ambiguous, and socially complex, making them imperfectly imitable to be duplicated. Resources are non-substitutable when there are no strategically similar substitutes that exist.
Grant (1991) identified characteristics of resources and capabilities as durability, transferability, transparency and replicability. Sustained competitive advantage cannot be sustained as information symmetry which corrects market is available to the rest of the market (Grant 1991). This means that the durability of a company’s resources and capability gets eroded over time but should be maintained for competitive advantage through maintaining and renewed culture and necessary socialisation of new employees. Lack of transparency in relation to how the company maintain, implementing its strategy for competitive advantage. Transferability is the ability to transfer unique resources and capabilities to a particular company due to location, information asymmetry, complex combination of resources and capabilities. Thus the ability to duplicate capabilities can be difficult due to the combination of these (Grant, 1991). Resource Based Theory to entrepreneurship, they include the cognitive ability of entrepreneurs as an additional human resource that enhances sustained competitive advantage and creates wealth for the company (Alvarez and Busenitz, 2001). Radojevich-Kelley and Hoffman (2012) applied the resources based theory to the services that accelerators provide and looked at the kinds of resources provided to startups to determine the success post the acceleration process. Findings highlighted the success of startup results from the resources the accelerators provide (Radojevich-Kelley and Hoffman, 2012).
Contributiond of RBT for Entrepreneurs and Accelerators
The resource based theory (RBT) has been applied to entrepreneurship to identify and explain how nascent companies can outperform others (Alvarez and Busenitz, 2001) yet, it was also used on services that accelerators provide (Radojevich-Kelley and Hoffman, 2012). Bretherton and Chaston (2004) applied the resource-based approached to small and medium-sized enterprises (SMMEs). Entrepreneurship is viewed as wealth creation that recognise the advantage taking advantage of environmental opportunities in the environment by developing new processes, new products or developing new markets (Ireland, Hitt and Sirmon ,2003). Managing resources strategically (Adner & Helfat, 2003; Ireland, Sirmon & Hitt, 2003) will enhance the identification and taking advantage of opportunities in the external environment for wealth creation (Ireland, et al 2003). Ireland, et al (2003) highlighted critical resources required for strategic entrepreneurship as financial (monetary), human (expertise, knowledge and skills) and social capital (value created through relationship fostered between internal and external stakeholders).
Isenberg (2014), argues that fostering entrepreneurship requires the nurturing of an entrepreneurship ecosystem whilst Ireland et al., (2003) focused on structures (acquiring, accumulating, and divesting), bundle resources (to create rare and valuable capabilities), and how these leverage capabilities (achieved through experienced management) to take advantage of the opportunities present in the external environment can position the company to have a competitive advantage and create wealth for its stakeholders (Ireland, et al. 2003, p.977). This ecosystem focus on leadership and government policy, financial capital, culture (including success stories and societal norm), support services (including infrastructure and other services), human capital, and markets (including customers and networks) something that accelerator programmes try to replicate when nurturing entrepreneurship to startups. However, a study done in South Africa highlighted 52% of the founders, identified access to funding as the biggest challenge whilst, 63% of founders reported having used self-funding or friends and family donations and loans for the first round of funding their business (Ventureburn, 2017). The creation of accelerators were largely created to give back to the startup communities by offering the kind of support presumed to be a gap for entrepreneurs (Radojevich-Kelley and Hoffman, 2012). On growth strategies companies rely on dynamic abilities(Li, and Rama, 2015) as the company’s capabilities (Brown and Mawson, 2016) a critique of looking at RBT as it does not only focus on tangible resources but also on tacit knowledge as a resource Brown and Mawson, 2016).
The biggest challenges faced by startups can be mitigated through accelerator programmes to include: funding (Fehder, and Hochberg, 2018), understanding target market, marketing expertise, reaching customers, and lacking experience in their proposed business (Radojevich-Kelley and Hoffman, 2012). According to Winston Smith et al. (2013) startups backed by an accelerator programme receive their first round of follow-up financing significantly sooner than startups that did not participate in acceleration programmes. Strategic entrepreneurship looks at gain and maintain a competitive advantage thus identifying opportunities in the external environment and exploit these opportunities through the appropriate deployment of valuable, rare, imperfectly imitable and non-substitutable resources becomes essential (Ireland, et al. 2003). Entrepreneurial cognition allows entrepreneurs to develop solutions by taking on the opportunity identified in the environment (Alvarez and Busenitz, 2001).
Peteraf (1993) proposes ex-post limits to competition (forces that limit competition once a competitive advantage is attained) to be in place to attain sustained competitive advantage for imperfect imitability and imperfect substitutable (Peteraf, 1993). However, cognitive differences, strategic complementarity, causal ambiguity, uncertainty, and information asymmetries have allowed entrepreneurs to sustain competitive advantage (Alvarez and Busenitz, 2001). Cognitive differences enhances high performing companies (Alvarez and Busenitz, 2001; Westhead & Wright, 1998; Rosa & Scott, 1999). Strategic complementarity leads to the creation of new invention that complement or create solution. (Alvarez and Busenitz 2001) to highlight Schumpeter (1934)’s creative destruction, (Ormiston & Seymour 2011, Hamel 2000) which suggests that “new combinations of resources leads to new ways of competing (Alvarez and Busenitz, 2001). Causal ambiguity looks at vagueness of the things that bring about efficiency in a business which may be different to how efficiency is created in the next business differences (Alvarez and Busenitz, 2001 p.766).
Critiques of Resource Based Theory and Accelerator Programmes
Critique of the accelerator programmes as highlighted by Brown and Mawson (2016) looked at the targeted support that high growth companies receive from accelerator type institutions and highlighted the following shortcomings of accelerator programmes: That the accelerator programmes are skewed to working with only certain sectors and high growth firms that are not in that sector are overlooked and do not receive the required assistance. Unintended consequences emerge such as the change in the entrepreneurial behaviour of the company as a result of intense levels of support given by the accelerator programme. The authors also note that accelerated companies tend to underperform non-accelerated companies because those companies that grew over time had the opportunity to adjust and put systems in place to deal with the challenges that come with the growth. (Brown and Mawson, 2016).
Critique of Resource Based Theory focused on the flawed theoretical assumptions of RBT underpin the support of the accelerator programmes instead it should be built around more relevant theories around entrepreneurship such as dynamic capability theory (Brown and Mawson, 2016). Kraaijenbrink, Spender and Groen et al., (2010) looked at resource based view and how these impede on the RBT the absence of managerial implications, the implications on infinite regression, the limited applicability, unachievable sustained competitive advantage, the too indeterminate value of resources to provide a useful theory, the resource-based view is not a theory about the firm, valuable, rare, imitable, non-transferable resources are not necessary sufficient to achieve sustained competitive advantage and the definition of a resource which is not workable. However in the context of accelerator identifying the necessary resources required to attain competitive advantage is a first step in determining their value.
To identify the necessary resources required to attain competitive advantage resource-based theorists have highlighted resources such as strategic planning (Michalisin et al 1997; Fahy and Smithee, 1999; Makadok, 2001) management skills (Castanis and Helft 1991), tacit knowledge (Polanyi, 1962, 1966), capital, employment of skilled personnel (Wernerfelt, 1984) including assets and resources owned by companies (Barney 1991; Grant 1991; and Peteraf 1993) to aid performance. Skill set tends to influence, the performance of the business (Lerner and Almor, 2002). This helps towards the first step in determining value (Kraaijenbrink, et al. 2010) whilst resource based view describes how business owners build their businesses from the resources and capabilities that they currently possess or can acquire (Dollinger, 1999; Saffu and Manu 2005)). tends to complement RBT whilst there is need to further refine resource types beyond static ones (physical, human and organisation) but to include dynamic; tangible, intangible; financial, human, technological; deployed, in reserve; perishable, non-perishable; and those between types of resource ownership (Kraaijenbrink, et al. 2010).