Towards an Understanding of the Sources of Sustainable Competitive Advantage: A Literature Review and Conceptual Framework

Abstract

While the concept of sustainable competitive advantage is pivotal to firm success and the subject of much debate in the literature, empirical research investigating it is limited, and few frameworks reflect the divergence of perspectives on the matter. This article aims to advance the understanding of the sources of sustainable competitive advantage by critically spanning a large part of the literature on this subject and synthesizing the findings in a conceptual framework. The review covers perspectives starting from the industry-based explanations of industrial economists such as Porter (1980) to the resource-based explanations favoured by many such as Barney (1991), to more market-oriented views (Day 1994; De Wit and Meyer 2005). The Resource Based View (RBV) is discussed in detail as making a key contribution to developing and delivering competitive advantage (Chaharbaghi and Lynch 1999). The research also covers the more recent insights from the Dynamic Capabilities Thinking, inspired by the rising pressure on businesses to evolve rapidly in an increasingly complex and dynamic environment, reinforcing the importance of the firm’s ability to renew its resources and capabilities in light of market dynamics (Tondolo and Bitencourt 2014). The resulting conceptual framework will be empirically tested and further addressed in subsequent work.