A Resource‐Based View of the Build/Buy Decision: Emergent and Rational Stepwise Models of Strategic Planning

• DOI: http://doi.org/10.1002/jsc.2044
• Date: 01 January 2016
• Author: Richard Vidgen,Philip Powell,Julian Sims
• Published date: 01 January 2016

RESEARCH ARTICLE

Strat. Change 25: 7–26 (2016)

Published online in Wiley Online Library

(wileyonlinelibrary.com) DOI: 10.1002/jsc.2044

Copyright © 2016 John Wiley & Sons, Ltd.

Strategic Change: Briengs in Entrepreneurial Finance

Strategic Change

DOI: 10.1002/jsc.2044

A Resource-Based View of the Build/Buy Decision:

Emergent and Rational Stepwise Models of

StrategicPlanning1

Julian Sims

Birkbeck College, University of London, UK

Philip Powell

Birkbeck College, University of London, UK

Richard Vidgen

Hull University Business School, UK

Two ideal models of strategy development are identied: one is rational stepwise;

the other is emergent, ex-post, relying on experimentation where strategy is used

to legitimize what has already been accomplished.

e development of new products and entry to new markets is a strategic process

(Anso, 1965) and is a function of strategic choices about organizational develop-

ment. e available approaches for researching such strategic choices include

mainstream strategy research, organizational economics, and industrial organiza-

tional analysis. e resource-based view (RBV) of the rm, an important approach

to understanding strategy (Ambrosini et al., 2009; Easterby-Smith et al., 2009;

Kyrgidou and Spyropoulou, 2013), ts well with all of these approaches and

provides a deep understanding of how organizational resources are combined and

deployed (Peteraf, 1993).

is research employs the resource-based view as a lens through which to

investigate strategy development in the deployment of new technologies. e

context for the research is information systems (IS) deployment in the public

sector, specically, the deployment of information systems in UK universities.

Itseeks to add to a long-standing debate about the role and nature of competen-

cies and capabilities, their acquisition, and the process of strategy development

(Ambrosini et al., 2009; Barney, 1991; Buckland, 2009; Duysters and Hagedo-

orn, 2000; Easterby-Smith et al., 2009; Eisenhardt and Martin, 2000; Grant,

1998; Hagedoorn and Duysters, 2002; Hamel and Heene, 1994; Kogut and

Zander, 1992; Kyrgidou and Spyropoulou, 2013; Marino, 1996; Montealegre,

1 JEL classication codes: L1, L21, M15, O33.

Capabilities for both strategy

emergent and rational stepwise

development models may be

acquired internally or externally,

but with the emergent, ex-post

model, core capabilities are

acquired internally through

experimentation.

These outcomes lead to a richer

resource-based view of emergent

strategy, and suggest a diverse

range of strategic options.

The ndings suggest rms might

deliberately take an ambidextrous

approach seeking balance

between planning and emergence

in their strategy process.

8Julian Sims, Philip Powell, and Richard Vidgen

Copyright © 2016 John Wiley & Sons, Ltd. Strategic Change

DOI: 10.1002/jsc

2002; Penrose, 1959; Peteraf, 1993; Prahalad and Hamel,

1990; Rouse and Daellenbach, 1999; Teece et al., 1997).

e RBV considers organizations as stocks of resources

bundled into capabilities and competencies, and pro-

poses that organizations need to develop or acquire

appropriate capabilities that can be leveraged to enter

new products or markets (Duysters and Hagedoorn,

2000). Although emergent strategy is addressed to some

extent (Wernerfelt, 1984), the dominant view of strategy

formulation in RBV approaches is a rational, stepwise

progression through a series of capability and compe-

tency acquisitions and deployments, leading to their

embedding in organizational routines (Figure 1) (Grant,

1998; Kogut and Zander, 1992). ere is an assumption

that all organizations have strategies (Buckland, 2009),

and that strategy is developed in response to managerial

perceptions of the need to change (Ambrosini et al.,

2009). However, this strategic process is not consistent

with an emergent, bottom-up view of strategy (Buckland,

2009; Easterby-Smith et al., 2009). e aim of this

research, therefore, is to provide a basis for understanding

how a model of emergent strategies might be incorpo-

rated in the RBV.

is research considers how emergent strategies may

form part of the RBV via investigation of the process of

strategic development for the exploitation of new tech-

nologies and considers when new capabilities are required

and their sourcing is to be decided. It specically asks the

following.

RQ1: What is the process of strategy development when

exploiting new technology?

RQ2: At what stage are new capabilities and competencies

acquired when exploiting new technologies?

RQ3: How are new capabilities and competencies acquired

when exploiting new technologies?

e required capabilities and competencies may vary at

dierent times during the early stages of technology use

(Montealegre, 2002). Some may exist within the organiza-

tion, either developed internally or bought in (Ambrosini

et al., 2009), some may be shared, and some outsourced

(Hagedoorn and Duysters, 2002; Insigna, 2000; Lynskey,

1999; Quinn, 1999, 2000; Sanchez et al., 1996). is

research identies the drivers, proposes required capabili-

ties, maps the timing of deployment, and investigates the

acquisition of new capabilities as a build/buy decision,

thereby oering a resource-based view of strategy develop-

ment that explains and reconciles two models of strategy:

one deliberate and one emergent.

Strategy and strategizing

e strategy literature can be characterized by four broad

approaches (Figure 2): classical, processual, evolutionary,

and systemic (Galliers et al., 1999). ese can be placed

on a continuum representing processes ranging from

deliberate to emergent (Whittington, 1997). Classical

strategy and organizational theory proposes that organiza-

tions change by a rational route. Vision and strategy are

formulated, then structure is changed to support the strat-

egy. Last, resources, including skills and technology, are

put in place to support the new structure. e classical

approach is based on planning and control: managers

perceive the need to change, and this triggers dynamic

capabilities that implement the change (Ambrosini et al.,

2009). e evolutionary approach seeks to ensure sur-

vival, and attempts to optimize the t between the rm

and its environment (Galliers et al., 1999). It views strat-

egy as emerging from individual actions. For the processual

Figure 1. Area under investigation (adapted from Grant,

1998; Kogut and Zander, 1992).