What differentiates a resource from a capability?

The distinction between a resource and a capability is fundamentally rooted in their definitions and roles within an organization. A resource is characterized as a productive input or competitive asset that a company possesses. This includes tangible assets like facilities, equipment, and financial resources, as well as intangible assets like brand reputation and intellectual property. These resources are crucial as they provide the foundation upon which a firm's competitive advantage can be built.

In contrast, a capability refers to the firm's capacity to utilize its resources effectively to perform particular activities or functions competently. This involves skills, processes, and organizational routines that enable a company to deploy its resources efficiently to achieve desired outcomes. Capabilities reflect how well a company can leverage its resources to create value and competitive differentiation in the market.

Thus, the correct choice highlights this clear segmentation: resources are what an organization has at its disposal, while capabilities represent how well the organization can utilize those resources to execute strategies and operations effectively. This understanding is pivotal for evaluating a company's strategic positioning and potential for sustaining competitive advantage.