From Temporary Competitive Advantage to Sustainable Competitive Advantage

Abstract

Both industrial organization theory (IO) and the resource‐based view of the firm (RBV) have advanced our understanding of the antecedents of competitive advantage but few have attempted to verify the outcome variables of competitive advantage and the persistence of such outcome variables. Here by integrating both IO and RBV perspectives in the analysis of competitive advantage at the firm level, our study clarifies a conceptual distinction between two types of competitive advantage − temporary competitive advantage and sustainable competitive advantage − and explores how firms transform temporary competitive advantage into sustainable competitive advantage. Testing of the developed hypotheses, based on a survey of 165 firms from Taiwan's information and communication technology industry, suggests that firms with a stronger market position can only attain a better outcome of temporary competitive advantage whereas firms possessing a superior position in technological resources or capabilities can attain a better outcome of sustainable competitive advantage. More importantly, firms can leverage a temporary competitive advantage as an outcome of market position to improving their technological resource and capability position, which in turn can enhance their sustainable competitive advantage.