Abstract:
Over the past few years, there has been a proliferation of academic discourse regarding the subject of transient competitive advantage. Several academics have performed empirical studies which have noted a decreasing tendency in the number of businesses with a sustainable competitive advantage. Notably in this space, Columbia Business School professor, Rita McGrath, has performed a study determining the number of mid-to-large cap firms, listed worldwide, able to achieve consecutive years of uninterrupted growth: a sign of a sustained competitive advantage.
The following study considers the current theory in this domain, and interrogates the methods McGrath used to identify her so called, growth outliers. Two methods: the McGrath and the alternate, are used in identifying all growth outlier firms, regardless of size, listed on the JSE. The study concludes that two predominant issues exist with McGrath's methods, namely her use of a single start year and her static growth threshold. The effects of which are postulated to impact the number and nature of firms identified, depending on the context of the specific market. Considering trends in the resulting percentage of growth outlier firms identified over the period of study, it is concluded that South Africa is tending towards a more sustainable competitive advantage environment. The qualitative study concludes that instances of firms with transient and sustained competitive advantage, are still both commonly occurring, and principally finds that the age of sustainable competitive advantage is not yet over.
