Question

Which of the following is the correct explanation of resource-based approach?

(a) internal sources are more important for a firm than internal forces for competitive advantage
(b) process whereby a firm determines the costs associated with organizational activities
(c) external factors are more important than internal factors for competitive advanta
(d) effective integration of both external and internal factors is the key to competitive advantege

Answer 1

The resource-based approach emphasizes the importance of a firm’s internal resources and capabilities as key drivers of competitive advantage over external factors. (option a)

Step-by-step explanation:

The correct explanation of resource-based approach is (a) internal sources are more important for a firm than external forces for competitive advantage. This approach posits that a firm's resources, such as its capabilities, processes, company attributes, information, knowledge, etc., are the primary determinants of its sustained competitive advantage. By focusing on developing and utilizing these unique internal resources and capabilities, a firm is able to outperform its competitors. It contrasts with other theories that suggest external factors like market structure or the competitive environment are more critical for competitive advantage.