How Does a Technological Firm Develop Its Competitive Advantage? A Dynamic Capability Perspective

Abstract

Dynamic capabilities have been widely discussed in the past decade but how the determinants of dynamic capabilities affect a firm`s competitive advantage has not been fully explored. This paper develops a quantitative method to investigate how a firm`s dynamic capabilities affect a firm`s competitive advantage. This study examines the developed hypotheses through a questionnaire survey of 165 firms together with a number of interviews drawn from Taiwan`s information and communication technology industry. The results suggest that three determinants of dynamic capabilities (i.e., path, process, and position) influence a technological firm`s competitive advantage in different ways. Both position and process have direct positive impacts on firm competitive advantage while position also has a mediating effect on the relationship between process and firm competitive advantage. This paper closes with theoretical and practical implications.