Firm Resources and Sustained Competitive

Firm Resources and Sustained Competitive

Firm Resources and Sustained Competitive BY apple3127 BARNEY, J (1991), Firm Resources and Sustained Competitive Advantage, Journal of Management, 17, 99-120 Research in the field of strategic management suggests that firms obtain sustainable competitive advantages by implementing strategies that exploit their internal strengths, while neutralising external threats and avoiding internal weaknesses. Recent work has tended to focus primarily on analysing a firm’s opportunities and threats within its competitive environment.

The purpose of this article is to analyse the conditions under which firm resources an be a source of sustained competitive advantage for a firm. The study builds on the assumptions that strategic resources are heterogeneous and immobile across firms, and that these resources are stable over time. Four empirical indicators of the potential of firm resources to generate sustained competitive advantage are proposed: value, rareness, imitability and substitutability.

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Within this context, for a firm resource to have the potential of generating competitive advantage, it must be: ??? valuable, in the sense that it exploits opportunities and/or neutralises threats in a irm’s environment; ??? rare among a firm’s current and potential competition; ??? imperfectly imitable (either through unique historical conditions, causal ambiguity, or social complexity); and ??? without strategically equivalent substitutes.

As an example of how this framework might be applied, it is used in the analysis of the competitive implications of three firm resources that others have suggested might be sources of sustained competitive advantage, namely, the strategic planning process, information processing systems, and positive firm reputations. It was found that all three resources may be capable of generating sustained competitive advantage under certain conditions.

Further, it is also maintained that the proposed resource-based model of strategic management is perfectly consistent with traditional social welfare concerns and organisation theory and behaviour models. Finally, it is suggested that the role of managers in understanding and describing the particular resource endowments controlled by a firm is crucial in the achievement of sustained competitive advantage.

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