Organizational Resources

and Competitive Advantage

Examples of Firm Resources and Capabilities

Financial Human
Superior CEO characteristics
Excellent cash flow
Experienced managers
Strong balance sheet
Well trained, motivated, loyal
Superior past performance
employees
Strong links to financiers
High performance structure or culture

Knowledge and Learning

Superior technology development
Excellent innovation processes and
organizational entrepreneurship
Outstanding learning processes

Physical General Organizational

State-of-the-art plant or machinery
Superiority in a value-adding Excellent reputation or brand name
process or function Patents
Superior locations or raw materials Exclusive Contracts
Outstanding products and/or Superior linkages with stakeholders
services
 Six Questions that Determine the Value of
Firm Resources and Capabilities
1. Does the resource 4. Do
Firm organizational
Resources or capability have
systems exist that 6. Is the
and value in the market?
allow realization of resource or
Capabilities 2. Is the resource or potential? capability
capability unique? difficult or
Financial 5. Is the
3. Is there a readily costly to
organization aware
Physical available substitute for imitate?
of and realizing the
the resource or advantages?
Human capability?
Knowledge
and Learning

General Potential Actual The

Organizational Competitive Source of Competitive
Advantage or Competitive Advantage or
Core Advantage Core
Competency* Competency
Is Sustainable
 Types of Resources
• Tangible Resources
› Can be seen, touched and/or quantified
› Examples are manufacturing processes and products
› Tend to be easy to imitate
• Intangible Resources
› Hard to quantify
› Examples are knowledge, skills, abilities and
relationships with stakeholders
› Difficult to imitate. Makes them good sources of
competitive advantage
• Industry Differences
› The resources and capabilities that lead to competitive
advantage vary from industry to industry
 Competitiveness and Resource
Interconnectedness
Human
High Quality Managers
High Quality Employees
Better Training

Financial Knowledge and Learning

Strong Financial More Innovation
Position More Learning

Physical
General Organizational State-of-the-art Plant
Strong Brand and Machinery
Better Reputation Superior Functional
Strong Stakeholder Processes
Relationships Superior Products and
Services
Typical Corporate Ownership Structure
External
Individual Stakeholders
Shareholders Board of Directors
Outsiders and Influence
Elect Insiders
Large-block
Shareholders Monitor & Control
Provide Services
Obtain Resources

Top Management

Manage

Manager Manager Manager Manager Manager

Employees Employees Employees