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Firm Resources & Sustained Advantage: Key Elements & Managerial Insights

This study explores the relationship between resource heterogeneity, immobility, and sustained competitive advantage. It delves into the value, rareness, imitability, and substitutability of firm resources, emphasizing the essential role of manager understanding in leveraging VRIN resources.

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Firm Resources & Sustained Advantage: Key Elements & Managerial Insights

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  1. Firm resources and sustained competitive advantage Barney, J. Journal of Management, 17(1): 99-120

  2. Research question

  3. Purposes • Understanding the sources of sustained competitive advantage • Examines the link between firm resources and sustained competitive advantage • Under what conditions firm resources can a source of sustained competitive advantage for a firm

  4. Assumptions • Firm resources are heterogeneous • Firms do not obtain first mover advantage for identical resources • These resources are not perfectly mobile across firms • Enter barrier and mobility barrier prolong the heterogeneous effect

  5. Sustained competitive advantage • A firm is said to have sustained competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy • Not purchasable on the factor market

  6. Firm resources • Valuable • Resources that improve the efficiency and effectiveness of strategy implementation • Rareness • A small number of competitors • Imperfectly imitable • a) depends on unique historical condition, b) causal ambiguity, and c) socially complex • Non-substitutable • Either similar or different, so long as the purpose is served

  7. Firm Resources and Sustained Competitive Advantage • The relationship btw resource heterogeneity and immobility; value, rareness, imitability, and substitutability; and sustained competitive advantage.

  8. Firm resource endowments • Managers are limited by their ability to manipulate all the attributes and characteristics of their firms • This limitation makes some firm resources imperfectly imitable, and thus potential sources of sustained competitive advantage • Competitive advantages cannot be purchased on open markets • Manager’s role is to understand endowment (VRIN resources)

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