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

Research question Firm resource ? Competitive advantages

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

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 In plain language, heterogeneous resources are something I have uniquely. And non perfect mobility is the protecting shell that prevents others have/copy/use my unique thing.

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

Firm resources Valuable Rareness Imperfectly imitable 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 - In order for causal ambiguity to be a source of sustained competitive advantage, ALL competing firms must have an imperfect understanding of the link between the resources controlled by a firm and a firm’s competitive advantages - Interpersonal relations, network, clan (Ouchi)

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

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)