5 - Resources in Firms and in Regions

Summary

[R] egions grow for similar reasons that firms do: regions host resources, which yield capabilities that expand with their use, that are valuable, rare, specific to economic activities, and hard to access from outside the region.

F. Neffke, M. Hartog, R. Boschma & M. Henning, “Agents of structural change”, 27

What resources are

In our evolutionary perspective, resources are something very fundamental. They form the basis on which regional economic change and growth are built. “Resources” also refers to a variety of different things. In this chapter, we explore some of these differences and what they mean for regional economic change.

Working with the idea of resources raises a couple of issues. It is, for instance, hard to find real examples in the business strategy literature of what resources actually are. In Chapter 4, we suggested the following definition: resources can be anything that provides the means on which organizations draw in order to achieve a capability. When trying to put this definition of resources to real use, the following problems become apparent:

• Aggregation: at what level of aggregation should a resource be defined? For example, is human capital in general a resource, or is a resource more precisely the specializations that the individuals of the labour force possess?

• Level: at what level should a resource be defined? Is a university a resource, or are the skilled engineers and the scientific knowledge it produces the resource?

The answer here is pragmatic: it depends on what aggregation and which level the resource is used in order to achieve a capability. If a specialized skill is required to develop a particular capability, that skill is the resource. If skilled engineers in general are required, they are the resource. If the university produces knowledge that is directly put into productive use, the knowledge becomes the resource.

This way of looking at resources provides considerable flexibility and at least some degree of theoretical rigour. This definition of resources is also productionist, in the sense that we are only concerned with resources that can be used in economic production.