The Vicissitudes of Competitive Advantage: Empirical Evidence from Australian Manufacturing SMEs

The goal of this study is to illustrate the variance pattern of competitive advantage. On the basis of an a priori model drawing on the Schumpeterian factors mediating the effects of innovation investment on firm performance, this paper conducts a Multiple Indicator Multiple Cause analysis on the intertemporal competitive advantage. The results suggest that the composition of sustainable competitive advantage is a series of short-term advantages. Either sustaining or creating competitive advantage requires concomitant interaction between innovation and effective market engagement. This paper highlights innovative efficiency of such interaction as an influence on a firm's evolution of market fitness in the marketplace.