Competitive Advantage

Research Questions

  • Does it make sense to search for one big flywheel or smaller temporary advantages?

Schools Of Thought

Hypercompetition

" The results presented above provide evidence that periods of sustained competitive advantage, as evidenced by its consequence, superior economic performance, have been growing shorter over time... These results hold across a wide range of sectors of the economy." — Schumpeter's Ghost-Is Hypercompetition Making The Best Of Times Shorter?
Recent studies have begun to suggest that sustainable competitive advantage is rare and declining in duration (Ruefli and Wiggins, 2002). Other studies have found anecdotal and more rigorous empirical evidence of the concatenation of temporary advantages (D’Aveni, 1994; Wiggins and Ruefli, 2005). And there is growing empirical evidence that the volatility of financial returns is increasing, suggesting that the relative importance of the temporary (volatile) component of competitive advantage is rising when compared to the long run component of sustainable competitive advantage (Thomas and D’Aveni, 2009). Finally, there is increased attention to the ethical consequences of the sustainable advantages derived from monopoly positions and oligopolistic behavior (DeCelles, Donaldson, and Smith, 2007). —The Age Of Temporary Advantage
The core argument of this stream of enquiry is that the unremitting pursuit of strategic change is necessary for success, especially in nascent, emerging, high-tech, or other high velocity environments, where the structure and the rules of the game are unstable or erratic (Christensen, 1997; D’Aveni, 1994; Hamel, 2000; Markides, 1999).

Flywheel

One counterargument against flywheels is reversion to the mean, which is what happened to the sample companies in Good To Great.

McNamara

Implications

Firms can either become exhausted by continuous transformation and innovation or get complacent by success and turn out to be blinded and myopic to requisite environmental change (Audia, Locke, and Smith, 2000). —The Age Of Temporary Advantage

Related Resources

Topics

  • Red Queen Effect

Studies

Copy of Study: Schumpeter's Ghost-Is Hypercompetition Making The Best Of Times Shorter?Copy of Study: Schumpeter's Ghost-Is Hypercompetition Making The Best Of Times Shorter?Copy of Study: The Age Of Temporary AdvantageCopy of Study: The Age Of Temporary Advantage