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

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.