Journal of Management in 1991

Firm Resources and Sustained

Competitive Advantage
Jay Barney

Presenter: Ngo Thi Minh Hang

Student ID: 20225559
 Table of Contents

Competition with
Defining Key Homogeneous &
01 Introduction 02 Concepts
03
Perfectly Mobile
Resources

Firm Resources
04 & Sustained 05 Applying the 06 Discussion &
Competitive Framework Personal view
Advantage
Introduction
• Object: the link between firm resources and sustained
competitive advantage.
• Purpose: to specify the conditions under which firm resources
can be a source of sustained competitive advantage for a firm
• Two assumptions of the resource-based view for the analysis
of sources of sustained competitive advantage:
1. This model assumes that firms within an industry (or
group) may be heterogeneous with respect to the strategic
resources they control.
2. This model assumes that these resources may not be
perfectly mobile across firms, and thus heterogeneity can
be long lasting.
 Defining Key Concepts
Firm
Resources
all assets, capabilities,
organizational processes, firm
attributes, information,
knowledge, etc. controlled by a
firm that enable the firm to
conceive of and implement
strategies that improve its
efficiency and effectiveness
Sustained
Competitive
Competitive
Advantage
Advantage
implementing a value implementing a value creating
creating strategy, not strategy, not simultaneously
simultaneously being being implemented by any
implemented by any current or potential
current or potential competitors; and when these
competitors other firms are unable to
duplicate the benefits of this
strategy
 Firm Resources &
Sustained Competitive Advantage
VRIN (Value – Rareness – Immitablility – Non-substitutability):

● Valuable Resources: When resources enable a firm to

conceive of or implement strategies, that improve its
efficiency and effectiveness => valuable => a source of
competitive advantage or sustained competitive advantage
● Rare Resources: Valuable and rare organizational resources
=> a source of competitive advantage, first-mover
advantages accruing to firms with resource advantages.
 Firm Resources &
Sustained Competitive Advantage
VRIN (Value – Rareness – Immitablility – Non-substitutability):

● Imperfectly Imitable Resources: firms that do not possess

valuable and rare organizational resources cannot obtain
=> sustained competitive advantage
3 reasons: history dependent, causal ambiguity, social
complexity substitutability
● Substitutability: there must be no strategically equivalent
valuable resources that are themselves either not rare or
imitable.
 3 examples of how the framework might be applied

Strategic Planning and Information Processing Positive Reputations and

Sustained Competitive Systems and Sustained Sustained Competitive
Advantage Competitive Advantage Advantages

The informal, emergent, An embedded Some firms invest both in a

and autonomous information- positive reputation and
processes, by which processing system guarantees => these
firms choose their => a source of two firm resources are
strategies => valuable sustained not substitutes =>
strategies for firms, competitive reputation: a source of
firm resources advantage sustained competitive
advantage
 Discussion & Personal view
● Avariety of implications for the relationship between strategic
management theory and other business disciplines, such as Social
Welfare, Organization Theory and Behavior, and Firm Endowments.
● Firms can benefit from previously overlooked competitive advantages =>
prioritize their efforts => increase efficiency, decrease costs
● Firms can efficiently make future plans, better allocate business resources
● Managers can grow insights => identify, evaluate potential opportunities
and threats
● The framework doesn’t consider internal factors (for example, how
demand in the marketplace is shifting and changing). It doesn’t take into
account all factors that could affect the organization's performance
Thank you!