Academic Writing

VRIO framework adopted from Rothaermel’s (2013) ‘Strategic Management’, p.91 VRIO Framework is illustrated, which tests if a resource or capability is valuable, rare, costly to imitate and if a company is organized to catpure value from it. If an answer is yes to all of the questions than the resource can bring sustained competitive advantage. Question of Value. Resources are valuable if they help organizations to increase the value offered to the customers. This is done by increasing differentiation or/and decreasing the costs of the production. The resources that cannot meet this condition, lead to competitive disadvantage. Question of Rarity. Resources that can only be acquired by one or few companies are considered rare. When more than few companies have the same resource or capability, it results in competitive parity. Question of Imitability. A company that has valuable and rare resource can achieve at least temporary competitive advantage. However, the resource must also be costly to imitate or to substitute for a rival, if a company wants to achieve sustained competitive advantage. Question of Organization. The resources itself do not confer any advantage for a company if it’s not organized to capture the value from them. Only the firm that is capable to exploit the valuable, rare and imitable resources can achieve sustained competitive advantage.