There is an opinion that competitive advantage is all about short-run price/quality ratio and consists in hard everyday work of adjusting company's supply to market's demand. In its turn sustainable competitive advantage is a mere theoretical speculation and reveals as systematic dumping or result of social techonologies usage.
In my forthcoming book - Energy Investments: An adaptive approach to profiting from uncertainty - I point the following for energy:
1. Choice of technology is where firms lock in costs and operational flexibility advantages, two features that allows firms to respond more effectively to volatile prices and volumes.
2. NPV's bias for certainty usually lead managers to commit to sub-optimal investments. Locking in certainty of payoffs is the flip side of foregoing options to achieve higher payoffs when higher prices result in higher returns.
3. Competitors' actions impact payoffs from extant as well as expansion supplies. Hence, a firm's initial endowments, and the interactions among prices, volumes and rivalry among firms are relevant. That is, prior commitments are not sunk costs, they actually influence the firm's (or portfolio's) outcomes.
You may refer to Lenos Trigeorgis' works on option games. I have touched on aspects of this line of reasoning in my paper on NPVs that you can download from my page here at Research Gate. Paddy Miller in his book "Innovation business as usual" covered aspects that may prove relevant to your research.
Thank you very much, I'll most certainly look through works you've recommended!
Economic uncertainty certainly throws up challenge towards maintaining competitive advantage, but at the same time opens up avenues for creative solutions to problems through strategic application of human and technological resources. Organizational agility will lead to innovative solutions and pave the way towards sustainable competitive advantage. Maintaining sustainable competitive advantage in times of economic uncertainty, is a challenge to organizational leadership.
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