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

Benjamin Maury

doi:10.1016/j.jbusres.2017.10.051

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

Benjamin Maury

Finance, Helsinki

Research output: Contribution to journal › Article › Scientific › peer-review

74 Citations (Scopus)

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.

Original language	English
Peer-reviewed scientific journal	Journal of Business Research
Volume	84
Pages (from-to)	100-113
ISSN	0148-2963
DOIs	https://doi.org/10.1016/j.jbusres.2017.10.051
Publication status	Published - 03.2018
MoE publication type	A1 Journal article - refereed

Keywords

512 Business and Management
Mean reversion
return on assets
competitive advantage
barriers-to-entry
market share

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SCA_and_Profitability_Persistence_HARISAccepted author manuscript, 2.06 MBLicence: CC BY-NC-ND

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

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Keywords

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