COMPETITIVE ADVANTAGE

Competitive Advantage

Competitive Advantage

Michael Porter was the first writer to introduce the term competitive advantage to the vocabulary of the strategy discipline. The term competitive advantage is another of the strategy “buzzwords” words that cause confusion for academics, business executives and consultants (ABCs) (Markides, 2000). ABCs have a tendency to use the term competitive advantage, like other popularly used terms in the strategy vocabulary such as strategic thinking or strategic innovation with a different meaning in different contexts; this includes different use of these terms in different countries. This challenge for the strategy discipline is exacerbated by ABCs all endeavouring to have their message accepted and embraced by the ABC community. Barney (2002 p. 9) makes an advantageous connection when he says: “a firm experiences competitive advantages when its actions in an industry or market create economic value and when competing firms are engaging in similar actions.”

Barney (1991) argues competitive advantage is achieved when a firm is implementing a value creating a strategy that is not being simultaneously implemented by any current or potential competitors. A sustained competitive advantage occurs where the firm is implementing a value-creating strategy that cannot be implemented simultaneously by rivals, and other firms are unable to duplicate the benefits of this strategy. It is of interest that Barney (1991) does not comment on the possibility of competitive advantage being eroded by the innovation efforts of rival firms changing the market space (Tushman and O'Reilly, 2004). Furthermore, Competitive advantage is defined as the “capability of an organization to create a defensible position over its competitors” (Li et al, 2006, p. 111). Tracey et al. (1999) argues that competitive advantage comprises of distinctive competencies that set an organization apart from competitors, thus giving them an edge in the marketplace. Porter's approach to competitive advantage centers on a firm's ability to be a low-cost producer in its industry, or to be unique in its industry in some aspects that are universally valued by customers (Porter, 1991). Most managers agree that cost and quality will continue to remain the competitive advantage dimensions of a firm (D' Souza and Williams, 2000). Wheelwright (1978) suggests cost, quality, dependability and speed of delivery as some of the critical competitive priorities for manufacturing.

There is widespread acceptance of time to market as a source of competitive advantage (Holweg, 2005). Price/cost, quality, delivery dependability, and time to market have been consistently identified as critical competitive capabilities (Vokurka et al, 2002). 'Time' has been argued to be a dimension of competitive advantage in other research contributions (Zhang, 2001). In a research framework, Koufteros et al. (1997) describe the following five dimensions of competitive capabilities: competitive pricing, premium pricing, value-to-customer quality, dependable delivery, and product innovation. These dimensions were further described and utilized in other contributions (Li et al. 2006). Based on these studies, the five dimensions of competitive advantage construct used in this study are price/cost, quality, delivery dependability, product innovation, and time to market.

Dimensions of Competitive Advantage

Based on the study of Koufteros (1995), Zhang ...