Comparative advantage is the relative advantage of strengths of an organization as compared to that of competitors. It is not a static concept, as relative weaknesses can be overcome and converted into strengths. SWOT analysis may be done and Strategic Advantage Profile may be drawn to assess comparative advantage.Competitive advantage is a strategic concept and forms part of Michael Porter's three generic strategies. Organizational resources (Financial, human, and technological resources) are strategically deployed to create sustainable competitive advantage. This is also a dynamic concept and depends on organization culture and agility.

Dear Yoshi,

My notion of comparative advantage, speaks mainly of advantages related to nature and location (solar-energy potential, climate, seaways and proximity to trade routes , natural resources etc). It also extends to human capital, eg Bahrainis are the best pearl divers in the world, based on expertise honed from centuries of pearl fishing in the Bahrain location.

Competitive advantage is dynamic and is won hour by hour by superior firm activity in their hypercompetitive marketspaces.  To the extent that the firm can build resilience and enjoy sustained competitive advantages (SCA), then to that extent it will be more successful than rivals. Firms therefore have to execute well on two dimensions, ie must be ambidextrous.  They must be good at exploration ie strategically futurescoping and from that scan of the market trends, determining their best directions.  Secondly, they must be good at exploitation ie internally executing their day-to-day operations efficiently. Organisational ambidexterity is a must for sustained survival.  If a firms is only good at operational execution and ignores future trends it will fail. If all a firm focusses on is strategic exploration and ignores excellence in its day-to-day operations, it will also fail, 

The Resource Based View (RBV) informs us that resources and capabilities that are Valuable, Rare, Non-Inimitable and wrapped-up or embedded in a unique organizational model (praxis, leadership, talent culture / management, special knowledge, Knowledge, IP etc) tend to produce Sustainable Competitive Advantage (aka the VRIO model)

An RBV framework illustrating a continuum of Competitive Advantage, ranging from Competitive Disadvantage, through Competitive Parity,Temporary Competitive Advantage and finally up to Sustainable Competitive Advantage (Peteraf, Wernerfelt, Eisenhardt, Barney) is on section C, Competitive Advantage, pages 15-15 of article below on Overcoming Barriers to Caribbean Innovation.  Also on figure attached as well.

https://www.researchgate.net/publication/258239256_Overcoming_Barriers_to_Caribbean_Innovation_Towards_a_Restructuring_of_the_Innovation_Payoffs

Conference Paper Overcoming Barriers to Caribbean Innovation ; Towards a Rest...

Dear Jaharkanti Dattagupta,

thank you for your post. 

"Comparative advantage" has a long history in international trade theory. It counts at least 160 years of history since John Stuart Mill. Although its interpretation is fluctuating even in the 21 st century, we should not ignore the established usage. (For a new but "truer" interpretation, see Faccarello's article below )

https://www.researchgate.net/publication/290821134_Comparative_Advantage

In my understanding, the competitive advantage concept was coined by Michael Porter, first  to explain first firm level competitive advantage and then extended to explain national level competitiveness. When we examine competitive advantage, we are obliged to differentiate two concepts:comparative and competitive advantage. My question and suggestion is concerned to this point.     

Chapter Comparative Advantage

Dear Silburn Clarke,

I have read you lecture report  (presentation data) on Overcoming Barriers to Caribbean Innovation. As they are full of figures, it was easy to grasp rough scheme of your ideas.

In page 26, you mentioned "national competitiveness". It is necessary to distinguish firm level competitiveness and national competitiveness. The trouble is that they are closely related to or depends on each other.

In the national level, differentiation of two concepts comparative advantage and competitive advantage is delicate and complicated because we have a huge accumulation of research and analysis based on these concepts. In my opinion, they are not very well differentiated and used in a confused way. The aim of my question is on this point.

In page 13, you cites Henrekson. The idea of his Figure Production Possibility Frontier is interesting. He divides various related factors into two: efficiency factors and Innovation factors. My idea to divide static and dynamic technological capability (of a nation and possibly of a firm) is close to his idea. We may make a follwoing scheme:

static capability ← Efficiency factors

dynamic capability ← Innovation factors.

As for you concept of comparative advantage, I have an impression that it is too much influenced by Heckshcer-Ohlin's theory of international trade. 

Dear Prof. Shiozawa,

 Generally, it's thought that comparative advantage is the theory that explains the technical phase and a multilateral macro phenomenon (international trade) in economics. On the other hand, competitive advantage, which is comprised of (1) technological improvement, (2) resources effective utilization and (3) customer satisfaction improvement, seems to be market strategy to beat competitors. A definition of competitive advantage by Philip Kotler is "the practical ability that a company accomplishes the ways, which other companies can't copy". But this ability doesn't continue in recent years.

As for the differentiation, I think that it is important that the concept of competitive advantage contains (3) customer satisfaction improvement. That is, an attempt in order to sell goods well to consumers. In comparative advantage, a consumer is related to economy only at a quantitative side like consumption increase or a change of wages, and the subjectivity of the consumer is excluded.

As far as I read Smith and Ricardo, however, classical economists consider the situation that a potential of the financial markets, the wages, factor endowments and preferences are different every country. Commerce is begun by the motive that a merchant would like to gain, according to Shiozawa-Fujimoto (2013) and Faccarello (2015). That is, trade is phenomena in terms of a price at micro level. In our time, it means that an enterprise needs the ability to win against a foreign enterprise. Comparative advantage is put in terms of money, so the concept contains all ability (production, circulation and advertisement, etc.) of the enterprise.

Consequently, competitive advantage and comparative advantage become a very close concept. Prof. Shiozawa is worrying about this point.

 I think the difference is that competitive advantage expresses specifically an attempt in order to sell goods to consumers, but comparative advantage doesn't. Capitalism is undeveloped at the time of the classical economics, so the amount of the goods itself is important. In other words, the room of consumer's choice is small. On the other hand the room is wide in today.

 However, I will consider the phenomenon on theoretical grounds. When a consumer doesn't like goods, it doesn't sell, so trade isn't begun. Therefore, comparative advantage assumes a viewpoint  "How are goods liked by a consumer?" in the back. Marx may call it “mortal leap.” Classical economics tends to exclude the subjectivity of the consumer, so they don't just express that specifically.

This question has been blocked to appear in any of topics left under the question. I strongly protest to this arbitrary measure, be cause it is a kind of censorship. It must not be the person in charge of controlling keywords that has a competence to establish or block links to related topics.  It should be a reader or user of RG who have the right to choose good question. 

I am thinking an effective way to change this state of affairs, but for the moment , I ask followers of this question to go to Hubert Escaith's question:  

How can we reconcile Ricardo's theory of comparative advantages with competitive advantages?

https://www.researchgate.net/post/How_can_we_reconcile_Ricardos_theory_of_comparative_advantages_with_competitive_advantages?_tpcectx=profile_answers

I have posted many answers there and you can continue our discussion there. Thank you.

 In my last post, I made a mistake in setting the link. I have corrected it. Please see the Hubert Escaith's  question and my discussions on it.  

I fully agree that static capability, sometimes known as operational capability can help only in improving efficiencey of operations but cannot take care of the external environment. Dynamic capability, also known as strategic capability, helps business in taking care of external environment and is the pillar for sustainability and growth of the business.