The I/O model suggests that above-average returns are earned when firms implement the strategy dictated by the characteristics of the general,industry,and competitive environments.

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The I/O model, also known as the industry-based view, argues that the external environment has a stronger influence on a firm's strategic actions and performance than the internal resources and capabilities of the firm. Therefore, above-average returns are expected when the firm implements a strategy that is well-suited to the opportunities and threats presented by the industry and competitive environment.

The I/O Model Suggests That Above-Average Returns Are Earned When