How can we evaluate if a capability provide a competitive advantage?

By using the VRIO framework. The 4 criteria by which capabilities provide a distinctive basis for achieving sustainable competitive advantage: V - Value Resources or capabilities are valuable when they enable a product or service that is valued by customers (at a cost that still allows an organisation to make profit). R – Rare Resources or capabilities are rare when possessed uniquely by one organisation or only by a few others. e.g. geo-located holdings; patented products; prime retail locations; special relationships with suppliers. I - Inimitable Resources and capabilities are inimitable when competitors find them difficult or costly to imitate, obtain or substitute. Resources (e.g. locations, raw materials) are more imitable than capabilities (the way resources are managed, developed, deployed integrated) . But capabilities are also acquirable, or imitable! O - Organization The ability to understand, support, leverage, facilitate, and exploit V-R-I advantage components.