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The resource-based view (RBV) presents the modern managerial way to analyze how to achieve greater performance and competitive advantage. It can explain why firms perform differently and help compare their set of tools to determine the reason for deferential success. The focus of a business manager who uses the RBV framework should be on the internal firm resources. A resource that can provide a competitive advantage should have the characteristics of value, rarity, imperfect imitability, and non-sustainability. These four characteristics are combined in one word, VRIN. VRIN concept was coined by Jay Barney and was developed in his article Firm Resources and Sustained Competitive Advantage.
The value refers to the increased quality of products offered to the customer, while rarity means the uniqueness of a resource that other companies cannot exploit. Imperfect imitability is the impossibility of other firms to copy that resource. Non-sustainability of resources means that it must not be possible to find another resource that will replace them. If the resource corresponds to all these requirements, it will bring a sustainable competitive advantage. Nevertheless, some scholars like Frank Rothaermel wants to transform these criteria and add organization as one of the factors. It makes the view not only on resources but on organizational capacities of the company itself.
However, there is a set of limitations to this view. Firstly, there could be the chance that many firms will evaluate their resources as sustainable development providers. VRIN concepts are quite subjective and difficult to measure so every manager will think about their resources as unique and valuable. Secondly, it seems that the RBV applies only to large firms such as Apple or Google. For an average company to become relatively successful, it is unnecessary to use VRIN criteria and better to concentrate on industry structure.
One of the strategies that can be more effective is called the positioning approach. It tries to focus on four major factors: promotion, price, place, and product. This range of criteria is fundamentally different from RBV and analyzes not only internal resources but external factors such as the industry. It will help to understand better why some firm outperforms other by the transparent tools. For example, the manager can put the competing companies on the matrix and evaluate their positioning in the market through the price and quality. It also suits the analytical needs of small companies, so it has wider applicability.
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