Temporary Competitive Advantage: A State‐of‐the‐Art Literature Review and Research Directions

• Author: Giulio Ferrigno,Giovanni Battista Dagnino,Pasquale Massimo Picone
• Published date: 01 January 2021
• Date: 01 January 2021
• DOI: http://doi.org/10.1111/ijmr.12242

International Journal of Management Reviews, Vol. 23, 85–115 (2021)

DOI: 10.1111/ijmr.12242

Temporary Competitive Advantage: A

State-of-the-Art Literature Review and

Research Directions

Giovanni Battista Dagnino,1Pasquale Massimo Picone2and Giulio Ferrigno3

1University of Rome LUMSA, Palermo Campus, Via Filippo Parlatore, 65, Palermo, 90145, Italy,2University of

Palermo, Viale delle Scienze, Ed. 13, Palermo, 90128, Italy, and 3Sant’Anna School of Advanced Studies, Piazza

Martiri della Libertà, 33, Pisa, 56127, Italy

Corresponding author email: g.dagnino@lumsa.it

In many industries, the traditional sources of competitive advantage tend to evaporate

fairly rapidly. Therefore, managers need to continually rethink and reformulate their

f‌irm strategies. Likewise, scholars have felt compelled to shift the traditional centre of

attention from competitive advantage that is sustainable over time to a focus on how

f‌irms compete by achieving a series of temporary advantages. However, the prolifera-

tion of research on temporary competitiveadvantage, far from building a solid body of

literature, has produced a series of fragmented studies. This condition calls for detect-

ing the state of knowledge in this realm of strategic inquiry. By leveraging the present

status of the literature on temporary competitiveadvantage, we offer a conceptual map

of the current inquiry of the antecedents, management, and consequences of temporary

competitive advantage. Then, we identify the key implications for strategy theory and

discuss the major challenges for cultivating fertile territories in this intriguing area of

researc h.

Introduction

In the last decade, the ability to break away from ex-

isting rules of the game has become increasingly im-

portant to generate innovation and achieve success

in several industries (Thomas and D’Aveni 2009).

For helpful suggestions on previous versions of this pa-

per, we recognize IJMR Associate Editor Valerie Stead and

three anonymous reviewers. Along its way, the development

of this paper has benef‌ited from comments of participants

to the Strategic Management Division Junior Faculty Paper

Development Workshop at the 2015 Academy of Manage-

ment Meetings in Vancouver, sessions of the 2015 Strate-

gic Management Society Conference in Denver and the 2016

Academy of Management Meeting in Anaheim, and research

seminars held at Cass Business School, the University of

Catania, and the University of Minnesota. For effective re-

search assistance, we are grateful to Laura VecchioRuggeri.

Last but not least, for offering developmental comments, we

acknowledge Richard D’Aveni and David Sirmon. All f‌laws

remain ours.

Andrevski and Ferrier (2019) observed a high fre-

quency of new product introduction, fast processes

of technological innovation, and increasing strategic

actions characterizing computer-aided software en-

gineering, personal computer, and semiconductor in-

dustries. Giachetti and Marchi (2017) highlighted the

speed of competitive countermoves through innova-

tion as a crucial aptitude for f‌irms’ survival in the

global mobile phone industry. Williamson (2016) ac-

knowledged a dynamism in many Chinese industries,

with many customers interested to try new products

and showing limited brand loyalty.

Since the f‌irm’s competitive environment has be-

come more global, uncertain, and aggressive, the ex-

planatory power of the traditional sources of com-

petitive advantage (CA) has turned inconsistent in

explaining how f‌irms sustain CA (D’Aveni 1994;

D’Aveni et al. 2010). Thus, strategic management

inquiry has tended to shift focus from traditional

sources of CA (Sirmon et al. 2010).

© 2020 British Academy of Management and John Wiley & Sons Ltd. Published by John Wiley& Sons Ltd, 9600 Garsington

Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA

86 G.B. Dagnino et al.

While some studies have rejected the existence of

temporary competitive advantage (TCA) in various

industries (McNamara et al. 2003; Vaaler and Mc-

Namara 2010) and/or argued for the persistence of

f‌irm-specif‌ic returns (Geroski and Jacquemin 1988;

Ghemawat 1991; Waring 1996), TCA has received

increasing attention (D’Aveni et al. 2010; McGrath

2013; Selsky et al. 2007). This proliferation of intel-

lectual attention suggests that TCA has turned into

an emerging research area in strategic management.

The contribution of TCA literature to strategic

management inquiry has generally been fragmented,

focusing on specif‌ic aspects, such as some an-

tecedents of TCA, how to manage resources and ac-

tions to achieve TCA, and the main consequences of

TCA. Thus, current TCA literature lacks a compre-

hensive appreciation of the key issues. Actually, there

is ‘confusion about how contemporary changes link

together and the lack of a systematic [view] of the

performance consequences of this kind of change’

(Whittington et al. 1999, p. 530).

The proliferation of studies on TCA, combined

with the fragmented research on the issue in strate-

gic management, yields a call for framing out a com-

prehensive understanding of the state-of-the-art of

TCA. Actually, discussing past accomplishments of

the TCA literature is helpful to extract a set of impli-

cations relevant for structuring a research agenda.

From sustainable to temporary

competitive advantage

Strategic management as a f‌ield of study was cre-

ated to probe into the factors underlying f‌irm success

(Furrer et al. 2008). Previous studies gave attention

to Chamberlinian rents grounded in the structure–

conduct–performance (SCP) paradigm (Porter 1981),

Ricardian rents of the resource-based view (RBV) of

the f‌irm (Barney 1991; Peteraf 1993), and Schum-

peterian rents of the dynamic capabilities (DCs)

perspective (Blyler and Coff 2003; Danneels 2012;

Galunic and Rodan 1998; Teece 2007). Based on

SCP and the RBV, strategic management inquiry of-

fers two core explanations of the sources of CA:

(a) the external context and f‌irm positioning; (b) the

possession of or access to VRIO (value, rarity, im-

itability, and organization) resources to capture value

(Lockett et al. 2009; Spanos and Lioukas 2001). In-

terestingly,SCP and the RBV share two assumptions.

First, both adopt ‘the implicit view that the origins

of CA lie in the unusual foresight or ability of the

f‌irm’s managers’ (Cockburn et al. 2000, p. 1124).

Effective and timely access to industries or/and the

orchestration of resources, allowing the exploitation

of opportunities, ref‌lect how executives interpret in-

ternal and external environmental forces (Cockburn

et al. 2000). Second, both emphasize that CA may

be sustainable and have the possibility to generate

long-lasting competitive rents (Rumelt 1991). Sus-

tainability of CA is linked to entry barrier height in

the industry (Reed and DeFilippi 1990) and rare and

unique resources inimitability (Barney 1991).

While SCP and the RBV pinpoint the impor-

tance of achieving a sustainable competitive ad-

vantage (SCA), the intrusion of hypercompetition

(D’Aveni 1994; Thomas III 1996) teaches us that,

far from being benef‌icial, traditional strategy ap-

proaches may take a negative value in rapidly chang-

ing contexts (Slater 1993). Consequently, scholars

have labelled these contexts ‘disruptive’(Christensen

2001), thereby stressing that strategy can also have

a ‘creative destruction’ effect on rivals’ advantage

(D’Aveni et al. 2010; Pacheco-de-Almeida 2010).

Actually,the traditional sources of CA tend to evapo-

rate incredibly fast, as occurs in long-term equilibria

of perfect competition (Aupperle 1996; Bogner and

Barr 2000; Weber and Tarba 2014).

Recently, the accelerated competitive intensity in

several industries has turned each of the traditional

sources of CA more vulnerable and weaker than ear-

lier. Because of the quickened pace of advantage

erosion, the decision to sustain CAs, rather than re-

thinking the current ones, reveals a strategic move

that has an effect opposite to the one expected, as

it prevents f‌irms from developing new advantages

(D’Aveni 1994). If competitors see a situation of

complacency, they will likely attack the complacent

f‌irm. Competitors indeed interpret complacency as

a favourable circumstance for disrupting the market

status quo, or even as an indicator of f‌irm weakness

(D’Aveni 1994).

Since the traditional sources of advantage have re-

peatedly fallen short of realizing competitive success,

they are shown to be insuff‌icient for competing ef-

fectively in rapidly changing environments. The so-

lution scholars advanced to solve this problem is to

subvert the status quo by seizing and creating op-

portunities and initiatives through the generation of

a series of TCAs (D’Aveni et al. 2010) by means

of designing and implementing a string of compet-

itive moves (Baum and Korn 1999; Chen and Miller

2012, 2015; Chen et al. 2007; Connelly et al. 2017)

that are frequently aggressive (Ferrier et al. 1999).

© 2020 British Academy of Management and John Wiley & Sons Ltd.