Research in Business Dynamics
Research in business dynamics at London Business School provides a model-based problem structuring framework for analysing strategy and the time evolution of firms' performance and competitive advantage. The framework (which we call the 'dynamic resource based view' DRBV) builds on two fundamental and complementary models of the firm: the feedback view of the firm from the field of system dynamics and the resource-based view of the firm from the field of strategy. Our work addresses three critical questions of interest both to academics and business leaders.
1. Why do some firms in an industry consistently outperform rivals and why does performance over time often fall far short of potential?
2. What causes creative new strategies to fail even if they are properly differentiated from rivals?
3. How can we design the operating polices of firms to ensure they deliver the intended strategy?
Contributing to Strategy Theory
The traditional resource-based view (RBV) seeks to explain superior firm performance and competitive advantage in terms of unique configurations of firm resources that rivals find difficult to imitate. Firms are viewed as complex bundles of resources. The dynamic resource based view (DRBV) proposes that competitive advantage and ultimately superior performance stem not only from the uniqueness and variety of the firm's current resources, but also from how they change over time as a result of management policies applied. This managerial view shifts attention from quasi-static comparison of resource endowments to dynamic analysis of resource accumulation and the policies and feedback processes that control them and drive their evolution over time.
Dynamic Theory Building for Mainstream Strategy
Competence and resource views are to be found at the heart of areas such as competitive strategy, diversification, corporate portfolio management (joint ventures and acquisitions), and international strategy (geographical diversification). Until now, most firm-related system dynamics has focused on single businesses. A dynamic resource based view (DRBV) opens the door to the intriguing and dynamically complex worlds of the multi-firm industry and the multi-business firm with the possibility of model-based theories to explain the dynamics of competition, diversification, transformation and internationalisation. The Group's current research interests include:
1. Competitive strategy and the process of building resources to achieve superior firm performance.
2. Managing metamorphosis - the process of successfully transforming resources in a changing competitive environment.
3. Dynamics of diversification.
