The resource-based view (RBV) and organizational economics (OE) are influential perspectives in the field of strategic management. In essence, the RBV is concerned with the creation and deployment of resources with certain qualities whereas OE is focused on efficiently monitoring operations. An important area of research where these approaches have both been employed is the choice of grand strategy. Grand strategies are the alternative ways that firms can implement an expansion of firm scope, including for example, joint ventures and internal development. The RBV and OE can, because of their different emphases, lead managers toward different grand strategies. Guided by prior research, this paper develops a model suggesting that firms will generally place their resource needs before monitoring considerations and that this choice brings about the best possible performance. Propositions designed to guide subsequent empirical research are developed and implications for both theory and practice are discussed.
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