Building the framework

Whilst resources are commonly classified as tangible and intangible resources, within those considerations there are various frameworks adopted for categorising resources. For example Barney (2007) contends four basic types of resources may confer a competitive advantage; financial capital which comprises all the money resources organisations have at their disposal to implement their strategies; physical capital such as an organisation’s equipment, geographical location; human capital such as the experience and relationships of individual managers; and finally, organisational capital such as its reputation, culture and its administrative framework. This study questions the inclusion of human capital in terms of individuals that are potentially mobile (recalling Barney’s (1991) criteria of ‘imperfectly mobile’). Instead, this study adopts the categorisations used by Galbreath (2005) that draw from Barney (1991) but also the broader works of Grant (1991); Hall (1992) and Roberts and Dowling (2002). The following description is based on a synthesis of these papers.

3.9.1 Tangible resources

These are defined as those factors that are more physical in nature, in other words, they can be observed and measured. Tangible resources can be further subdivided into financial assets; such as cash, raised capital, investments and endowments and physical assets: such as buildings, equipment and land (including its location).

3.9.2 Intangible resources

Intangible resources are by their nature a little more complex. Defined by Lev (2001, p. 5) as “a claim to future benefits that does not have a physical or financial embodiment”, thus are not so easily quantified. As mentioned previously, the intangible resources of an organisation should be divided into intangible resources that are assets (what it has) and intangible resources that are competency based (what it can do). Table 3.1 provides an overview with examples.

Table 3.1: Types of Intangible Resource after Hall (1992, 1993).

Type of intangible resource Categories of resource Examples Intangible resources: Assets Reputational assets Brand reputation, prestige

Organisational reputation Product/service reputation Organisational assets Culture

Structure Policies

Intangible resources: Skills Capabilities Employee know-how Managerial know-how Relational abilities

Reputational assets can be broadly conceived as all the perceptions than an organisation’s internal and external stakeholders hold about the organisation (Itami & Roehl, 1987; Hall, 1992, 1993).

Organisational assets encompass the organisation’s culture which can be viewed as an array of implicit shared beliefs, assumptions and values that can drive organisational behaviour (Hall, 1992, 1993; Hofstede, Hofstede, & Minkov, 2010). Organisational assets also include its structure, its units and its reporting design (Barney, 1991); as well as its policies around recruitment, promotion and compensation (Barney & Wright, 1998).

Capabilities broadly represent what the organisation can do (Hall, 1992, 1993). It encompasses collective know-how (Penrose, 1959; Itami & Roehl, 1987; Hall, 1992, 1993) and the maintenance of effective relationships across a broad range of stakeholders (Hall, 1993; Ireland, Hitt, & Vaidyanath, 2002).

Drawing on the internal factors harvested from the literature review as influencing a university’s success in diversifying its income, these resource categories are populated to develop the theoretical framework for this study. The hypotheses to be tested in the quantitative phase are also indicated and then presented below.

3.9.3 Illustrating the framework

The theoretical framework, hypotheses, dependent, explanatory and control variables under study are illustrated in figure 3.1.

Figure 3.1: The theoretical framework for this study, highlighting the focal resource of each hypothesis.

The size of a university was not flagged in the extant research as a potential factor to influence the level of income diversification, however it is commonly used as a control variable in this type of study (Powers & McDougall, 2005; Liu, 2006) and so is included here as a potential alternative explanation.

3.10 Presenting the hypotheses

This section summarises the hypotheses that underpin the predominantly deductive nature of this study. Scholars of the resource-based view highlight the need for systematic hypothesis testing and the importance of empirical testing of the theoretical predictions (Barney, 2001; Priem & Butler, 2001; Levitas & Chi, 2002). Whilst the literature provided a rich source of potential resources that influence income diversification in higher education, none had been statistically tested against an established measure of income diversification. The literature review and the theoretical base driving this inquiry therefore develop the following hypotheses to address the second research question. These hypotheses not only test the extant income diversification in higher education research but also validate the resource-based view in this context.

Firstly, the hypotheses focus on establishing whether there is a relationship between a university’s resource-set as a whole, and then which particular type of resource has the strongest relationship to a diversified income portfolio.

Hypothesis 1a: A university’s unique bundle of resources have a statistically significant, positive effect on its level of income diversification.

Hypothesis 1b: Within a university’s unique bundle of resources, it is the capabilities of the institution that has the greatest statistically significant effect on its level of income diversification.

The resources are then analysed individually, firstly to establish if there is an individual relationship between the resource and level of income diversification, and secondly to consider that relationship in combination with the other resources in the model. Hypotheses 2-13 are identical but for the resource under study.

Hypothesis 2a: There is a statistically significant, positive relationship between a university’s [individual resource] and its level of income diversification.

Hypothesis 2b: The significant relationship persists when allowing for the combined effects of an institution’s unique bundle of resources.

These resource hypotheses are illustrated in figure 3.1. Reference back to the literature review can provide additional context if needed.

In the more inductive phase of this mixed method study, the underlying mechanisms behind any relationships uncovered are explored to provide a richer explanation of any causal effect.

3.11 Chapter conclusion

This chapter has provided the rationale and justification for the use of the resource-based view as the theoretical base for this study to achieve the research aim. Moreover, the available research suggests its suitability in the context of higher education research. The theoretical framework provides appropriate categorisations for the antecedent factors harvested from the literature and provides structure to the hypotheses presented.

Building on this theoretical framework, the next chapter in this thesis considers the methodology that will be used meet the objectives of this research, address the research questions and achieve the research aim.

Chapter 4: Research Methodology and Methods