Firm Resources and Sustained Competitive Advantage

A set of vocabulary flashcards covering the key concepts from Jay Barney's 1991 article on firm resources and sustained competitive advantage, focusing on the resource-based view, resource attributes, and related concepts.

Firm Resources

All assets, capabilities, organizational processes, firm attributes, information, knowledge, etc., controlled by a firm that enable it to conceive of and implement strategies to improve efficiency and effectiveness.

Resource-Based View (RBV) of the Firm

A theoretical framework emphasizing that firm heterogeneity and immobility of resources are central to explaining sustained competitive advantage.

Competitive Advantage

A firm's ability to implement a value-creating strategy not simultaneously adopted by any current or potential competitors.

Sustained Competitive Advantage

A competitive advantage that persists because competitors cannot duplicate the benefits of the strategy; an equilibrium condition, not necessarily lasting forever.

Resource Heterogeneity

Differences in the strategic resources of firms within an industry.

Resource Immobility

Strategically relevant resources that are not perfectly mobile across firms and thus not easily purchased or transferred.

Valuable Resource

A resource that enables a firm to exploit opportunities or neutralize threats, improving efficiency and effectiveness.

Rare Resource

A valuable resource possessed by a small number of firms; widespread possession eliminates a competitive edge.

Imperfectly Imitable Resource

A resource whose benefits cannot be easily copied due to unique history, causal ambiguity, or social complexity.

Non-Substitutability

There are no strategically equivalent, valuable, and imperfectly imitable substitutes for the resource.

Causal Ambiguity

When the link between a resource and a firm’s advantage is not well understood, hindering imitation.

Social Complexity

Resource bases rooted in complex social interactions (culture, inter-firm relationships) that are hard to imitate.

Unique Historical Conditions

History- and place-dependent resources that may be imperfectly imitable due to their origin in a firm’s past.

Path Dependence

The idea that a firm’s current resources and capabilities are shaped by historical sequences of decisions and events.

First-Mover Advantage

Benefit from being first to implement a strategy; requires resource heterogeneity; can disappear if resources are homogeneous.

Barriers to Entry

Obstacles that prevent or impede new entrants; in RBV terms, these arise when resources are heterogeneous and immobile.

Mobility Barriers

Barriers that prevent the movement or acquisition of resources across firms, supporting sustained advantages.

Value Chain

Porter’s framework for analyzing activities to identify where value-creating resources are located and how they can yield advantages.

Formal Strategic Planning as a Firm Resource

Formal planning processes can be valuable but are often not rare or imitable by themselves, so they usually do not by themselves yield sustained competitive advantage.

Informal Strategy-Making Processes

Emergent, autonomous, or informal approaches to strategy that may be rare and socially complex, and thus potentially sources of sustained advantage.

Information Processing Systems

Embedded computer-management systems integrated with decision-making; can be rare and socially complex, offering potential sustained advantage.

Reputation

Positive perceptions among customers and suppliers that can be a source of sustained advantage when rare and difficult to imitate.

Substitutability

Existence of other valuable resources that can implement the same strategy; if substitutes are common or easily imitated, advantages are not sustained.

Resource Endowments

The collection of a firm’s valuable, rare, imperfectly imitable, and non-substitutable resources.

Efficiency Rent

Profit from the efficient exploitation of resource advantages, considered distinct from monopoly rents.

Schumpeterian Shocks

Structural shifts in an industry that redefine which attributes are valuable resources and can alter competitive dynamics.