In the resource-based model of above-average returns, a capability is:
a. an input into a firm's production process.
b. the foundation for a firm's mission.
c. the capacity for a set of resources to perform a task or an activity in an integrative manner.
d. a product of a large number of firms competing against one another in an increasing number of global economies.

The correct answer is c. the capacity for a set of resources to perform a task or an activity in an integrative manner.

Explanation:

The central assumption of the resource-based model says that the company's unique capabilities, resources and core competencies influence the choice and use of strategies rather than the external environment of the company. This yields higher than average returns when uses its valuable and unique capabilities, expensive to imitate and impossible to substitute to compete against its rivals in one or more industries. The evidence indicates that the two models provide knowledge that is linked to the choice and successful use of strategies. Consequently, companies want to use their unique core resources, capabilities and competencies as the basis for one or more strategies that allow them to compete in industries they understand.

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