Sustainable competitive advantage or temporary competitive advantage: Improving understanding of an important strategy construct

Purpose ‐ Competitive advantage is an important construct in the strategy discipline. The purpose of this paper is to explore an appropriate definition of competitive advantage, seek to identify sources of competitive advantage for firms and improve understanding of why in many industries for many firms competitive advantage is only a temporary outcome due to the influence of environmental uncertainty. Design/methodology/approach ‐ The paper undertakes a synthesis of classic and contemporary insights into competitive advantage in the literature to assist the development of several research propositions. Findings ‐ By introducing the perceived environmental uncertainty construct to discussion on the relationship between firm resources, competitive advantage and organization performance, understanding of sustained competitive advantage and temporary competitive advantage is enhanced. Research limitations/implications ‐ Through the development of the research propositions the paper helps to clarify terminology and provide several suggestions for future research. Practical implications ‐ The findings contribute to the evolution of strategic management practice by giving some insight to practitioners as to when and where firm resources may be useful by explaining these links between environmental uncertainty, firm resources, competitive advantage, and organization performance. A brief illustration of these connections in the context of BHP Billiton Limited is provided to link theory to practice. Originality/value ‐ Competitive advantage remains a poorly understood construct in the strategy literature and the subject of much discussion. This paper sets out to clarify understanding and stimulate debate in an area that is not well understood.