38 ENTREPRENEURSHIP
such a firm, he or she fades into an also-ran whose bundle of resources and skills may
soon be depleted by the forces of destructive capitalism. This entrepreneur will eventu-
ally go out of business^18
A recent research study has verified this conclusion. The study sought to identify the
criteria that influence the performance of high-tech new ventures. The results indicated
that entrepreneurial quality, resource-based capability, and competitive strategy are the
critical determinants of the firm’s viability and achievement. Successful entrepreneurs
develop multiple, resource-based capabilities to sustain multiple strategies that will push
their products to market. Furthermore, researchers have concluded that it is not the
unique products relative to those of competitors that bring success; rather, it is the firm’s
ability to meet customers’ unique requirements.^19
In Street Story 2.1, we see how sometimes resources and skills have to be found over-
seas because they are in short supply locally. The same principles apply to a resource that
is underpriced; one can use that resource to generate profit (rent) for a venture.
Street Story 2.1 illustrates that for the tailoring business, master tailors are a strate-
gic resource. Can we generalize to other situations? What are strategic resources?
Strategic resources create competitive advantage. There is a distinction between strate-
gic and non-strategic, or common, resources. Not all capital resources and assets are
strategically important for the entrepreneur. Many are considered “common” because,
while they are necessary for carrying out the firm’s usual activities, they provide no spe-
cific advantage. Ordinary desks, chairs, and office furniture are examples. Some
resources may prevent the formulation and implementation of valuable strategies due to
their shoddiness, imperfections, and poor quality. Still others may prevent beneficial
strategies by blinding the entrepreneur to alternative possibilities because he or she
focuses too narrowly on resources that are already controlled rather than on resources
that are potentially controllable.^20Valuable Resources
What makes resources valuable? Resources are valuable when they help the organiza-
tion implement its strategy effectively and efficiently, which means that in a “strengths,
weaknesses, opportunities, and threats” model of firm performance, a valuable resource
exploits opportunities or minimizes threats in the firm’s environment. A valuable re-
source is useful for the venture’s operation.^21 Examples of valuable resources and capa-
bilities are property, equipment, people, and skills such as marketing, finance, and
accounting. All of these resources are fairly general, however, so we must look at other
factors.Rare Resources
Valuable resources that are shared by a large number of firms cannot be a source of
competitive advantage or SCA. Because of their widespread availability, they are not
rare. An example might be legal resources, either independent professionals on retainer
or staff attorneys. Their major purpose is to minimize threats of lawsuits from a con-
tentious environment. Clearly, these are valuable resources in that they neutralize a
threat, but lawyers are not rare. Most, if not all, firms have access to approximately the
same legal talent (at a price, of course). Retaining legal counsel or building a corporate