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Evidence on competitive advantage and superior stock market performance

  • Øystein Gjerde

    (Norwegian School of Economics and Business Administration, Bergen, Norway)

  • Kjell Knivsflå

    (Norwegian School of Economics and Business Administration, Bergen, Norway)

  • Frode S�ttem

    (Norwegian School of Economics and Business Administration, Bergen, Norway)

This article analyzes the value-relevance of industry-based and resource-based competitive advantage in a large sample of firms listed on the Oslo Stock Exchange. We measure competitive advantage by a single variable and perform a new decomposition into its underlying sources. In 1986-2005, the industry-based and the resource-based competitive advantage explain more than 20% of abnormal stock market returns, accumulated over 5 years. The resource-based advantage is almost 4 times more important than the industry-based advantage. Differences in both the return and the risk capability of firms' net assets relative to their industry peers are significant parts of the resource-based advantage, estimated at 60 and 40%, respectively. Copyright © 2009 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/mde.1488
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Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 31 (2010)
Issue (Month): 4 ()
Pages: 277-301

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Handle: RePEc:wly:mgtdec:v:31:y:2010:i:4:p:277-301
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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  1. Schmalensee, Richard., 1984. "Do markets differ much?," Working papers 1531-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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  7. Gabriel Hawawini & Venkat Subramanian & Paul Verdin, 2005. "Is performance driven by industry or firm-specific factors? A response to McNamara, Aime and Vaaler," ULB Institutional Repository 2013/14192, ULB -- Universite Libre de Bruxelles.
  8. Cramer, J. S., 1987. "Mean and variance of R2 in small and moderate samples," Journal of Econometrics, Elsevier, vol. 35(2-3), pages 253-266, July.
  9. Juan Carlos Bou & Albert Satorra, 2003. "The persistence of abnormal returns at industry and firm levels," Economics Working Papers 729, Department of Economics and Business, Universitat Pompeu Fabra.
  10. Villalonga, Belen, 2004. "Intangible resources, Tobin's q, and sustainability of performance differences," Journal of Economic Behavior & Organization, Elsevier, vol. 54(2), pages 205-230, June.
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