The Resource-Based View

15 important questions on The Resource-Based View

What are examples of Tangible Resources?

Visible, Physical Attributes:
- Buildings
- Capital
- Equipment
-Plant
- Supplies

-Labor
-Land

What are examples of Intangible Resources?

Invisible, Physical attributes
- Brand Equity

- Culture
- Intellectual Property
- Knowledge
- Reputation

What is Resource Heterogeneity?

An assumption in the RBV that a firm is a bundle of resources and capabilities that differs across firms.
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What are the different criteria of The VRIO Framework?

Valuable
Rare
Icostly to Imitate
Organised to capture the value of the resource

VRIO FRAMEWORK: Valuable

A resource is valuable if it helps a firm exploit an external opportunity or offset an external threat. A valuable resource helps enables a firm to increase its economic value creation.

VRIO FRAMEWORK: Rare

A resource is rare if only few/one firm possess it.

! If the resource is common it results in perfect competition and no firm is able to maintain a competitive advantage !

A resource that is NOT rare but is valuable can lead to competitive parity (at best)

VRIO FRAMEWORK: Costly To Imitate

If firms that do not possess the resource are unable to develop or buy the resource at a reasonable price.

What is Direct Imitation?

A way to copy or imitate a valuable and rare resource when firms have difficulty protecting their advantage.

Example: patents or trademarks

What if firms combine Direct Imitation and Substitution?

Firms are able to combine them when attempting to mitigate the competitive advantage of a rival.

VRIO FRAMEWORK: Organised to Capture Value

Having in place an effective organisational structure, processes and systems to fully exploit the competitive potential of the firm's resources, capabilities and competencies.

What are Isolating mechanisms?

Barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.

What is Causal Ambiguity?

A situation in which the cause and effect of a phenomenon are not readily apparent.

What is Social Complexity?

A situation in which different social and business systems interact with one another.

What is Intellectual Property Protection?

A critical intangible resource that can provide a strong isolating mechanism and thus help to sustain a competitive advantage.

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IPP can make direct imitation difficult

What are 5 Major forms of IP Protection?

- Patents
- Designs
- Copyrights
- Trademarks
- Trade secrets

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