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African Journal of Business Management Vol. 6(37), pp. 10159-10170, 19 September, 2012 Available online at http://www.academicjournals.org/AJBM
DOI: 10.5897/AJBM12.295
ISSN 1993-8233 ©2012 Academic Journals

Full Length Research Paper

Valuable, rare, inimitable resources and organization
(VRIO) resources or valuable, rare, inimitable resources
(VRI) capabilities: What leads to competitive
advantage?
Nuno Cardeal1* and Nelson António2
1

Católica-Lisbon School of Business Economics, Universidade Católica Portuguesa, Palma de Cima, Lisbon, Portugal. 2
ISCTE-IUL Lisbon, Av. Forças Armadas, Lisbon, Portugal.
Accepted 13 July, 2012

The resource-based view (RBV) argues that valuable, rare, inimitable resources and organization (VRIO) lead to competitive advantage. Dynamic capabilities (DC) are a comparatively new field and the related literature is mainly conceptual. Capabilities can be considered as the firm’s routines and processes. We argue that the “O” in VRIO refers to DC. DCs are the “organization” needed to transform bundles of resources into competitive advantage. Consequently, does competitive advantage stem from VRIO resources or from VRI capabilities? Through a case study we analyzed the development of one capability in a medium-sized Portuguese footwear manufacturer. After reviewing the process of development of the capability, we performed a VRIO test for each of the resources it exploits and a VRI test of the capability. We can conclude that none of the resources contributing to the capability are VRIO, but the capability is VRI.

Key words: Competitive advantage, dynamic capabilities, footwear, resource-based view.

INTRODUCTION
The resource based view (RBV) focuses on specific
resources and highlights that competitive advantage is
based on valuable, rare, inimitable resources and
organization (VRIO) (Barney, 1997). Dynamic capabilities
(DC), which represent the firm’s behavioral orientation
towards constant integration, reconfiguration, renewal
and recreation of its resources and capabilities and
continuous upgrading and reconstruction of its core
capabilities in response to the changing environment and
to remain competitive (Wang and Ahmed, 2007), focus
on internal processes or routines.
The RBV does not explain how competitive advantage
is achieved (Priem and Butler, 2001a). The DC view
explores how the firms’ resources and capabilities evolve
over time and provides a better understanding of how

*Corresponding author E-mail: nucard@ucp.pt. Tel: +351 217
214 000.

competitive advantage is achieved and maintained
(Ambrosini and Bowman, 2009). The DC literature is
quite new, which is probably the reason why it is mostly
conceptual and provides little empirical evidence, on how
to overcome the shortcomings of the RBV (Priem and
Butler, 2001a).
W e provide an extensive review of the state of the art
of the RBV and DC literatures. We conclude that from the
RBV viewpoint, to have a competitive advantage, firms
need to have VRIO resources. The unit of analysis is the
resource. On the other side, from the DC viewpoint,
capabilities in the origin of the competitive advantage
need to be VRI (being “O” the capability itself). The unit of analysis is the “O”. Then we argue that DC can be seen
as the “O” in VRIO according to the RBV. Being DCs the
VRIO’s “O”, to achieve competitive advantage, firms need to have VRI (valuable, rare and inimitable) capabilities. If we compare the RBV and the DC literature, a tension
emerges about whether competitive advantage stems
from VRIO resources or from VRI capabilities.

10160

Afr. J. Bus. Manage.

W e use a case-study methodology to analyze the
development of one capability by a medium sized
Portuguese footwear manufacturer. W e deeply analyzed
the way the firm renewed, recreated, upgraded and
reconstructed its resources / capabilities in respon se to
the changing environment. After reviewing the process of...
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