A resource yields sustained advantage only if it is valuable, rare, hard to imitate and the organisation is arranged to exploit it.
Barney's 1991 framework is the standard test in the resource-based view, and its practical value is as a checklist that eliminates most claimed advantages. Almost everything a firm calls a strength fails on rarity or on imitability. The theoretical objection is that the criteria are often applied after observing the performance they are meant to explain.
In practice
- A firm listing its culture as an inimitable advantage has not asked whether a competitor could hire the same people.
- A capability that is valuable and widely held is a cost of entry, not an advantage.
- Standing
- Criticised as close to tautological: a resource is identified as valuable and inimitable partly because the firm holding it does well.
- Subject
- Economics & Incentives
- Essay
- The theories behind every argument about money