Inimitability

Valuable and rare resources can be considered as sources for competitive advantage only when firms that do not possess these resources cannot

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tain them. (Barney 1991, p. 107) Firms that do not possess those resources are in cost disadvantage compared to those that already possess them.

These kinds of resources are imperfectly imitable. (Barney 1996, p. 151)

In order to generate rents, firm heterogeneity must be durable; so there must be some barriers that limit ex-post competition. These ex-post barriers make resources imperfectly imitable. (Peteraf 1993, pp. 182–183) Nevertheless, imitation does not destroy all the value of the resource. It merely reduces the uniqueness of the resource, which erodes the value of the resource. (Godfrey

& Gredersen 1999, p. 40)

According to Dierickx and Cool (1989) and Barney (1991), there are three main reasons why some resources are inimitable. Moreover, physical unique-ness is added to the list, although it can be included in the first three reasons.

1.) Unique historical conditions: time compression diseconomies and as-set mass efficiencies

2.) Causal ambiguity

3.) Social complexity: interconnectedness of asset stocks 4.) Physical uniqueness

Unique historical conditions mean that the low-cost acquisition or develop-ment of the resource for a particular firm has depended on certain unique his-torical conditions. This can be accomplished by exploiting first-mover advan-tages or by path dependence. In the first case it is possible for other firms to exploit an opportunity, but it is very costly, because the first-mover has al-ready exploited advantages, such as learning curve effects, and there are time compression diseconomies, because of which resources cannot be de-veloped just by throwing in money. Secondly, the performance of a firm does not simply depend on the industry structure within which a firm finds itself at a particular point in time, but also on the path a firm followed through history to

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arrive where it is. If a firm obtains valuable and rare resources, because of a unique path through history, these resources cannot be duplicated by com-petitors, because they can only be obtained through that unique path of his-tory. Conceptually both cases can include asset mass efficiencies, when a firm can exploit scale advantages in accumulating resources. (Barney 1991 &

1996; Dierickx & Cool 1989, pp. 1507–1508) In addition, economic deter-rence can be included in the list. It occurs when sizable, specific and scale sensitive investments are required to compete in the market with limited mar-ket potential. Basically the investments can be replicated, but the threat of intense competition and economic losses will keep imitators out. Basically the question is about economies of scale. (Collis & Montgomery 1995, pp. 121–

122) Unique historical conditions will make markets incontestable where the discounted value of future cash flows facing a new entrant does not exceed the costs of entering the market (Godfrey & Gregersen 1999, p. 46).

Causal ambiguity exists when resources controlled by a firm and a firm’s sus-tained competitive advantage are not understood or are understood imper-fectly. When the link between resources and competitive advantage is not clear it is difficult for firms that are attempting to duplicate a successful firm’s strategies to know which resources they should imitate. Under causal ambi-guity it is unclear that described resources are the sources for competitive advantage. Nevertheless, causal ambiguity has to be on the same level for firms that possess resources and firms that try to imitate those resources. If a firm with competitive advantage understands the links between resources and competitive advantage, other firms can also learn the links, acquire necessary resources and implement relevant strategies. In order for causal ambiguity to be a source of competitive advantage all the rival firms must have an imper-fect understanding of the links, or otherwise information will be diffused to all the competitors, thus eliminating causal ambiguity. (Barney 1991, pp. 108–

110) Reed and DeFillippi (1990) propose that causally ambiguous activities

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and competences have the characteristics of tacitness, complexity and speci-ficity. Sustainable competitive advantage can be created only by reinvesting into the characteristics mentioned, which takes us to the question of durability discussed before.

Social complexity means that the resources the firm possesses may be very complex social phenomena, beyond the ability of firms to systematically man-age and influence. For example, interpersonal relations, the firm’s culture, its reputation among its suppliers and customers can be considered socially complex. Usually complex physical technology cannot be a source of com-petitive advantage, because it is typically imitable. However, the exploitation of physical resources often requires the use of complex social resources.

(Barney 1991, p. 110) Grant (1991) claims that complexity is a relevant factor in the sustainability of competitive advantage. However, he does not draw a line between social complexity and other types of complexities.

Physical uniqueness makes resources by definition inimitable. Physical uniqueness is based on legal rights or special conditions (Collis & Montgom-ery 1995, pp. 121–122). Barney (1996) even lists patents as the main source of inimitability. Resources such as land could be considered as scarce re-sources, when property rights are clearly defined. Property rights can convert otherwise imitable resources into inimitable, which makes it possible to ap-propriate economic rents. (Lippman & Rumelt 2003, p. 1076; see Teece 1996, p. 210) Miller & Shamsie (1996) argue that legally protected resources are almost impossible to imitate. Property rights enable a resource owner to create, protect, appropriate and sustain the value of resources (Foss K. &

Foss N.J. 2005, p. 542).

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