If a firm's resources and capabilities are costly to imitate because imitating firms may not understand the relationship between the resources and capabilities controlled by a firm and that firm's competitive advantage, this competitive advantage is said to be protected from imitation by
A) path dependence.
B) causal ambiguity.
C) unique historical conditions.
D) social complexity.

Question

Quizplus · Accepted Answer

Causal ambiguity refers to a situation when other firms cannot understand the exact relationship between a firm's resources and competitive advantage. Due to this lack of understanding, it becomes challenging for imitating firms to replicate the competitive advantage. Thus, the firm's advantage is protected from imitation. Path dependence refers to a situation when a firm's current capabilities and resources are the result of a unique historical path followed by the firm, making it difficult for imitating firms to replicate. Unique historical conditions and social complexity are related to path dependence and do not explain the causal ambiguity that protects a firm's competitive advantage from imitation.

If a Firm's Resources and Capabilities Are Costly to Imitate