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both have the capabilities to build cars of high quality at relatively low cost. [26] Their
products regularly beat rival firms’ products in both short-term and long-term quality
ratings. [27] Thus, the criterion of rarity requires that the resource not be widely
possessed in the industry. It also suggests that the more exclusive a firm’s access to a

particularly valuable resource, the greater the benefit for having it.
Inimitable
An inimitable (the opposite of imitable) resource is difficult to imitate or to
create ready substitutes for. A resource is inimitable and nonsubstitutable if it is
difficult for another firm to acquire it or to substitute something else in its place. A
valuable and rare resource or capability will grant a competitive advantage as long as
other firms do not gain subsequently possession of the resource or a close substitute.
If a resource is valuable and rare and responsible for a market leader’s competitive
advantage, it is likely that competitors lacking the resource or capability will do all
that they can to obtain the resource or capability themselves. This leads us to the third
criterion—inimitability. The concept of imitation includes any form of acquiring the
lacking resource or substituting a similar resource that provides equivalent benefits.
The criterion important to be addressed is whether competitors face a cost
disadvantage in acquiring or substituting the resource that is lacking. There are
numerous ways that firms may acquire resources or capabilities that they lack.
As strategy researcher Scott Gallagher notes:
“This is probably the toughest criterion to examine because given enough time
and money almost any resource can be imitated. Even patents only last 17 years and
can be invented around in even less time. Therefore, one way to think about this is to
compare how long you think it will take for competitors to imitate or substitute
something else for that resource and compare it to the useful life of the product.
Another way to help determine if a resource is inimitable is why/how it came about.
Inimitable resources are often a result of historical, ambiguous, or socially complex
causes. For example, the U.S. Army paid for Coke to build bottling plants around the
world during World War II. This is an example of history creating an inimitable
asset. Generally, intangible (also called tacit) resources or capabilities, like
corporate culture or reputation, are very hard to imitate and therefore
inimitable.” [28]
Organized
The fourth and final VRIO criterion that determines whether a resource or
capability is the source of competitive advantage recognizes that mere possession or
control is necessary but not sufficient to gain an advantage. The firm must likewise
have the organizational capability to exploit the resources. The question of
organization is broad and encompasses many facets of a firm but essentially means
that the firm is able to capture any value that the resource or capability might
generate. Organization, essentially the same form as that taken in the P-O-L-C
framework, spans such firm characteristics as control systems, reporting
relationships, compensation policies, and management interface with both customers
and value-adding functions in the firm. Although listed as the last criterion in the
VRIO tool, the question of organization is a necessary condition to be satisfied if a
firm is to reap the benefits of any of the three preceding conditions. Thus, a valuable

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