The paper presents the concept of the Firm Growth Profile (FGP) which contributes to the creation of a dynamic Resource-Based View theory by explaining how capabilities are developed in path-dependent processes. An FGP represents the pattern of critical actions taken by a firm in different value activities (e.g. R&D, marketing, production and finance) during subsequent periods. It is suggested that the outcomes of a set of actions taken in a given period modify a firm’s entire capability set. We also assert that similarities between the environments in which firms operate (i.e. the time during which they operate, their geographical location, industry characteristics and network position) moderate the development of FGPs, leading to similarities in the actions taken by specific groups of firms operating in similar environments. We further claim that variance in firm capabilities is attributable to both inter-FGP and intra-FGP differences. We demonstrate the usefulness of the FGP approach by analyzing the FGPs of four Israeli Enterprise Software firms.
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