5.4 VRIO Framework (think Resource Based-View)

Question 1

Barney (1991, 1995) and Barney and Wright (1998) provide the VRIO framework is

Answer 1

to identify the characteristics – value, rarity, inimitability and organisation – that organisational resources should possess if they are to provide sustained competitive advantage.

Question 2

In VRIO Competitive Advantage comes from:

Answer 2

1 employee knowledge and skill

2 physical technical systems – both individual technical competence and that accumulated in physical systems built over time

3 managerial systems – a firm’s systems of education, rewards and incentives which guide and monitor the accumulation of employee knowledge

4 values and norms – determine what kinds of knowledge are sought and nurtured and what kind of activities are tolerated and encouraged.

Question 3

Value

Answer 3

HRM should help the organisation to create value, both through improving efficiency and by
explicitly meeting the needs of customers

Question 4

Rarity

Answer 4

HRM should seek to develop and exploit rare characteristics of human resources

Question 5

Inimitability

Answer 5

HRM should develop and nurture characteristics that cannot be easily imitated by competitors (for example, through creating and sustaining a particular culture)

Question 6

Organisation

Answer 6

HRM should ensure that human resources are appropriately organised to add value and to
capitalise on their rarity and inimitability with an emphasis on integrated, coherent systems of HR practices (‘positive bundles’) to enable employees to reach their potential