Resource based theory says that the resources support in the success of an organization and it provides an organized way to study and understand the resources by categorizing, comparing, and contrasting them. It assumes that a firm’s performance is dependent on its capabilities. The resources in an organization are classified as human resources, business resources, and technology resources and these resources must be valuable, heterogeneous, and immobile.
VRIN resources are tough to find out, they are rare, valuable, imperfectly imitable and non substitutable. These include re engineering, enterprise system, bench marking and downsizing etc. Valuable resources that have advantage must be hard, and impossible to imitate and not available to those who do not already have them.
A firm can stay ahead of its competitors and can get higher returns by developing capabilities based on the sequences of path dependent learning.
The business should give more importance to business resources and human resources because they exert impact on firm competitive advantage. Technology resources are indispensable but inevitable conditions to improve firm's performance.
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