40 ENTREPRENEURSHIP
legal staff cannot be the source of an advantage. Common resources such as these may
be necessary under certain conditions and may improve chances for survival, but they
are not a source of SCA.
Some resources have inelastic supply, which means that even when there is an increase
in the demand for the resource, and a corresponding rise in price, the market takes a long
time to respond with additional supply. The lag time provides the firm with an advan-
tage that it can exploit until the competition catches up.^22
How rare must a resource be to generate a competitive advantage? A unique and
valuable resource clearly gives a firm SCA, but does this resource need to be one of a
kind? Probably not. A resource may be considered rare when it is not widely available
to all competitors. If supply and demand are in equilibrium, and the price of the resource
is generally affordable, the resource will cease to be rare. Examples of resources that may
be considered rare are a good location, managers who are also considered good leaders,
or the control of natural resources like oil reserves (if you are in the oil business). A spe-
cial case of a rare resource that does not provide SCA can be found in a Bertrand mar-
ket. A Bertrand market is a duopoly in which both firms have similarly rare resources,
giving them the same marginal costs. They will ultimately charge the competitive price
based on their marginal costs and neither will therefore have a sustainable competitive
advantage.^23Imperfectly Imitable (Hard-to-Copy) Resources
Firms with rare and valuable resources clearly have advantages over firms lacking such
assets. Indeed, such strategic endowments often lead to innovation and market leader-
ship.^24 However, even rare resources can be obtained at some price. If the price is so
high that the firm makes no profit, there is no SCA because the firm has spent its advan-
tage on the resource. Where duplication is not possible at a price low enough to leave
profits, the resource is said to be imperfectly imitableor hard to copy. Four factors
make it difficult for firms to copy each other’s skills and resources: (1) economic and
legal deterrence, (2) unique historical conditions, (3) causal ambiguity, (4) and social
complexity.Economic and Legal Deterrence. Under certain circumstances, it is illegal for one
firm to copy the resources of another. These legal protections take forms such as copy-
rights, patents, trademarks, service marks, and intentionally proprietary trade secrets. In
addition, economic deterrence can prevent copying, as a firm can retaliate in the mar-
ketplace as well as in court. For example, the victimized company can cut prices, devel-and their new terziindicate that this innova-
tive strategic resource arrangement works for
them. “The world has changed,” Aydin
Olcum, one of the company’s Turkish tailors,
observes. “You’re not supposed to live whereyou’re born. You’re supposed to live where
you can feed your family.”
SOURCE:Adapted from Michael M. Phillips, “Why
Turkish Tailors Seem So Well-Suited to Work in
Tennessee,” The Wall Street Journal, April 12, 2005: A1,
and http://www.johnhdaniel.com.