Resources and Capabilities 49replace financing because they enable the firm to meet its goals without having to make
additional investment by piggybacking on the investment of another firm.
To summarize: Financial resources are valuable and necessary, but because financial
resources are not rare, hard to duplicate, or nonsubstitutable, they are insufficient (in
most cases) to be a source of sustainable competitive advantage.
However, the management of financial resources—the firm’s organization, processes,
and routines that enable it to use its resources more effectively—can be a source of SCA.
This is because capable financial management involves complexity and a human element
that is valuable, rare, hard to copy, and nonsubstitutable. Thus, although money as a
resource is inert and static, the ability and skill to manage money is dynamic, complex,
and creative.
Intellectual and Human Resources
Intellectual and human resources include the entrepreneur’s knowledge, training, and
experience, and his or her team of employees and managers. It includes the judgment,
insight, creativity, vision, and intelligence of the individual members of an organization.
It can even include the social skills of the entrepreneur.^39 Entrepreneurs often perceive
great opportunities where others see only competition or chaos; therefore, entrepre-
neurial perception is a resource. The entrepreneur’s values and his or her beliefs about
cause and effect can form the initial imprint of the firm’s culture. For example, entre-
preneurs who believe in racial and cultural diversity and can build a workforce around
these values are even more successful than those who do not practice diversity. A new
study indicates that diversity interacts with strategy in three ways to enhance perform-
ance: improves productivity, improves return on equity, and improves market perform-
ance.^40
One of the fastest-growing entrepreneurial companies that depends on its intellectual
resources is Cognizant Technology Solutions of Teaneck, New Jersey (USA) at
http://www.cognizant.com/. Cognizant is a software development company for informa-
tion-intensive firms and industries. It was recently ranked number eight on Business
Week’s list of hot growth companies. By visiting its Web site, we find that Cognizant
shares a great deal of its expertise and prior work online. The site features case studies of
previous clients, descriptions of industry practices, and a complete description of corpo-
rate advantages. How can the company be so forthcoming? Because its true advantage is
embodied in the people it employs and the knowledge and experience that these folks
have. Cognizant even runs its own academy. Here is its description from the Web site:
Our greatest strength is our people’s knowledge and it is our associates and managers who
deliver the outstanding projects upon which we have built our reputation. Cognizant is
committed to facilitating continuous learning among its associates. This commitment plays
an important role in ensuring that the associates keep themselves current with leading-edge
technologies and executive communication skills so that they can perform their roles effec-
tively and efficiently. (Retrieved from the Web May 10, 2006, http://www.cognizant.com)In addition, human capital includes relationship capital as a subset. Relationship
capital refers not to what the organization’s members know but rather to who the orga-