A resource-based perspective of developing organizational capabilities for business transformation

From a resource-based perspective, organizations are considered heterogenous in relation to their resources and capabilities. Resources and capabilities largely determine the competitiveness of the organization. Organizational capabilities are rooted in the ability of the organizations to reconfigure and recombine organizational resources. In a way, it is the interaction between resources and capabilities that becomes critical in providing sustaining advantages to the organizations. The pattern of interaction is mostly determined by an organization's foreground knowledge and background knowledge. Even though foreground knowledge can be easily imitated, replicated, and transferred, background knowledge remains elusive to imitation. In addition, imitating foreground knowledge may not be that important because for developing capabilities, foreground knowledge and background need to matched, reconfigured, and recombined. There are several ways through which organizations develop their capabilities. For example, routines set around technological systems are important in developing organizational capabilities, but technologies do not determine capabilities. It is the pattern of interaction between techniques, technology, and people that determine organizational capabilities. Therefore, despite the fact that technologies can be replicated and imitated, an organization may still not be able to develop worthwhile capabilities, because of its inability to comprehend and apply patterns of interactions that are likely to be the sources of sustaining advantages.