The Root Cause of Competitive Advantage: Powerpoint Presentation

Abstract

This PowerPoint has proven useful for corporate executives, investors, and business students for thinking about the role of the firm's knowledge-building culture in creating value in general and sustaining competitive advantage in particular. Competitive advantage is reflected via the fade rate at which the firm's economic returns regress over time towards the cost of capital. Intangible assets are typically considered the cause and driving force for achieving competitive advantage. However, using company examples, which include firms' long-term life-cycle charts, I introduce the idea that the root cause of competitive advantage is actually the firm's knowledge-building culture that generates intangible assets such as patents, organizational routines, network advantages, brand names, and the like. The final slides contain suggestions (especially relevant to business students) for understanding and participating in a knowledge-building culture.

Keywords: competitive advantage, life cycle, knowledge, culture

JEL Classification: D21, D83, G12, G30, G34, G38, L21, M41, M44