A process model of firm heterogenei

A process model of firm heterogeneity is proposed that combines the insights of a resourcebased
view with the institutional perspective from organization theory. Normative rationality,
institutional isolating mechanisms, and institutional sources of firm homogeneity are proposed
as determinants of rent potential that complement and extend resource-based explanations of
firm variation and sustainable competitive advantage. The article suggests that both resource
capital and institutional capital are indispensable to sustainable competitive advantage.