ABSTRACT
'Competitive advantage' is an expression that is widely used, but often with imprecision. There is in fact no consensus definition. An economist might argue that competitive advantage is anything that permits a firm to earn 'economic rent' – that is, a profit in excess of returns available from equally risky investment alternatives. Work in the strategic positioning school of competitive strategy is rooted in industrial organization economics. Its central argument is that the structure of an industry should shape organizational conduct, and superior performance will result if the choice of strategy is sound relative to industry structure; this is sometimes referred to as the structure-conduct-performance model. 'Evolutionary economics' places innovation at the centre of the search for competitive advantage. Although it has made a significant contribution to the development of resource-based theory, which we will look at shortly, its unit of analysis is not the individual firm but the population of competing firms.
