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

Benjamin Maury

Journal of Business Research, 2018, vol. 84, issue C, 100-113

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.

Keywords: Mean reversion; Return on assets; Competitive advantage; Sustained competitive advantage; Barriers-to-entry; Sustained market share (search for similar items in EconPapers)
JEL-codes: D4 G1 M4 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:84:y:2018:i:c:p:100-113

DOI: 10.1016/j.jbusres.2017.10.051

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