What is the key difference between a "resource" and a "capability"?

Question

BlackTom AI · Accepted Answer

First, let's restate what the question is asking: identifying the key difference between a 'resource' and a 'capability' in a business context, using the provided options.
Option 1: 'A capability refers to physical assets, while a resource refers to organizational skills.' This is misleading because it swaps typical definitions: resources can be tangible (physical assets) or intangible, and capabilities are about how the firm uses its resources, not merely about physical vs organizational traits.
Option 2: 'A capability is what a company does with its resources, while a resource is what a company has.' This aligns with common strategic management concepts: resources are the stock a firm owns (things it has), whereas capabilities are the processes, routines, and skills that enable the firm to deploy and combine those resources to perform activities and create value.
Option 3: 'A capability is an external factor affecting the company, while a resource is internal.' This is inaccurate because capabilities are not external factors; they are internal competencies, and resources can be internal assets or sometimes external where appropriate, but the distinction here is misrepresented.
Option 4: 'There is no difference; they are the same thing' This is incorrect because resources and capabilities denote different ideas in strategy: resources are assets, while capabilities are capabilities—the abilities to organize, coordinate, and apply resources effectively.
In summary, the distinction hinges on what the firm owns or has (resources) versus what the firm can do with those resources through routines and processes (capabilities). The correct framing separates possession (resources) from performance potential (capabilities).

BUSN 0302 Module 3 Knowledge Check

What is the key difference between a "resource" and a "capability"?

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