Hoskisson, Hitt and Ireland (2004) introduced the VRIN model and argued that, resources fit in these criteria would allow the firm have superior performance. The first criteria is valuable, resources with great worth that allow the company to identify opportunities or suppress competitors in the external environment. Secondly, the resource has to be rare that only a few company can possess. Thirdly, the resource needs to be costly to imitate. Lastly, the resources should be non-substitutableļ¼as a company can not easily develop an equivalent strategy. .
The knowledge-based view suggests core competencies are embedded in 4 dimensions, employee knowledge and skills, technical systems, managerial systems and values and norms with the organisation (Leonard-Barton, 1992). Therefore, core competencies can be defined as a company's collective knowledge of coordinate diverse production skills and technologies which differentiate its service or products from competitors (Prahalad and Hamel, 1990). It is essential to recognise the value of human capital, as the soft skills of employees such as knowledge and attitudes are the basis for forming a functioning core competency(Pellegrini, 2014). .
Core competency can boost the competitiveness of a company in the long run (Danilovic & Leisner, 2007) and gives the company a way to stand out in the fierce market (Thompson et al., 2013). Identifying core competencies can facilitat strategy development. It offers managers the information needed to evaluate the company's internal capabilities and set clearer objectives for the company, thus enhancing the decision-making process. For example, after identifying the main production activities, a manager can outsource the non-essential activities, and focus on a company's core competencies which generate competitive advantage in order to save unnecessary costs (Tompkins et al , 2005). Core competencies will also enforce the human resource management process through various activities such as recruitment and selection, appraisal, training and rewards(Barber,2014).
