What is meant by rare in the VRIO framework?

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Understanding rare in the VRIO framework

The rare component in the VRIO framework is critical for competitive advantage. If you have resources that no one else has, i.e., a rare resources, then this can provide the basis for a competitive advantage. Rare relates to how common the resource is among your competitors – if a lot of firms have it then it is not rare, if on the other hand, you are the only firm that has it, then it is a rare resource.

The extent that the resources are rare

While there are some resources that fall on either extreme – either common with all firms having them, and unique with you the only firm that has them – there are some resources that are some that are in-between. We can think of rare as a continuum, examining the extent that the resource is rare. For resources in the middle, you may have a competitive advantage over some firms (i.e., those that do not have the resource), but be at parity with those that do have the resource.

Will the resources stay rare?

While having rare resources is important to having a competitive advantage, if other firms are able to develop comparable resources, then the competitive advantage may disappear over time. This is the next component of the VRIO framework – whether the resource is hard to imitate or substitute. If the valuable and rare resource is hard to imitate and substitute, then it may remain a sustainable competitive advantage. If on the other hand the resource can be imitated, then the initial competitive advantage may disappear and the firm may return to being at parity with the other companies. 

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