The activities and processes of the organization utilize certain assets. These assets are called resources. These resources can be created within the organization. They form the internal resources. Such generated resources are organization-specific. Otherwise they could be obtained externally from the suppliers available in the resource markets. They form the external resources. The externally obtained resources are organization-addressable. In addition resources can be categorised as specific or non-specific. Those resources which can only be used for extremely specialized intentions and are significant to the organization in adding value to goods and services are called specific resources.
Non-specific resources are less specific and are less significant in adding value. Also resources can be broadly classified as tangible and intangible. The physical assets that an organization possesses are called tangible resources. The physical resources, human resources and final resources come under this category.
The intellectual resources, technological resources and the organizational reputation together form the intangible resources. The patents and copyrights of the organization are typical examples of intellectual resources. The innovation capacity and innovation speed are examples of technological resources. Reputation is basically good-will that the organization has acquired among the customers. It is a critical resource of an organization.
An organization should posses some characteristics in order to have the ability to compete with other organizations in the market place. These characteristics form the competencies of the organization. For any organization to survive in an industry competencies are must. At the same time competencies cannot be useful to an organization when they stand alone. It is when they combine together in the right combination that they help the organization to attain competitive advantage. For instance consider an information technology organization. For this to compete in the software industry it should posses the competencies to write programs and design tools which have to be combined together to provide it with the competitive advantage in the industry.
An organizationâ€™s resources which are critical in imparting it with competitive advantage are called distinctive capabilities. When the capabilities originate from an attribute which other firms do not have then they form an organizationâ€™s distinctive capabilities. In addition to having a distinctive characteristic it should also be sustainable and appropriable.
When a distinctive capability is able to continue functioning over a period of time it is said to be sustainable. When the organization which holds a distinctive capability is able to benefit mainly from it then it becomes appropriable. An organization can derive the distinctive capabilities mainly the organizational architecture, organization reputation and innovation. The relationships between the organization and the stakeholders are critical in developing these three aspects of the organization.