FirmResourcesandSustainedCompetitive

Advantage
Barney,JayB,1991

5/1/16

Summary

Thisarticlesuggeststhatfirmsresourcesarepotentialas
source for sustained competitive advantage, when firm
resourcesareHeterogeneousandImmobile

5/1/16

Earlierframework
SWOT Analysis
ShowHowFirmsSustaintheircompetitiveadvantagesby
implementingstrategies

Exploiting Strengths

Responding to Opportunities

Neutralizing Threats

Avoiding Weaknesses

AssumptionsinthisFramework
Firmsinanindustrymaybeheterogeneouswithrespectto
thestrategicresourcestheycontrol
Resourcesmaynotbeperfectlymobile,therefore
Heterogeneitycanbelong-lasting

FirmResources
Allassets,capabilities,organizationalprocesses,firmattributes,information,knowledgeetc.thatare
controlledbyfirmstobeusedasstrengthforimprovingefficiencyandeffectiveness(Daft,1983)

Physical capital.technologies,infrastructures,location,accesstomaterialsetc
Human capital.training,experience,relationship,worker&managerskills
Organizational capital . :reportingstructure,planning,controlling,informalrelations

amonggroup

CompetitiveAdvantage&
SustainedCompetitiveAdvantage.
Competitive Advantage

Firmisimplementingavaluecreatingstrategynotsimultaneouslybeingimplementedbyotherfirms
Sustained Competitive Advantage

Firmisimplementingavaluecreatingstrategynotsimultaneouslybeingimplementedbyotherfirms
and
whenotherfirmsareunabletoduplicatethebenefitsofthestrategy
Doesnotmeanitwilllast forever.Butwillnotbecompetedawaythroughthe
duplicationefforts.
Theinabilityofexistingandpotentialfirmstoduplicatestrategy

ResourceHeterogeneityandImmobility

Thesearchforsourcesofsustainedcompetitiveadvantagemustfocusonfirmsresource
heterogeneityandimmobility

Homogeneity & Mobility

Ifanindustryispopulatedwithidenticalfirmsthathaveaccesstosimilarresources,itis
impossibleforthesefirmstoenjoysustainedcompetitiveadvantage.

Inordertobeafirst-moveradvantage,firmsinanindustrymustbeheterogeneousinterms
oftheresourcestheycontrol

Entrybarriersandmobilitybarrierscanbesourceofsustainedcompetitiveadvantagewhen
resourcesareheterogeneousandimmobile.

AttributesofResourcesasSourcefor
SustainedCompetitiveAdvantage
Valuable

Rareness
Ifaresourcesisvaluablebuteasytoobtain,
itcannotbeusedassourceofcompetitive
advantage

Enablefirmstoimplementstrategiesforincreasingeffectivenessandefficiency

Exploitopportunities,Neutralizingthreats

However,valuableandcommonresources
canalsobeusedtoensurefirmssurvival.
Ifnumberoffirmspossessavaluableof
resourcesisless than thenumberoffirms
neededtogenerateperfectcompetition
industry:Itsasource.

AttributesofResourcesasSourcefor
SustainedCompetitiveAdvantage
Imitability

Substitutability

Valuable&rarenessresourcesmustbedifficulttoimitateinordertobeconsideredassourcefor
sustainedcompetitiveadvantage.

Imperfectlyimitablebecause:

Dependentuponuniquehistorical conditions
Thelinkbetweenfirmsresources&sustained
competitiveadv.iscasually ambiguous
Resourcegeneratingfirmsadvantageissocially
complex

PhysicalTechnologyresourcesis not includedinthisattributes

Resourcesmustbeno
strategicallyequivalent.
Thecompetitorsshouldntbe
abletousethesamestrategy
withdifferentresources.
Verydifferentresourcescanalso
bestrategicsubstitute.Likeclear
visionoffuture.

ProposedFramework

Firm Resource
Heterogeneity
Firm Resource
Immobility

Value
Rareness
Imperfect Imitability
HistoryDependent
CausalAmbiguity
SocialComplexity
Substitutability

Sustained Competitive
Advantage

Formal & Informal Strategic Planning asResourcefor

SustainedCompetitiveAdvantage

Imitability&Substitutable
Valuable:
Valuable:

EnableToRecognizeOpportunities&Threats

EnableToRecognize&ExploitFirms
Resources

Valuable:

Enabletorecognizeopportunities&threats

Firmsthatrecognizetheimportanceofthisprocess

willlikelytogainSustainedCompetitiveAdvantage

Firmstrytopreventprocessesfromunfolding

Imitable:

ThroughDocumentationInPublicSources

OtherFirmsCanLearnToDoTheSameStrategy

NotRare:
NotRare:

ThoroughlyDescribed&Documented

Rare:

Substitutable:

Formal

ThroughStrategicInformalPlanning

Imperfectly imitable

Processesaresociallycomplex

Substitutable

Substitutablethroughformalplanning?

Informal

Value&Rareness

Information Processing Systems asResourceFor

SustainedCompetitiveAdvantage
Value&Rareness

Imitability&Substitutable

Valuable:

Enabletorecognizeopportunities&threats

Enabletorecognize&exploitfirmsresources

Imitable:

Becausemachinescanbepurchased,thenthey
arehighlyimitable

Thepresenceofhighlyexperienced
managementteammakesIPSassourceof
SustainedCompetitiveAdvantage

Not Rare:

Machinesareavailabletopurchaseacross
markets

Ifembeddedthroughformal-informal
managementdecisionmakingprocess,thenit
canbeconsideredasrare

Substitutable:

Throughstrategicinformalplanning

Positive Reputation as Resourcefor

SustainedCompetitiveAdvantage

Value&Rareness

Imitability&Substitutable

Positivereputationamongcustomersand
suppliers

Imitable:

Valuable:

Ifonlyafewfirmshavepositivereputations

DifficultToDuplicateBecauseOfHistorical
Setting

KnownAsSociallyComplexRelation

Rare:

Substitutable:

SubstituteWithGuaranteeAndReassurance

ThankYou

Structure

Bundle

Leverage

Resources

Intrafirmcausalambiguity
Interfirmcausalambiguity
PortervsBarney
CreatingVRIN
DevelopingDynamism
Metalearning
Metacompetency