The resource-based view of the firm and the labour theory of value

The paper argues that the principal components of the Resource- based view (R-BV) of the firm are not a sufficient basis for a complete and consistent theory of firm behaviour. Two important missing elements are governance arrangements and value theory. Whilst these missing elements have been acknowledged separately in the literature, their complementary interaction with the commonly accepted components of the R-BV has yet to be fully explored. This paper argues that there are significant opportunities to develop a more integrated approach, thereby uniting substantial strands of the strategy and economics literatures to produce a unified view of strategy and move towards a resource based theory of the firm. Specifically the paper argues for the inclusion of labour process theory, asymmetric information and the analysis of risk and the classical labour theory of value. The combination of these elements shows that a resource-based theory must unite the process and content elements of strategy, through the simultaneous interaction of labour management processes, the determinants of sustained competitive advantage (SCA), and relations with capital markets. The argument presented shows how value originates in the productive process and is transmitted as rents to organizational and capital market constituents. The detailed assumptions are sufficient to suggest an integrated resource-based theory of corporate strategy. The principal assertion in the paper is not that the labour theory of value is true per se, only that it is at least as good as competing theories, but that only if it is assumed to be true can we progress to construct a consistent resource-based theory of the firm. Without these links to the labour theory of value and labour process theory, and mechanisms of corporate governance, the R-BV remains merely a view and not a theory, because it lacks a consistent basis for asset valuation. The theory also explains that the roots of SCA lie in the labour process, but with the corollary that maximizing the associated investment in tacit knowledge and associated difficult to replicate assets is fundamentally inconsistent with the objective of maximizing shareholder value.