Managerial Influence

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