Be purchased because of non existent or imperfect strategic factor markets.

Organizations in the same industry may posses different bundles of resources and these resource differences may persist over time. The development of resources is often tacit and complex and the augmentattion of resources takes time. Value-creating organizational resources that are not easily replicated have four main attributes: valuable, rare, inimitable, and non-substitutable. They should valuable in enabling the organization to exploit opportunities or neutralized threats, rare in that the resources are not readily available to all players in abundance, costly to imitate, and not easily to substitute with other resources. Imitation maybe costly because of thr need for a high level of initial resources, time compression diseconomies in building intangible assets, dependence of unique historical conditions that cannot be replicated, or socially complex and causally ambiguous linkages in the organization. Routines are predefined ways of performing standardized transactions that are fairly common across organizations, and while valuable, do not necessarily posses attributes of rareness, inimitability and nonsubstitutability. While routines are previously learned patterns in action, resources that have potential for strategic options require deliberate direction, definition, and decisions. Resources may be derived from a major routines and resources or a combination of routines but their development requires clear strategic intent, managerial choice, and focused investments sustained over extended periods. Leveraging organizational routines and resources requires the managerial ability to perceive their strategic value, to amplify their contributions, to replicate them across settings, and to creatively combine them in novel ways to establish new capabilities. Organizations need to identify their critical resources and continue to nurture, maintain and renew them through appropriate long-term policies and investments. Organizations with resources disadvantages may seek to improve their performance by acquiring the needed resources or duplicating them through imitation or substitution. Dynamic Capabilities: Capacity to Change Routines and Resources In situation of rapid and unpredictable change, established routines and resources often cause organizations to continue existing ways of doing things that may no longer be relevant or competitive, which may lead to organizational failure. In periods of major technological change, incumbents are often slow in adjusting their capabilities and strategic leadership often passes to new players. New entrants are more dynamic because they are not constrained by path dependencies and the rigidities of existing organizational positions inherited by incumbents. Incumbents often find making path-breaking change te be very difficult because of the values and behavior imprinted into the organizational system by its founders, leading them to engage in only marginal changes in pathdependent ways. The development of dynamic capabilities is shaped by an organizations asset position through its accumulated investments in its knowledge.