Following the institutional economic groundwork established by Commons (1924) and Williamson (1975), much current discussion about the firm treats it as a ‘bundle’ of heterogeneous resources. At the same time, strategy is the search for such differentiation as can be turned to competitive advantage. It follows that resource differences may well provide a useful theory of business strategy. Recent work on the resource-based theory of the firm (Wernerfelt, 1984; Barney, 1986; Teece, 1987; Prahalad and Hamel, 1990; Peteraf, 1993) has led us to distinguish the firm’s important or ‘core’ resources, such as technological

From International Business Review, Vol. 3, No. 4, 1994, pp. 353-367. Reprinted by permission of Elsevier Science Ltd., Oxford, England.