The organizational routines factor market paradox

The resource-based view (RBV) of strategy holds that superior organizational routines can be a source of value if and only if there is an isolating mechanism preventing their diffusion throughout industry. Generally this isolating mechanism is taken to be the tacitness of the routines. However, the existence of franchises, a market for organizational routines, poses a challenge to this RBV-if the routine is to be conveyed across a market, it can't be tacit. This paper examines the necessary and sufficient conditions of the RBV to find the weak link leading to the paradox of explicit, yet valuable franchise routines. Copyright (C) 2003 John Wiley Sons, Ltd.