The resource-based view of the firm and the different types of tangible and intangible resources, as

resource-based view of the firm and the different types of tangible and
intangible resources, as well as organizational
As noted earlier
Spotlight 3.1), a firm’s strengths and capabilities—no matter how unique or
impressive—do not necessarily lead to competitive advantages in the
marketplace. The criteria for whether advantages are created and whether or not
they can be sustained over time will be addressed later in this section. Thus,
the RBV is a very useful framework for gaining insights as to why some
competitors are more profitable than others. As we will see later in the book,
the RBV is also helpful in developing strategies for individual businesses and
diversified firms by revealing how core competencies embedded in a firm can
help it exploit new product and market opportunities.
83In the two sections that
follow, we will discuss the three key types of resources that firms possess
3.5): tangible resources,
intangible resources, and organizational capabilities. Then we will address the
conditions under which such assets and capabilities can enable a firm to attain
a sustainable competitive″>33
Types of Firm
Firm resources are all assets, capabilities,
organizational processes, information, knowledge, and so forth, controlled by a
firm that enable it to develop and implement value-creating strategies.
Tangible Resources These are assets that are
relatively easy to identify. They include the physical and financial assets
that an organization uses to create value for its customers. Among them are financial
resources (e.g., a firm’s cash, accounts receivables, and its ability to borrow
funds); physical resources (e.g., the company’s plant, equipment, and machinery
as well as its proximity to customers and suppliers); organizational resources
(e.g., the company’s strategic planning process and its employee development,
evaluation, and reward systems); and technological resources (e.g., trade
secrets, patents, and copyrights).
tangible resources
organizational assets that are relatively easy to identify, including physical
assets, financial resources, organizational resources, and technological
EXHIBIT 3.5 The Resource-Based View of the Firm:
Resources and Capabilities

Source: Adapted from Barney, J. B. 1991. Firm Resources and Sustained
Competitive Advantage. Journal of Management: 17: 101; Grant,
R. M. 1991. Contemporary Strategy Analysis: 100–102. Cambridge
England: Blackwell Business and Hitt, M. A., Ireland, R. D., & Hoskisson,
R. E. 2001. Strategic Management: Competitiveness and Globalization (4th
ed.). Cincinnati: South-Western College Publishing.
84Many firms are finding
that high-tech, computerized training has dual benefits: It develops more
effective employees and reduces costs at the same time. Employees at FedEx take
computer-based job competency tests every 6 to 12″>34 The 90-minute
computer-based tests identify areas of individual weakness and provide input to
a computer database of employee skills—information the firm uses in promotion
Intangible Resources Much more difficult for
competitors (and, for that matter, a firm’s own managers) to account for or
imitate are intangible resources, which are typically embedded
in unique routines and practices that have evolved and accumulated over time.
These include human resources (e.g., experience and capability of employees,
trust, effectiveness of work teams, managerial skills), innovation resources
(e.g., technical and scientific expertise, ideas), and reputation resources
(e.g., brand name, reputation with suppliers for fairness and with customers
for reliability and product quality)″>35 A firm’s culture
may also be a resource that provides competitive″>36
intangible resources
organizational assets that are difficult to identify and account for and are
typically embedded in unique routines and practices, including human resources,
innovation resources, and reputation resources.
For example, you might
not think that motorcycles, clothes, toys, and restaurants have much in common.
Yet Harley-Davidson has entered all of these product and service markets by
capitalizing on its strong brand image—a valuable intangible″>37 It has used that
image to sell accessories, clothing, and toys, and it has licensed the
Harley-Davidson Café in New York City to provide further exposure for its brand
name and products.
Social networking sites
have the potential to play havoc with a firm’s reputation. Consider the
unfortunate situation Comcast faced when one of its repairmen fell asleep on
the job—and it went viral:
Ben Finkelstein, a law student, had trouble with
the cable modem in his home. A Comcast cable repairman arrived to fix the
problem. However, when the technician had to call the home office for a key
piece of information, he was put on hold for so long that he fell asleep on
Finkelstein’s couch. Outraged, Finkelstein made a video of the sleeping
technician and posted it on YouTube. The clip became a hit—with more than a
million viewings. And, for a long time, it undermined Comcast’s efforts to
improve its reputation for customer″>38
Organizational Capabilities Organizational
capabilities are not specific tangible or intangible assets, but
rather the competencies or skills that a firm employs to transform inputs into″>39 In short, they
refer to an organization’s capacity to deploy tangible and intangible resources
over time and generally in combination, and to leverage those capabilities to
bring about a desired″>40 Examples of
organizational capabilities are outstanding customer service, excellent product
development capabilities, superb innovation processes, and flexibility in
the competencies and skills that a firm employs to transform inputs into
In the case of Apple,
the majority of components used in their products can be characterized as
proven technology, such as touch screen and MP3 player″>42 However, Apple
combines and packages these in new and innovative ways while also seeking to
integrate the value chain. This is the case with iTunes, for example, where
suppliers of downloadable music are a vital component of the success Apple has
enjoyed with their iPod series of MP3 players. Thus, Apple draws on proven
technologies and their ability to offer innovative combinations of these.
Page 85Firm Resources and
Sustainable Competitive Advantages
As we have mentioned, resources alone are not a
basis for competitive advantages, nor are advantages sustainable over″>43 In some cases, a
resource or capability helps a firm to increase its revenues or to lower costs
but the firm derives only a temporary advantage because competitors quickly
imitate or substitute for″>44

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