---
title: "VRIO: testing SWOT strengths, even when the answer is no"
description: "VRIO tests whether a SWOT strength is valuable, rare and costly to copy. A hypothetical workshop and HarmonyOS show when \"not enough evidence\" is valid."
url: "https://staging.khoi.co.uk/en/blog/vrio-ket-qua-am-tinh-van-tot"
lang: en-GB
author: "Lê Quốc Khôi"
date: 2026-11-03
updated: 2026-11-03
topics: ["Strategy & leadership"]
tags: ["VRIO", "Resource-based view", "SWOT", "Competitive advantage", "Huawei"]
---

# VRIO is not a rubber stamp: a negative result is still a result

## Key takeaways

- Barney (1995) puts four questions to every resource: value, rarity, imitability and organisation (Barney, 1995, p. 50). A valuable resource that many rivals also hold gives only competitive parity (Barney, 1995, p. 52).
- "Parity", "temporary advantage" and "not enough evidence" are all valid results. The library's VRIO framework names forcing a positive verdict as the pitfall.
- In the hypothetical garment workshop (every number invented), of four strengths one is parity, one is temporary, one is not fully exploited and one lacks evidence.
- For the HarmonyOS app ecosystem, Reuters on 23 November 2024 reported more than 15,000 apps against a 100,000 target (Reuters, 2024). The public evidence I read suggests the value gate passes in principle; rarity, imitation cost and organisation are not settled.

A distribution company's managing director sends the board a SWOT. The Strengths box lists experienced staff, competitive prices and fast delivery, with a request to put more capital behind "playing to our strengths". None of the three has been compared with a rival. The company is hypothetical. [VRIO](https://staging.khoi.co.uk/en/framework/vrio) steps in between: each line goes through four gates before money follows, and at each gate the answer can be "no", "not known" or "yes".

## Why do most SWOT strengths fail the test?

Because SWOT asks what helps, while the test asks what helps more than a rival's version does. Barney (1995) says tools for analysing the outside environment had developed much faster than tools for analysing internal strengths and weaknesses, and offers his article as a simple way to fill that gap (Barney, 1995, p. 49).

A valuable resource that many rivals also have gives [competitive parity](https://staging.khoi.co.uk/en/glossary#competitive-parity). Barney stresses that this is not worthless, because such resources may be essential for survival (Barney, 1995, p. 52). His own example: Pepsi ran the Pepsi Challenge in Dallas-Fort Worth and doubled its share from 7% to 14% in six months, but its retail price fell to roughly half the earlier level. Barney reads that as exactly what one would expect under parity (Barney, 1995, p. 58). In my reading, lines such as "competitive prices" or "fast delivery" fall into this group easily, because customers demand them from every supplier.

## What do the four VRIO gates ask, and what does each one return?

Each gate asks one question, and a "no" stops the test at that gate's label.

> **Figure:** [VRIO framework](https://staging.khoi.co.uk/en/framework/vrio) The four VRIO gates, following the framework in the site library.

- Value: does the resource help exploit an opportunity or neutralise a threat (Barney, 1995, p. 50)? If not, competitive disadvantage.
- Rarity: do few rivals have it (Barney, 1995, p. 52)? If not, parity.
- Cost to imitate: would a rival that wants it face a cost disadvantage? Barney groups the reasons into three: history, countless small decisions and social complexity (Barney, 1995, pp. 53-55). If not, a temporary advantage.
- Organisation: do the reporting structure, control systems and pay policies let the firm exploit the resource fully (Barney, 1995, p. 56)? If not, an advantage not fully exploited.

Only a resource that passes all four is a [sustained competitive advantage](https://staging.khoi.co.uk/en/glossary#sustained-competitive-advantage). "Sustained" is not measured in years but by whether rivals can copy it (Barney, 1991, pp. 102-103).

There are three possible answers, not two: yes, no, and not enough evidence. The rarity gate shows why. Barney (1991) calls how rare a resource must be a difficult question and gives only a general principle (Barney, 1991, p. 107); ten years later he still accepted that rarity had not been fully specified (Barney, 2001, p. 44). When the evidence cannot answer, writing "not enough evidence" is correct. Forcing a "yes" is the pitfall the library's VRIO framework names.

## How does it work on a hypothetical garment workshop?

A workshop makes uniforms for schools and companies, with 40 tailors and VND 30 billion a year in revenue. The owner proposes spending VND 2 billion to "build on our strengths". The workshop and every number are invented by me for illustration. Suppose the owner has asked 10 nearby workshops.

> **Figure:** (compare) All content is hypothetical, for illustration.

```json
{
  "type": "compare",
  "columns": ["Valuable?", "Rare?", "Costly to imitate?", "Organised to exploit?", "Result recorded"],
  "rows": [
    { "label": "Delivery before the school term starts", "cells": ["Yes: schools fix orders before term", "No: 7 of 10 workshops promise the same date", "Stopped at the earlier gate", "Stopped at the earlier gate", "Parity"] },
    { "label": "CNC fabric cutter (VND 1.2 billion)", "cells": ["Yes: fabric waste falls from 8% to 5%", "Yes: 3 of 10 have one", "No: list price, installed in 4 months", "Stopped at the earlier gate", "Temporary advantage"] },
    { "label": "Multi-year contracts with 12 schools, built on the owner's personal relationships", "cells": ["Yes: VND 12 billion a year, 40% of revenue", "Yes: no other workshop holds these contracts", "Yes: built over years, tied to people", "No: only the owner holds the relationships, no account-care routine", "Durable potential, not fully exploited"] },
    { "label": "Lowest price in the area", "cells": ["Yes: customers compare prices", "Yes: only one workshop is lowest", "Not enough evidence: rivals' unit costs unknown", "Not assessed", "Not enough evidence"] }
  ]
}
```

The last row repays a close look. Lowest price is rare by definition. The real question sits at the imitation gate: does the low price come from genuinely low cost, or from accepting thin margins, which any rival could also do? That needs rivals' cost per set, which might be found from earlier tender prices, with a re-score after two tender rounds.

The cutter is a temporary advantage: Barney (1995) notes that with physical assets a rival can simply buy one and take it apart (Barney, 1995, p. 55). The contracts are the best row, passing three gates and failing at organisation. In my reading, the VND 2 billion belongs there, as a person responsible for school relationships and a renewal routine, before another machine.

This scoring suits you if you can ask rivals or customers. It does not suit you if you have no way to ask: most rows then come out "not enough evidence", and the first job is to find the cheapest evidence.

## What can public evidence say about the HarmonyOS app ecosystem?

Very little beyond the first gate, and that is the result. The resource tested is the app and developer ecosystem on HarmonyOS that a buyer of a Huawei device can use. The full case is at [Huawei and HarmonyOS](https://staging.khoi.co.uk/en/case/huawei-harmonyos).

On 23 November 2024 Reuters reported that Huawei was aiming for 100,000 apps on Harmony within 6 to 12 months, against more than 15,000. Xu Zhijun, whom Reuters calls Huawei's chairman, said: "Based on our analysis, for the Harmony ecosystem to be mature in meeting consumer needs, 100,000 apps is the milestone" (Reuters, 2024). That is the company's own analysis, not independently checked, and this post asserts nothing about Huawei's internal affairs.

| Gate | Evidence needed | What is public | Result recorded |
|:--|:--|:--|:--|
| Value | Buyers choosing or keeping devices because of the ecosystem, against the alternative of none | Reuters: the system was launched after US sanctions cut off support for Android; Xu says an operating system "would be of no value if no one uses it" (Reuters, 2024). Consumer revenue in 2025 was CNY 344,473 million, up 1.6%, which does not isolate the ecosystem (Huawei Investment & Holding Co., Ltd., 2026) | Passes in principle. Size not measured |
| Rarity | Counts on the same definition for Huawei and each main rival, on the same date | Reuters gives only Huawei's figure and its self-set milestone. The 2025 report gives over 350,000 apps and services in AppGallery at the end of 2025, a different unit (Huawei Investment & Holding Co., Ltd., 2026). No rival figures | Not enough evidence |
| Cost to imitate | Time and cost for another firm to build a comparable ecosystem; cost to developers of rewriting apps; users' switching costs | Reuters: Huawei built an open-source version; Xu urged government bodies and state firms to use Harmony (Reuters, 2024). 2025 report: OpenHarmony has over 10,000 individual contributors; over 10 million developers registered (Huawei Investment & Holding Co., Ltd., 2026) | Not enough evidence |
| Organisation | Internal structure, processes and rewards for supporting developers | 2025 report: R&D spending of CNY 192.3 billion, 21.8% of revenue; rotating chairwoman Meng Wanzhou says Huawei will keep cultivating the developer ecosystem (Huawei Investment & Holding Co., Ltd., 2026) | Not enough evidence |

Rarity depends on how the resource is defined. In my reading, "an app ecosystem" in general is unlikely to be rare, while "an ecosystem independent of a US company's software" may be rarer. Knowing needs a list of rivals, which the sources I used do not provide.

The imitation gate runs the other way round. Reuters describes HarmonyOS as launched after US sanctions cut off support for Android, so in my reading the question is whether the firm catching up pays more than those ahead of it did. Barney (2001) says resource-based logic also helps firms at a disadvantage reach parity through imitation or substitution (Barney, 2001, p. 49).

Recorded result: passes value in principle; from rarity onwards, not enough evidence. It cannot be called an advantage, and it cannot be called parity. Reuters's count and the 350,000 figure use different units, so I draw no conclusion on whether Huawei met its target. The two data points date from 23 November 2024 and the end of 2025; the position since may differ. The same case read through scenario planning is in [the post on scenarios when policy turns quickly](https://staging.khoi.co.uk/en/blog/kich-ban-khi-chinh-sach-re-nhanh).

## Going deeper: where does VRIO come from, and what did Priem and Butler argue?

Barney (1991) names four attributes a resource needs for sustained advantage: valuable, rare, imperfectly imitable, and without strategically equivalent substitutes (Barney, 1991, pp. 105-106, 111). That is [VRIN](https://staging.khoi.co.uk/en/framework/vrin). The 1995 version for managers folds substitution into imitation and adds the question of organisation (Barney, 1995, pp. 53, 56).

Priem and Butler (2001) say the elemental resource-based view is not currently a theoretical structure, and that its proponents assumed stable product markets and avoided determining the value of resources (Priem and Butler, 2001, p. 22). They substitute Barney's definitions into the statement that valuable and rare resources can be a source of competitive advantage and find a statement true by definition (Priem and Butler, 2001, pp. 27-28). They then argue that value is set by demand-side conditions outside the model (Priem and Butler, 2001, p. 29). That is the circularity critique the library's VRIN framework records.

Barney (2001) replies that restating a theory as a tautology does not show that it is one; Porter's theory and transaction cost economics can be restated the same way, so the question is whether the elements are specified well enough to be tested (Barney, 2001, pp. 41-42). He accepts that value is the least fully specified element (Barney, 2001, p. 42) and says he would develop value more fully if he wrote the 1991 article today (Barney, 2001, p. 43). In my reading, because value has to be set by the market and not by the firm calling something a strength, the value gate needs evidence from outside the company.

I read the full text of Barney (1991, 1995, 2001). For Priem and Butler (2001) I read as far as page 29, not the research directions that follow. For the Reuters article I read the verbatim republication; for Huawei's 2025 annual report I read the web page, not the PDF.

## Frequently asked questions

### Is a strength that passes only the value gate worth keeping?

Yes, but do not pay for it as if it were a moat. Barney (1991) writes that valuable but common resources still help a firm survive, because under parity no firm pulls ahead yet each improves its chance of surviving (Barney, 1991, p. 107). The sensible move is to maintain it at the level of your rivals and look for advantage elsewhere.

### Does VRIO work for people's skills and brands, or only for physical assets?

It works for both. Barney (1995) lists resources and capabilities as financial, physical, human and organisational, including experience, relationships, trust and culture (Barney, 1995, p. 50). This is my reading: soft resources like these are harder to score from evidence than machines are, so "not enough evidence" turns up more often for them.

### What if two people score the same resource differently?

They usually differ on how the resource is defined, which rivals were compared, or what evidence was seen. Write down all three for each gate and compare; that is my suggestion. One cause is harder to remove: Barney (2001) says that where an advantage rests on causally ambiguous resources, managers cannot know for certain which of their resources actually produce it (Barney, 2001, p. 50).

### When should a "not enough evidence" result be scored again?

No source I read sets an interval. My suggestion is to re-score when new evidence arrives on the gate that was missing, or before the next decision to commit capital, whichever comes first. Write down in advance what will trigger the re-score.

## References

- Barney, J.B. (1991) ‘Firm resources and sustained competitive advantage’, *Journal of Management*, 17(1), pp. 99–120. https://doi.org/10.1177/014920639101700108
- Barney, J.B. (1995) ‘Looking inside for competitive advantage’, *Academy of Management Executive*, 9(4), pp. 49–61. https://doi.org/10.5465/ame.1995.9512032192
- Barney, J.B. (2001) ‘Is the resource-based 'view' a useful perspective for strategic management research? Yes’, *Academy of Management Review*, 26(1), pp. 41–56. https://doi.org/10.5465/amr.2001.4011938
- Huawei Investment & Holding Co., Ltd. (2026) *2025 annual report*. Huawei Investment & Holding Co., Ltd. Available at: https://www.huawei.com/en/annual-report/2025.
- Priem, R.L. and Butler, J.E. (2001) ‘Is the resource-based 'view' a useful perspective for strategic management research?’, *Academy of Management Review*, 26(1), pp. 22–40. https://doi.org/10.5465/amr.2001.4011928
- Reuters (2024) *China's Huawei aims for 100,000 apps on HarmonyOS in 6–12 months*. Reuters (via Yahoo Finance). Available at: https://finance.yahoo.com/news/chinas-huawei-aims-100-000-104101421.html.

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