Competitive advantage: Logical and philosophical considerations

Strategic management theories invoke the concept of competitive advantage t o explain firm performance, and empirical research investigates competitive advantage and describes how it operates. But as a performance hypothesis, competitive advantage has received surprisingly little formal justification , particularly in light of its centrality in strategy research and practice . As it happens, the core hypothesis-that competitive advantage produces su stained superior performance-finds little support informal deductive or ind uctive inference, and the leading theories of competitive advantage incorpo rate refutation barriers that preclude meaningful empirical tests. This art icle explores the logical and philosophical foundations of the competitive advantage hypothesis, locating its philosophical foundations in the epistem ologies of Bayesian induction, abductive inference and an instrumentalist, pragmatic philosophy of science. Copyright (C) 2001 John Wiley & Sons, Ltd.