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There has been an active debate among management scholars concerning the relative importance of internal firm capabilities (e.g., Galbraith & Kazanjian, 1986; Peters & Waterman, 1982; Prahalad & Hamel, 1990) versus environmental factors (e.g., Hannan & Freeman, 1977; Pfeffer & Salancik, 1978: Porter, 1980, 1990) to sustained competitive advantage. Evidence suggests, however, that both internal and external factors are crucial to competitive success (Fiegenbaum, Hart, & Schendel, In press; Hansen & Wernerfelt, 1989). In fact, many recent contributions attempt an integration of the internal and external perspectives under the banner of the "resource-based" view of the firm (e.g., Barney, 1991; Wernerfelt, 1984). Resource-based theory takes the perspective that valuable, costly-to-copy firm resources and capabilities provide the key sources of sustainable competitive advantage.
Without question, the resource-based view has generated a productive dialogue among previously isolated perspectives (Conner, 1991). However, this theory (like its more limited internal and external predecessors) still contains one serious omission: It systematically ignores the constraints imposed by the biophysical (natural) environment (e.g., Brown, Kane, & Roodman, 1994: Meadows, Meadows, & Randers, 1992). Historically, management theory has used a narrow and parochial concept of environment that emphasizes political, economic, social, and technological aspects to the virtual exclusion of the natural environment (Shrivastava, 1994; Shrivastava. & Hart, 1992: Stead & Stead, 1992). Given the growing magnitude of ecological problems, however, this omission has rendered existing theory inadequate as a basis for identifying important emerging sources of competitive advantage. The goal of this article is, therefore, to insert the natural environment into the resource-based view--to develop a natural-resource-based view of the firm.
Accordingly, the first section of the paper reviews resource-based theory, highlighting the relationships among firm resources, capabilities, and sources of competitive advantage. Next, I discuss the driving forces behind the natural-resource-based view--the growing scale and scope of human activity and its potential for irreversible environmental damage on a global scale. The natural-resource-based view is then developed with the connection between the environmental challenge and firm resources operationalized through three interconnected strategic capabilities: pollution prevention, product-stewardship, and sustainable development. Propositions are then developed connecting these strategies to key resource requirements and sustained competitive advantage. The article closes with suggestions for a future research agenda.
THE RESOURCE-BASED VIEW
Researchers in the field of strategic...