Sustaining Competitive Advantage

Sustaining Superior Performance: Commitments and Capabilities
Background
  Competitive advantage necessary, but not sufficient
      Ghemavat study on PIMS data shows convergence of high ROI and   low ROI business units, over time, to mediocre ROI.
      Some drop in high ROI anticipated due to limited availability   of high ROI opportunities. But pace and degree of convergence   unexpected – article delves further into assessing reasons   behind the rapid loss of competitive advantage.
    Threats to sustainability
  Conditions for maintaining competitive advantage: (1) Scarcity   needs to be preserved and (2) Appropriability needs to be tackled.
      Threats to maintaining Scarcity: (1) Imitation – Actual and   potential competitors copy superior position, (2) Substitution   – Actions by competitors that may undermine the firm’s competitive   advantage without copying it (e.g. by changing consumer preferences)
      Threats of Appropriability: (1) Hold-up – Diversion of the   scarcity value to other players, (2) Slack – Dissipation of   the scarcity value by complacency and related factors.
    Imitation
  Process innovation and product innovation both likely to   be copied.
      Different types of early mover advantages can be used to build   deterrents to imitation
    Substitution
  Substitution usually results from indirect competition   rather than direct competition.
      Substitution effects most likely against the backdrop of   rapid environmental changes (e.g. technology changes, rapid   market changes, etc)
    Holdup
  Results from dependence on complementors for sustained superior   position
      Degree of holdup influenced by prevailing contractual agreements,   patterns of dependence, norms and posturing possibilities
    Slack
  Shrinks the overall size of the pie (dissipates the scarcity   value)
      Mostly irreducible – cannot be eliminated
    Building Sustainable Competitive... [continues]

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