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Innovation, Competitive Advantage and Rent: A Model and Test


  • Rita Gunther McGrath

    (Columbia University, Graduate School of Business, 703 Uris Hall, New York, New York 10027)

  • Ming-Hone Tsai

    (National Central University, Taiwan, Republic of China)

  • S. Venkataraman

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

  • I. C. MacMillan

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)


Four antecedents, it is argued, are necessary precursors for a firm to capture rents from innovation. The antecedents are causal understanding; innovation team proficiency; emergence and mobilization of new competences; and creation of competitive advantages, each of which are conceptually distinct and precisely defined in the paper. These constructs are linked together in a stage model and subsequently operationalized and tested using LISREL. Substantial support is found for the central thesis, that achieving each of the four antecedent processes increases the predicted rents from an innovation project.

Suggested Citation

  • Rita Gunther McGrath & Ming-Hone Tsai & S. Venkataraman & I. C. MacMillan, 1996. "Innovation, Competitive Advantage and Rent: A Model and Test," Management Science, INFORMS, vol. 42(3), pages 389-403, March.
  • Handle: RePEc:inm:ormnsc:v:42:y:1996:i:3:p:389-403

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    References listed on IDEAS

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    2. Amason, Allen C. & Shrader, Rodney C. & Tompson, George H., 2006. "Newness and novelty: Relating top management team composition to new venture performance," Journal of Business Venturing, Elsevier, vol. 21(1), pages 125-148, January.
    3. Minarelli, Francesca & Raggi, Meri & Viaggi, Davide, 2013. "“What Do we Know about Entering Innovation Network by SMEs ?”," 2013 International European Forum, February 18-22, 2013, Innsbruck-Igls, Austria 164740, International European Forum on Innovation and System Dynamics in Food Networks.
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    5. Jaafar, Harlina Suzana & Endut, Intan Rohani & Faisol, Nasruddin & Omar, Emi Normalina, 2011. "Innovation in logistics services – halal logistics," MPRA Paper 34665, University Library of Munich, Germany.
    6. Shepherd, Dean A. & Covin, Jeffrey G. & Kuratko, Donald F., 2009. "Project failure from corporate entrepreneurship: Managing the grief process," Journal of Business Venturing, Elsevier, vol. 24(6), pages 588-600, November.
    7. Basu, Sandip & Sahaym, Arvin & Howard, Michael D. & Boeker, Warren, 2015. "Parent inheritance, founder expertise, and venture strategy: Determinants of new venture knowledge impact," Journal of Business Venturing, Elsevier, vol. 30(2), pages 322-337.
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    9. Avimanyu Datta, 2011. "Combining Networks, Ambidexterity and Absorptive Capacity to Explain Commercialization of Innovations: A Theoretical Model from Review and Extension," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 2(4), pages 2-25, December.
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    12. Manuel Portugal Ferreira & Fernando Ribeiro Serra & Emerson Maccari, 2013. "When the innovator fails to capture rents from innovation," Working Papers 101, globADVANTAGE, Polytechnic Institute of Leiria.
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    14. Insu Cho & Heejun Park & Joseph Kim, 2012. "The moderating effect of innovation protection mechanisms on the competitiveness of service firms," Service Business, Springer;Pan-Pacific Business Association, vol. 6(3), pages 369-386, September.
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    17. Nerkar, Atul A. & McGrath, Rita Gunther & MacMillan, Ian C., 1996. "Three facets of satisfaction and their influence on the performance of innovation teams," Journal of Business Venturing, Elsevier, vol. 11(3), pages 167-188, May.
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    20. Dimária Silva e Meirelles & Eduardo Sérgio Ulrich Pace & Leonardo Fernando Cruz Basso, 2005. "The Contributions Of Firm'S Productive Assets To Its Competitive Performance: A Resource-Based View Approach In The Software Sector," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33th Brazilian Economics Meeting] 103, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
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    22. Karim Moustaghfir, 2012. "Explicating Knowledge-based Competitive Advantage," International Journal of Synergy and Research, ToKnowPress, vol. 1(1), pages 23-38.


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