Distinction between Capabilities and Resources

Pages: 2 (727 words) Published: August 21, 2013
1. Makadok (2001) emphasizes the distinction between capabilities and resources by defining capabilities as “a special type of resource, specifically an organizationally embedded non-transferable firm-specific resource whose purpose is to improve the productivity of the other resources possessed by the firm” [4](p389). “[R]esources are stocks of available factors that are owned or controlled by the organization, and capabilities are an organization’s capacity to deploy resources”:[3] p. 35. Essentially, it is the bundling of the resources that builds capabilities.[5] A competitive advantage can be attained if the current strategy is value-creating, and not currently being implemented by present or possible future competitors (:[2] 102). Although a competitive advantage has the ability to become sustained, this is not necessarily the case. A competing firm can enter the market with a resource that has the ability to invalidate the prior firm's competitive advantage, which results in reduced (read: normal) rents (Barney, 1986b, p658). Sustainability in the context of a sustainable competitive advantage is independent with regard to the time frame. Rather, a competitive advantage is sustainable when the efforts by competitors to render the competitive advantage redundant have ceased (:[2] p102; Rumelt, 1984, p562). When the imitative actions have come to an end without disrupting the firm’s competitive advantage, the firm’s strategy can be called sustainable. This is in contrast to views of others (e.g., Porter) that a competitive advantage is sustained when it provides above-average returns in the long run. (1985).

2. In-imitable – If a valuable resource is controlled by only one firm it could be a source of a competitive advantage (:[2] p107). This advantage could be sustainable if competitors are not able to duplicate this strategic asset perfectly (Peteraf, 1993, p183; Barney, 1986b, p658). The term isolating mechanism was introduced by Rumelt (1984, p567) to...
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