Framework

VRIO framework

The question it answers

When leaders plan to invest in an internal resource or capability, is it valuable, rare and hard to imitate enough for lasting advantage, and is the firm organised to exploit it?

Origin
Barney, 1995; Barney, 1991
Diagram type
Decision flow
Level of analysis
Firm
Topics
Strategy & leadershipBusiness consulting
Chess knight on a glass compass, icon for strategy and leadership

Diagram

VRIO framework

  1. Valuable?Does it raise revenue or cut cost compared with not having it?Competitive disadvantage.
  2. Rare?Do few rivals have it?Competitive parity.
  3. Costly to imitate?Do rivals trying to get it face a cost disadvantage?Temporary competitive advantage.
  4. Organised to capture the value?Do structure, processes and rewards allow full exploitation?Unused competitive advantage.
Sustained competitive advantage

Pitfalls

Pitfall

Forcing a positive verdict. 'Not enough evidence on rarity or imitation cost' is a valid result and should be stated.

Sources

References

Listed A–Z by author surname, Harvard style. A source with a DOI links to https://doi.org/…; one without links to its page or says plainly that it has no DOI.

  1. Barney, J.B. (1991) ‘Firm resources and sustained competitive advantage’, Journal of Management, 17(1), pp. 99–120.doi:10.1177/014920639101700108Source page
  2. Barney, J.B. (1995) ‘Looking inside for competitive advantage’, Academy of Management Executive, 9(4), pp. 49–61.doi:10.5465/ame.1995.9512032192Source page