The Concept of Risk in RBV - An Exploratory Analysis

Abstract

The resource-based view (RBV) appears as a more comprehensive theory than the neoclassical theory to explain value creation in the capitalist system. RBV emphasizes the role of strategic resources to the firm. Barney (1991) adopts the standpoint that the stock of strategic resources is important in the determination of the level of profitability of the firm. Barney (1991) proposes that, besides being valuable, resources should also possess the fundamental attributes of being rare, imperfectly imitable and nonsubstitutable. The objective of this work is to present an alternative concept for risk based on the concept of resource. The work is divided into three sections: in the first we present two methodologies to deal with risk in RBV, the perspective of the discounted cash flow and the perspective of real options. In the second we present an alternative risk concept (including the means of measuring it), which takes into consideration the level (sum) of resources essential to the company, as well as the volatility of this level. (We will apply the concept including a measure of risk for a sector where the innovative activity is essential).In the third we present a model based on behavioral finance of the behavior of the manager toward risk.