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Sustainable competitive advantage and profitability persistence: Sources versus outcomes for assessing advantage

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  • Maury, Benjamin

Abstract

This paper explores how variables measuring firms' sustainable competitive advantages influence profitability persistence. Using a large sample of firms from MSCI 23 developed countries during 1985–2013, I find that an index of economic rents (such as size and market share) significantly reduce profit mean reversion, whereas traditional barriers-to-entry measures do not lower mean reversion. Higher previous long-term performance and sustained market share are associated with lower future mean reversion in profitability. Outcomes dominated sources of advantages, although both were useful in predicting future profitability persistence.

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  • Maury, Benjamin, 2018. "Sustainable competitive advantage and profitability persistence: Sources versus outcomes for assessing advantage," Journal of Business Research, Elsevier, vol. 84(C), pages 100-113.
    • Handle: RePEc:eee:jbrese:v:84:y:2018:i:c:p:100-113
    DOI: 10.1016/j.jbusres.2017.10.051
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    More about this item

    Keywords

    Mean reversion; Return on assets; Competitive advantage; Sustained competitive advantage; Barriers-to-entry; Sustained market share;
    All these keywords.

    JEL classification:

    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • G1 - Financial Economics - - General Financial Markets

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