Resources Resources represent inputs into a firm's production process, such as capital equipment, the skills of individual employees, brand names, financial resources, and talented managers. By themselves — or individually — resources generally will not enable a firm to achieve a competitive advantage. They must be combined or integrated with other firm resources to establish a capability. When these capabilities are identified and nurtured, they can result in core competencies, which may lead to a competitive advantage. A firm's resources can be classified either as tangible or intangible. Tangible Resources Tangible resources are assets that can be seen or quantified, such as a firm's physical assets (e.g., its plant and equipment). Tangible resources are classified in one of four ways, as illustrated in Table 3.1 . TABLE 3.1 Tangible Resources A firm's tangible resources generally can be placed into one of four categories: Financial resources, such as borrowing capacity Organizational resources, such as its formal reporting structure and systems Physical resources, such as location Technological resources, such as patents and trademarks Intangible Resources A firm's intangible resources may be less visible, but they are no less important. In fact, they may be more important as a source of core competencies. Intangible resources range from innovation resources, such as knowledge, trust, and organizational routines, to the firm's people-dependent or subjective resources of know- how, networks, organizational culture, to the firm's reputation for its goods and services and the way it interacts with others (such as employees, suppliers, or customers). TABLE 3.2 - Intangible Resources A firm's intangible resources can be classified as: Human resources, such as knowledge, trust, and managerial capabilities Innovation resources, such as scientific capabilities and capacity to innovate Reputational resources, such as the firm's reputation with customers or suppliers Because tangible resources are those that can be seen (such as plants), touched (such as equipment), documented (such as contracts with suppliers of raw materials), or quantified (such as the value of a specific asset), they generally will not, by themselves, represent capabilities that will serve as sources of core BUSINESS POLICY LEARNING NOTES
Chapter 3: The Internal Environment 3-4 competencies. However, they still have value and will contribute to the development of capabilities and core competencies. Because they cannot be quantified, touched, or seen, and are more difficult to explain, intangible resources are more likely to be sources of sustainable competitive advantage. And, if they also are difficult for competitors to identify and/or understand, they also may represent the most likely source(s) of a firm's capabilities, core competencies, and sustained competitive advantage.
- Summer '12
- Business, Internal Organization, Sustainable Strategic Capabilities