Case Study “Relative exploration and firm performance

The resource-based theory states that having valuable, rare, inimitable, non-substitutable, and organized (VRINO) resources and capabilities give firms a sustainable performance. However, by integrating the attention- based view, we raise a question as to why VRIN-O resources alone are not sufficient for sustainable performance. We introduce the variable – decision-makers’ attention- as a key moderator in achieving sustainable performance so that VRIN-O/capability and capability/resource heterogeneity may last longer. To test this relationship, we examine how the needs of firms to balance their exploration and exploitation efforts, called relative exploration anchored to resource-based theory is influenced by CEO’s attention towards entrepreneurial
orientation and market orientation as moderators. Using a panel data set of 269 firms listed on the Nordic NASDAQ stock exchange, we find an inverted U-shaped relationship between relative exploration and long-term performance, while the attentions of the CEO have a positive moderation effect. Thus, using the attention- based view complements the resource-based theory in explaining sustainable competitive advantage especially in the dynamic environment.
Answer the Following Questions:
5. Discuss the base theory used in the following research?

Solution: