Interweaving of the sources and forms of a firm’s competitive advantage: A critical review of the adequacy of existing schools of thought

Abstract

The paper examines how the sources and forms of competitive advantage interweave and what does this mean for the existing theory on competitive advantage. We found out that all sources of competitive advantage should be classified into external and internal category. Consequently, we believe it is reasonable to discuss only two schools, i.e. the 'internal' school based on resources, capabilities and knowledge and the 'external' school based on the industrial organisation. The relation between them should not be understood as being solely competitive but also complementary, which means that the mystery of creating a competitive advantage cannot be explained by any school alone.