Rare resources are resources that other competing firms do not possess. If many firms have the same resource, then those firms will likely implement similar strategies, thus giving no one firm a sustainable competitive advantage. This is not to say that resources that are common are not valuable; they do indeed aid the firm in its chance for economic
prosperity. However, to sustain a competitive advantage, it is more advantageous if the resource(s) is also rare.
It is also important that these same resources be difficult to imitate. If firms cannot easily gain the resources, say RBV theorists, then those resources will lead to a competitive advantage more so than resources easily imitable. Even if a firm employs resources that are rare, a sustainable competitive advantage may be achieved only if other firms cannot easily obtain these resources.
The third empirical indicator that can make resources a source of competitive
advantage is substitutability. Borrowing from Porter’s Five-Forces Model, to the degree that there are no viable substitutes, a firm will be able to sustain its competitive advantage. However, even if a competing firm cannot perfectly imitate a firm’s resource, it can still obtain a sustainable competitive advantage of its own by obtaining resource substitutes.
The RBV has continued to grow in popularity and continues to seek a better understanding
of the relationship between resources and sustained competitive advantage in
strategic management. However, as alluded to in Chapter 3, one cannot say with any
degree of certainty that either external or internal factors will always or even consistently
be more important in seeking competitive advantage. Understanding both external and
internal factors, and more importantly, understanding the relationships among them, will
be the key to effective strategy formulation (discussed in Chapter 6). Because both external
and internal factors continually change, strategists seek to identify and take advantage of
positive changes and buffer against negative changes in a continuing effort to gain and
sustain a firm’s competitive advantage. This is the essence and challenge of strategic management,
and oftentimes survival of the firm hinges on this work.