Structuring, Bundling but Leveraging? Impact of Performance on Resource Management

Abstract

How do owner-managers transform resources to create value? Recent work on the framework of resource management—a firm’s ability to structure, bundle, and leverage resources—has enhanced the resource-based theory (RBT) of the firm by incorporating testability and measurability and stressing the importance of properly mobilizing the available resources for success—as opposed to simply possessing them. This paper advances our understanding of RBT by investigating the underlying mechanisms through which owner-managers are able to acquire and utilize resources. To do so, it uses the period following a successful event in the context of creative industries. I employ novel measurements and causal empirical identification through difference-in-differences estimations to show that there are systematic differences in resource management abilities of owner-managers with and without connections to established families in creative industries. In particular, following a successful project, owner-managers with family relations have much better access to creative human capital and also exhibit resource divestiture with respect to team size. Also, while family related owners leverage the available resources, to focus more on quality, high performing owner-managers are focused on the mass appeal of the product. Implications and future directions for RBT are discussed.