Toward an “austrian” Theory of Sustainable Competitive Advantage: the Role of Value-enhancing Competitive Actions

We develop a dynamic model of sustainable competitive advantage in hypercompetitive environments. We argue that competitive advantages of firms can be sustainable even if resource-based advantages of firms can be quickly replicated by rivals or when the barriers to entry are almost non-existent. This is accomplished through intensive entrepreneurial activity of firms during the equilibrating tendencies of the market process. We develop a concept of valueenhancing entrepreneurial actions to show that the intensity with which a firm recognizes more productive resource combinations and progressively enhances the value of its products and services is primary driver of sustainable competitive advantage. We then complement the Austrian methodological individualism with the network embeddedness to provide more comprehensive, contextualized understanding of sustainability of competitive advantages in hypercompetitive environments.