Essay About Imitability Paradox And Competitive Advantages.These Limitations

Managerial Influence
Essay Preview: Managerial Influence
Report this essay
Managerial Influence
A second limitation of the VRIO approach to studying organizational strengths and
weaknesses is that it suggests that managers have a limited ability to create sustained
competitive advantages.These limitations are summed up best, perhaps, by what might
be called the imitability paradox: The less costly it is for managers in a firm to develop
or acquire resources that could generate competitive advantage, the less likely it is that
these resources will be a source of sustained competitive advantage. In general, if any
firm can develop or acquire a set of valuable resources at no cost disadvantage, then
those resources will be imitable and a source only of competitive parity in the long run.
What the imitability paradox suggests is that not all firms can gain sustained
competitive advantages. Managers in firms that have developed valuable, rare, and
costly-to-imitate resources or capabilities over long periods of time (because of path
dependence, causal ambiguity, or social complexity) may be able to help their firms
gain sustained competitive advantages. However, firms that do not have any of these
special skills and capabilities, but attempt to acquire them without any cost disadvantage,
will not gain sustained competitive advantages, because if one firm can acquire
these resources, others will be able to as well.
Although the observation that not all firms can obtain a sustained competitive
advantage does suggest some limitations on managers ability to affect firm performance,
it is consistent with most research on the performance of firms in various
industries. In most industries, several firms (perhaps even the majority) apparently
discover their own unique resources and capabilities and exploit them in ways that
generate superior performance. However, there are often firms in an industry that
are perpetually generating only competitive parity, or even competitive disadvantages.
These perpetually failing firms simply have not developed valuable resources
that would enable them to gain a sustained competitive