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Developing a measure of competitive advantage

Article  in  Journal of Strategy and Management · October 2013

DOI: 10.1108/JSMA-03-2013-0015

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 Journal of Strategy and Management Vol. 6 No. 4, 2013, pp. 320‐342. DOI 10.1108/JSMA‐03‐2013‐0015 

Developing a Measure of Competitive Advantage

Christos Sigalas
Doctor of Philosophy
University of Piraeus
Department of Management & Business Administration

Victoria Pekka Economou

Professor
University of Piraeus
Department of Management & Business Administration

Nikolaos B. Georgopoulos
Professor
University of Piraeus
Department of Management & Business Administration

Correspondence to: Christos Sigalas, email: [email protected]

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Abstract

Purpose – This paper attempts to develop a measure of competitive advantage by identifying a

stipulative definition, composing an operational definition and constructing a measurement
variable.
Design/methodology/approach – The paper undertakes critical literature review, cognitive
interviews as well as a pilot and full study, which were carried out by applying a cross-sectional,
self-administered email survey with questionnaire in a fillable text-processing file, in order to
develop a valid and reliable measure of competitive advantage.
Findings – The results have led to the identification of a conceptually robust stipulative
definition, the composition of a comprehensive operational definition and the construction of a
qualified variable, making the development of a valid and reliable measure of competitive
advantage possible.
Research limitations/implications – The newly developed measure of competitive advantage,
exempt from past conceptual problems, could be used for valid measurements in future empirical
studies in the field of strategic management. At the same time, authors encourage future tests of
the newly developed measure’s reliability and validity.
Practical implications – The provision of a conceptually clear stipulating definition and a
comprehensive operational definition for competitive advantage could increase practicing
managers’ awareness relating to the conceptual nature as well as the latent expressions of
competitive advantage.
Originality/value – The findings contribute to the evolution of the strategic management field by
providing a valid and reliable measure of competitive advantage that is applicable under any
leading theoretical perspective in strategic management and it could better serve the needs of both
empirical research and management practice.
Keywords Measure of Competitive Advantage, Stipulative Definition of Competitive Advantage,
Operational Definition of Competitive Advantage, Competitive Advantage Variable, Competitive
Advantage Construct, Measure Development
Paper type Research paper

Acknowledgements

The authors would like to gratefully thank editor and anonymous reviewers for their thoughtful
comments on earlier versions of this paper.

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1. Introduction

Although the literature in the field of strategic management has extensively identified the sources
or determinants of competitive advantage (Caves and Porter, 1977; Miles and Snow, 1978; Porter,
1980; Lippman and Rumelt, 1982; Wernerfelt, 1984; Porter, 1985; Barney, 1986a; Winter, 1987;
Dierickx and Cool, 1989; Barney, 1991; Peteraf, 1993; Teece et al., 1997; Eisenhardt and Martin,
2000; O’Regan and Ghobadian, 2004), surprisingly it does not provide any clear definition of
competitive advantage (Ma, 2000; Arend, 2003; Rumelt, 2003; Foss and Knudsen, 2003;
O’Shannassy, 2008; Sigalas and Pekka Economou, 2013).

In their recent review of the literature regarding the use of competitive advantage term, Sigalas
and Pekka Economou (2013) found that there are multiple meanings of competitive advantage
and there is no agreement on a single conceptually clear and unambiguous definition. In
particular, Sigalas and Pekka Economou (2013) argue that apart from few definitions in the
literature that define competitive advantage in a rather fuzzy manner (see for example South,
1981), all other statements, which implicitly define competitive advantage, can be classified into
two main streams. The first stream defines competitive advantage in terms of performance (see
Thomas, 1986; Schoemaker, 1990; Ghemawat, 1991; Winter, 1995; Grant, 1998; Besanko et al.,
2000; Foss and Knudsen, 2003; Grahovac and Miller, 2009) whereas the second stream defines
competitive advantage in terms of its sources or determinants (see Ansoff, 1965; Porter, 1985;
Powell, 2002; Wiggins and Ruefli, 2002). Hence, even though statements about competitive
advantage abound in literature, its conceptually precise definition is elusive (Ma, 2000; Rumelt,
2003; Arend, 2003; O’Shannassy, 2008), an issue that has been classified as the “definitional
problem of competitive advantage” (Sigalas and Pekka Economou, 2013: 63). In view of the fact
that the strategic management field, since its inception, has been lacking a clear theoretical
definition of competitive advantage (Rumelt, 2003), its operational definition is also obscure (Ma,
2000).

The poor theoretical definition, or stipulative definition, and operational definition of competitive
advantage, lead to its poor operationalization which, according to Popper’s (1959) statements,
stalls theory from being scientific, falsifiable, and truth seeking. Thus, more work on developing
a measure, or on operationalization, of competitive advantage is required before strong empirical
tests are possible. However, prior to the development of a reliable and valid measure of
competitive advantage, scholars have to identify a conceptually robust stipulative definition and
to compose a comprehensive operational definition of competitive advantage (Sigalas and Pekka
Economou, 2013). One simply cannot acknowledge an inefficient or even wrong stipulative

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definition of a concept that would lead to a misstated operational definition and then proceed to
empirical research using the derivative measure without being in danger of building a theory on
rotten foundations. Before scholars are able to do so, competitive advantage will remain a heavily
loaded concept used mainly for convenience but without theoretical meaning and empirical
content (Ma, 2000; Arend, 2003).

Therefore, the field of strategic management is in need of a valid and reliable measure of
competitive advantage that will be grounded on a comprehensive operational definition which in
turn has to be based on a conceptually robust stipulative definition. Otherwise it needs to stop
employing a concept that cannot be defined and operationalized (Arend, 2003). This paper
intends to respond to literature’s call for developing a measure of competitive advantage, based
on a clear and comprehensive stipulative and operational definition (Sigalas and Pekka
Economou, 2013), that can be used in empirical studies.

2. Methodology

Due to its definitional problem, competitive advantage has raised logical and philosophical
considerations to scholars in the strategic management field. Powell (2001, 2002, 2003) was one
of the first scholars who provoked debate relating to the philosophical foundations of competitive
advantage’s research. In particular, Powell (2001) mentions that the competitive advantage
hypotheses are tautologous and, hence, of little scientific value because they are true by definition
and not falsifiable. Nevertheless, Powell (2001) argues that there remains some value in the
research stream, if scholars adopt the pragmatic view as philosophy of science. On the other hand,
some scholars have argued that there is no necessity to adopt Powell’s pragmatic view of
competitive advantage, and there is room for more positivist research on the relationships
between competitive advantage and performance (Durand, 2002; Arend, 2003). We follow the
positivist stream because we believe that the meaning attributed to competitive advantage can, in
fact, generate or resolve the problems and fallacies arising from its conceptualization that have
been identified by literature (see Sigalas and Pekka Economou, 2013).

Insert Figure 1 about here

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Before developing a measure for competitive advantage, we should point out the process that
needs to take place. As can be seen in Figure 1, the first step is the identification of a robust
stipulative definition for the concept of competitive advantage in line with Sigalas and Pekka
Economou (2013) criterion 1, i.e. to incorporate all the latent characteristics of the concept and
criterion 2, i.e. not to contain any judgments about its own value or firm’s performance. The
identification of a robust stipulative definition was carried out by critical literature review in the
field of strategic management. The articles that offer a stipulative definition for competitive
advantage were obtained by conducting a keyword search of ABI/Inform, ProQuest, Scopus,
Business Source Premier (EBSCO) and JSTOR using the keyword ‘competitive advantage’. We
used 1965 as the starting date for the search because in the early work of Ansoff (1965), the
concept of competitive advantage first appeared in the strategy literature (Wiggins and Ruefli,
2002).

The second step, which is the composition of a comprehensive operational definition of

competitive advantage, was performed by conducting cognitive interviews, in line with Dillman’s
et al. (2009) guidelines, with six practitioners from six companies incorporated in Greece. The
cognitive interviews had taken place from May 5, 2010 until May 26, 2010. The practitioners
who participated in the interview were all senior-level executives, who are heavily involved in the
strategic management process of their firms. The companies were randomly selected from the
population list. Population includes those companies that are incorporated in Greece and the last
three years reported revenue higher or equal to ten million Euros.

Furthermore, the third step is the construction of a qualified variable for competitive advantage,
which can support valid and reliable measurements. The construction of a variable for
competitive advantage was based on the construction of a variable for firm competitiveness. For
the construction of firm competitiveness variable, we have followed the levels of measurement
classification as proposed by Trochim (2000; 2006).

The fourth step, which is the purification of the newly developed measure of firm
competitiveness and thus of the competitive advantage, was achieved by the results of a pilot
study. The pilot study was administered to a random sample of 130 firms, drawn from the
population list, from July 2010 to November 2010. The pilot study was carried out in the form of
a cross-sectional self-administered email survey using a questionnaire approach following the
Dillman et al. (2009) Tailored Design Method. The pilot survey resulted in 25 completed
questionnaires, reflecting a response rate of 19.2 percent. The response rate of the pilot survey
compares favorably with similar studies in the field of strategic management (Newbert, 2008).

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The respondents who participated in the pilot study were all senior-level executives, i.e. CEOs
and CFOs.

Finally, the fifth step, which is the assessment of validity and reliability of the newly developed
measure of firm competitiveness, and consequently of competitive advantage, was performed by
using the data of a full study. In particular, following Dillman et al. (2009) Tailored Design
Method, the full study was carried out with a cross-sectional, self-administered email survey with
questionnaire in fillable text-processing file. The questionnaire along with a cover letter were sent
out in a series of emails from December 2010 to May 2011 to all population members, 2,033 in
total, as were identified by the sampling frame drawn from Hellastat database, turning the survey
into census. The cover letter described the target of the survey, which was to investigate the
competitiveness of companies in the current turbulent economic conditions in Greece, in order to
motivate respondents to participate as per common practice (Julian and Ofori-Dankwa, 2008;
Dillman et al., 2009). From these 2,033 respondents, 268 usable completed questionnaires were
received, reflecting an adjusted response rate of 18.1 percent, a response rate that compares
favorably with similar studies in the field of strategic management (see Powell, 1992; Spanos and
Lioukas, 2001; Gunn and Williams, 2007; Hmieleski and Baron, 2008). Pursuant to previous
studies, the response rate was adjusted for defunct and missing email addresses (see Doving and
Gooderham, 2008). As in the pilot study, the respondents who participated in the full study were
all senior-level executives, i.e. CEOs and CFOs, who are heavily involved in the strategic
management process of their firms.

3. Identifying a stipulative definition for competitive advantage

By accessing the strategic management literature we have managed to identify only two clear
stipulative definitions of competitive advantage that seemingly do not contain any judgments
about their own value or firm’s performance. The above result, apart from rendering the task of
providing a stipulative definition in line with the two criteria extremely difficult, also depicts the
extent of the definitional problem of competitive advantage (Sigalas and Pekka Economou,
2013).

Using chronological order, the first clear stipulative definition of competitive advantage was
introduced by Peteraf and Barney (2003). According to them ‘An enterprise has a competitive
advantage if it is able to create more economic value than the marginal (breakeven) competitor in
its product market’ (Peteraf and Barney, 2003: 314). Peteraf and Barney (2003) argue that their
definition is consistent with the usage of competitive advantage by resource-based view of
Barney (1986a, 1991) and by the market-led perspective of Porter (1985). Nevertheless, its

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precise meaning heavily depends upon a clear definition of the concept of ‘economic value’.
Peteraf and Barney (2003: 314) define economic value as the value ‘created by an enterprise in
the course of providing a good or service (that) is the difference between the perceived benefits
gained by the purchasers of the good and the economic cost to the enterprise’.

In a nutshell, according to Peteraf and Barney (2003), a firm that has attained a competitive
advantage has created more economic value – which is the difference between the customer’s
perceived benefit from product or service and the economic cost in order to produce the product
or provide the service – compared to its competitors. Thus, according to Peteraf and Barney
(2003) the stipulative definition of competitive advantage is:

the capability of a firm to create more economic value than the least efficient competitors.

The stipulative definition of competitive advantage as provided by Peteraf and Barney (2003) is
argued to be clear and rigorously stated, thus it meets the first criterion of a conceptually robust
stipulative definition. But it seems that it does not fulfill the second criterion of an adequate and
robust stipulative definition, which is not to contain any antecedents of performance. Although,
Peteraf and Barney (2003) do not define competitive advantage in terms of financial profitability
such as profits, ROA and etc, their stipulative definition does not avoid the tendency of
containing judgments about its own value since it defines competitive advantage in terms of
economic value. In particular, when competitive advantage is defined as the capability of a firm
to create more economic value than the least efficient competitors, then in reality the meaning
appointed is closely related to its outcome in terms of economic value. However, we should
mention that the terms ‘economic performance’ (Wiggins and Ruefli, 2002; 2005), ‘profit,’ ‘rent,’
‘value,’ and ‘firm performance’ (Bosse et al, 2009) are often used to indicate the concept of
performance in strategic management. Consequently, Peteraf and Barney’s (2003) stipulative
definition of competitive advantage cannot be accepted.

The second clear stipulative definition of competitive advantage that has been traced in the
strategic management literature was provided by Newbert (2008). Newbert’s (2008) stipulative
definition was based on Barney’s (1991) statements regarding competitive advantage. According
to Newbert (2008: 752), competitive advantage is ‘the degree to which a firm has exploited
opportunities, neutralized threats and reduced costs’. We should mention that the degree to which
a firm has exploited opportunities, neutralized threats and reduced costs, according to our
understanding, does not represent competitive advantage but rather the degree of firm
competitiveness. Several scholars have argued that competitive advantage is in fact a relational
term and for that reason in order to be defined, its expressions, or dimensions, or characteristics

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must be compared with those of the firm’s competitors. In support, Ma (2000: 17-18) mentions
that ‘competitive advantage is a relational term. It is essentially a comparison drawn between a
focal firm and its rival(s) on certain dimension(s) of concern in competition’. In addition, Arend
(2003: 280) states that ‘… noting that the term competitive advantage includes the word
competitive, it may be argued that the term has a relative basis, specifically relative to rivals’.
Moreover, Peteraf and Barney (2003: 320) state that ‘competitive advantage is a relative term and
therefore requires an exogenous basis for comparison’.

Therefore, the aforementioned statement of Newbert (2008), namely ‘the degree to which a firm
has exploited opportunities, neutralized threats and reduced costs’ is not the stipulative definition
of competitive advantage but the stipulative definition of firm competitiveness, or in other terms
the degree of firm competitiveness. In order to advance to the stipulative definition of competitive
advantage the dimensions of firm competitiveness, as they have been identified by Newbert
(2008), have to be compared with those of comparable competitors within an industry. Therefore,
paraphrasing and enhancing Newbert’s definition, the stipulative definition of competitive
advantage can be crafted as:

the above industry average manifested exploitation of market opportunities, neutralization of

competitive threats and reduction of costs.

The above stipulative definition satisfies the first criterion of a clear and conceptually precise
definition along with the second one since it differentiates competitive advantage from superior
performance. All three latent dimensions of competitive advantage are not necessarily associated
with performance let alone superior performance. Although exploitation of opportunities and/or
neutralization of threats and/or reduction of cost may lead to improved or even superior
performance, this is not always the case. In support, even when a firm has effectively developed a
competitive advantage, it may find itself with an expenditure incurred to develop the competitive
advantage that is higher compared to the benefits that stem from competitive advantage (Coyne,
1986).

The stipulated definition of competitive advantage, as has been refined and enhanced, can be
accepted as a rigorous and conceptually robust theoretical definition for competitive advantage
that can be served as a basis for the development of its thorough operational definition.

4. Composing an operational definition for competitive advantage

After having established a robust stipulative definition for competitive advantage construct, the
second step of its measure development process is to compose its comprehensive operational

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definition. Given that firm competitiveness and competitive advantage (i.e. the above industry
average firm competitiveness), like all unobservable constructs, are inherently complicated
(Godfrey and Hill, 1995) their operational definition was diligently created in consultation with
senior management executives that participate in the strategic management process of their firms,
during the cognitive interviews.

In the first step of the cognitive interviews, the selected stipulative definition of competitive
advantage was provided and reviewed by the executives in order to ensure their clarity and
relevance to non-academics. Afterwards, they were asked to elaborate further on the provided
definition in order to include significant manifestations or latent expressions that are not present
in the selected stipulative definition. The feedback from the executives led to the enhancement of
competitive advantage’s first dimension, namely exploitation of market opportunities, to the
following aspects:

1. exploitation of all market opportunities

2. full exploitation of market opportunities
3. exploitation of more market opportunities than competitors.

The second dimension of competitive advantage, namely neutralization of competitive threats,

was enhanced to the following aspects:

1. neutralization of all competitive threats

2. full neutralization of all competitive threats
3. neutralization of more competitive threats than competitors.

The third dimension of competitive advantage, namely and reduction of costs, was enhanced to
the following aspects:

1. reduction of total expenses at higher rate than competitors

2. reduction of operating expenses at a higher rate than competitors
3. reduction of total expenses divided by revenue to a higher extent than competitors
4. reduction of operating expenses divided by revenue to a higher extent than competitors.

All the above aspects of the three dimensions of competitive advantage, as proposed by senior
managers, should be included in the operational definition of both firm competitiveness and
competitive advantage. Therefore, the operational definition of firm competitiveness can be
expressed as follows:

‘The degree to which a firm has

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exploited:

a) all market opportunities, b) the market opportunities fully and c) more market opportunities
than competitors,

neutralized:

a) all competitive threats, b) the competitive threats fully and c) more competitive threats than
competitors

and reduced:

a) total expenses at a higher rate than competitors, b) operating expenses at a higher rate than
competitors, c) total expenses divided by revenue to a higher extent than competitors and d)
operating expenses divided by revenue to a higher extent than competitors’.

Likewise, the operational definition of competitive advantage can be expressed as follows:

‘The above industry average manifested:

exploitation of:

a) all market opportunities, b) full (exploitation of) the market opportunities and c) more market
opportunities than competitors,

neutralization of:

a) all competitive threats, b) full (neutralization of) the competitive threats and c) more
competitive threats than competitors

and reduction of:

a) total expenses at a higher rate than competitors, b) operating expenses at a higher rate than
competitors, c) total expenses divided by revenue to a higher extent than competitors and d)
operating expenses divided by revenue to a higher extent than competitors’.

5. Constructing a variable for competitive advantage

The third step of competitive advantage’s measure development process, after finding a
conceptually robust stipulative definition and developing a comprehensive operational definition,
is the construction of a qualified variable for competitive advantage which can support valid and
reliable measurements.

The variable for measuring competitive advantage will be constructed from the variable of firm
competitiveness. Thus, first we need to construct a variable for firm competitiveness and then we

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can create a variable of competitive advantage by comparing each firm competitiveness with the
average competiveness of its industry, which is the arithmetic mean of all firms’ competitiveness
that belong to a specific industry. Thus, based on levels of measurement classification as
proposed by Trochim (2000; 2006), the variable will be the firm competitiveness, or the degree of
firm competitiveness. The attributes of the variable will be ten in number, equal to the total
aspects of the three dimensions of the firm competitiveness as derived from its operational
definition. The values of the attributes depend on whether the attributes are measured by scales or
indices. Firm competitiveness is an unobservable construct (Godfrey and Hill, 1995) and for that
reason its measurement will be carried out by a latent variable. Latent variables, on the other
hand, can be classified into two categories, i.e. reflective and formative variables
(Diamantopoulos and Siguaw, 2006; Diamantopoulos et al., 2008). Since the expressions, or
dimensions, or manifestations, of firm competiveness are being affected by firm competitiveness
and not vice versa, the variable of firm competitiveness should be reflected in its attributes.

The values of the attributes, as a result of the reflective nature of firm competitiveness variable,
will be based on scales. The specific type of scale that was selected is the five-point Likert scale,
since it has been used in similar efforts to operationalize competitive advantage in the past (see
Newbert, 2008) with satisfactory level of dispersion around mean value. All the levels of
measurement of firm competitiveness variable are presented in the Figure 2.

Insert Figure 2 about here

The selected variable of firm competitiveness, like every other unobservable construct, needs to
have observable attributes, or items, which can ascribe all its latent expressions in order to be able
to measure it. For that reason, we operationalized the items of the variable of firm
competitiveness, and subsequently of competitive advantage, based on senior managers’
perceptions, thus making the measure of firm competitiveness a perceptual or subjective one. The
items of a firm competitiveness variable will be positively coded, such that the higher the
response, the greater the firm competitiveness. The variable will not be constructed from the sum
or the average of the responses’ scores to these ten items, as it is often found in literature (see
Spanos and Lioukas, 2001; Zahra and Nielsen, 2002; Newbert, 2008), but from the components

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scores of Principal Component Analysis in order to factor in the different weigh of each item to
the overall variable.

The variable of competitive advantage, on the other hand, will be derived from the variable of
firm competitiveness. In particular, following the estimation of a mean value1 of firm
competitiveness variable for all responses, the companies that exhibit higher level of
competitiveness than the mean value, will be assumed to have a competitive advantage. On the
contrary, the companies that exhibit a level of competitiveness equal or lower than the mean
value will be assumed as not having a competitive advantage. Therefore, the variable of
competitive advantage will be a dichotomous variable as it only takes two possible values, since a
firm may either have competitive advantage, i.e. higher level of competitiveness compared to the
industry’s average competitiveness level, or have no competitive advantage, namely an equal or
lower level of firm competitiveness compared to the level of industry’s average competitiveness.

6. Purifying the measure of competitive advantage

In an attempt to purify the newly developed measure of firm competitiveness and thus of the
competitive advantage, a pilot study was administered to a sample of 130 firms that has resulted
to 25 responses. The results of the pilot study suggest that items C7 and C8 as well as items C9 and
C10 of the measure of firm competitiveness are almost perfectly correlated since their correlation
coefficient is equal to 1.0 and 0.918 respectively in 99 percent confidence interval. For that
reason, it is reasonable to assume that the attributes as measured by items C8 and C10 do not
capture any additional dimension or expression of a firm competitiveness construct. Therefore,
we have decided to remove those items from the measure of firm competitiveness.

In addition, items C3 and C6 were considered to be part of the wider scale of items C1 and C4
respectively. In fact, the item that measures the degree to which a firm has exploited more market
opportunities than competitors (C3) is a fraction of the item that measures the degree to which a
firm has exploited all market opportunities (C1). For example, the strongly agree or agree
responses in the five-point Likert scale for the ‘exploitation of all market opportunities’ item are
conceptually identical with the ‘exploitation of more market opportunities than competitors’ item.
As a matter of fact, there is no way for a respondent to agree with the statement that its firm has
exploited all market opportunities and disagree with the statement that its firm has exploited more
market opportunities from its competitors. The same syllogistic applies for the second dimension
of firm competitiveness, i.e. neutralization of all competitive threats (C4) and neutralization of
                                                            
1
The mean value is equal to zero, since the data of firm competitiveness variable, as derived from
components scores, is standardized with mean value of 0 and standard deviation of 1.

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more competitive threats than competitors (C6). Therefore, we have decided to remove items C3
and C6 from the measure of firm competitiveness.

Following the removal of the items C3, C6, C8 and C10, the measure of firm competitiveness is left
over with six items in total. In order to assess the validity of the purified measure of firm
competitiveness, we used Principal Component Analysis with Varimax as rotation method. The
results of the Principal Component Analysis2 to the six items of the newly developed measure of
firm competitiveness show that items C7 and C9, which measure the various aspects of ‘reduction
of costs’ dimension, do not converge with the four items measuring the construct of firm
competitiveness. In practice this means that the items C7 and C9 are not measuring the same
construct as the rest of the items. Therefore, there is an indication that the dimension ‘reduction of
costs’ may not be a valid expression or manifestation of firm competitiveness and subsequently of
competitive advantage.

Nevertheless, based on the above findings, we did not proceed with the removal of items C7 and
C9 at this stage, due to two reasons. First, because the cases-per-variable ratio of 4:1, post
removal of items C3, C6, C8 and C10, is lower than that which is regarded as adequate to derive
stable components (Everitt, 1975; Cattell, 1978; Fabrigar et al., 1999; Conway and Huffcutt,
2003), no compelling conclusions from Principal Component Analysis’ results could be drawn.
The value of Kaiser-Meyer-Olkin measure of sampling adequacy test, which is equal to 0.471 and
lower than 0.5, verifies the reason above as the number of pilot study’s cases seems to be
inadequate to run Principal Component Analysis. Secondly, the items C7 and C9 have been used in
past empirical efforts to measure the competitive advantage construct (see Newbert, 2008),
although in different form, with well documented reliability and validity.

Therefore, after all the above purifications, the items of the measure of firm competitiveness, and
subsequently of competitive advantage, are being reduced from ten to six. The values of the
remaining items, post purifications, are derived from a five-point Likert scale. Following the
purification and refinement efforts, the levels of measurement of firm competitiveness variable
are presented in Figure 3.

                                                            
2
The results of pilot study’s Principal Component Analysis are not reported herein but are available upon
request. 

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Insert Figure 3 about here

7. Assessing the validity and reliability of the measure of competitive advantage

The validity and reliability of the newly developed measure of firm competitiveness, and
consequently of competitive advantage, was assessed using the data of a full study. Our data set is
derived from questionnaires received from 268 respondents. Since all respondents are members
of senior management that participate in the strategic management process of their firm, it is
assumed that they are all highly qualified to provide accurate responses to the survey items.

According to Armstrong and Overton’s (1977) guidance, in order to test for the presence of non-
response bias, independent sample t-test and non-parametric independent sample Mann-Whitney
U test were conducted to test whether statistical differences exist between mean and median of
both a) the first 50 and last 50 respondents and b) first half, or early, and second half, or late,
respondents. All statistics were insignificant, suggesting that the answers of the respondents and
non-respondents do not differ, thus there is no non-response bias in the data of the full study.

Convergent Validity

The assessment of convergent validity was carried out using Principal Component Analysis with
Varimax as rotation method. The Principal Component Analysis was selected because Principal
Component Analysis is more appropriate than Common Factor Analysis when the objective is to
discover the minimum number of factors needed to account for the maximum portion of the total
variance represented in the items (DeCoster, 1998; Hair et al., 2010). Orthogonal rotation of
Varimax was adopted since it provides a more clear separation of the components (Hair et al.,
2010) that is in line with the goal to obtain some theoretical meaningful components (Gunn and
Williams, 2007) with, if possible, the simplest component structure (Hair et al., 2010).

Before presentation of the results, we should mention that the value of Kaiser-Meyer-Olkin
measure of sampling adequacy test is equal to 0.670, well above 0.5, therefore sufficient (Kaiser,
1970; Kaiser and Rice, 1974; Hair et al., 2010). In addition, Bartlett’s test of sphericity is
statistical significant, indicating sufficient corrections among items (Hair et al., 2010).

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Furthermore, the cases-per-variable ratio, using listwise deletion method for missing values, is
10:1, which is meritorious to derive stable components (Everitt, 1975; Hair et al., 2010).

Insert Table 1 about here

The results of the Principal Component Analysis for the items of firm competitiveness measure
are presented in Table 1. Two components were derived from the rotated component matrix
instead of one that is essential in establishing a convergent validity, reaffirming the inconclusive
pilot study results. In particular, the ‘reduction cost’ dimension as measured by items C7 and C9,
is not extracted under the same component as the rest of the items. Thus, the ‘reduction cost’
dimension does not measure the same construct as the dimensions of ‘exploitation of market
opportunities’ and ‘neutralization of competitive treats’. Therefore, the results of the full study’s
Principal Component Analysis confirm the outcomes of the pilot study regarding the removal of
‘reduction cost’ dimension from the measure of firm competitiveness, and of competitive
advantage.

The review of literature in the strategic management field after the results of the Principal
Component Analysis, pointed out that the dimension of ‘reduction of costs’ as proposed by
Newbert’s (2008) stipulative definition, which was based on Barney’s (1991) statements relating
to competitive advantage, had not been identified in Barney’s article. Most likely, reduction of
cost, as a latent expression of competitive advantage, was introduced by Newbert (2008) as part
of his effort to develop the items used to measure competitive advantage construct following
Kerlinger and Lee’s (2000) guidelines. Thus, based on the above, we have removed items C7 and
C9 and have rerun the Principal Component Analysis for the remaining four items.

Insert Table 2 about here

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Before presenting the results of iterative Principal Components Analysis, we should mention that
the value of Kaiser-Meyer-Olkin measure of sampling adequacy test is equal to 0.670, Bartlett’s
test of sphericity is statistically significant and the cases-per-variable ratio, using listwise deletion
method for missing values, is 67 : 1. Furthermore, the only one extracted component accounts for
67 percent of the total variance that is satisfactory given the 60 percent threshold set for social
sciences (Hair et al., 2010). Following the control of Principal Components Analysis’
assumptions or statistical requirements, the component loadings, presented in Table 2, show that
all items converge with items measuring the same construct, i.e. firm competitiveness. While
such results would ordinarily provide strong evidence in support of the measure’s validity, we
also need to investigate the other types of construct validity, i.e. discriminant validity, concurrent
validity and predictive validity.

Discriminant Validity

In order to assess the discriminant validity of the newly developed measure of firm
competitiveness, we needed to employ a measure of a second construct that in theory
discriminates from the construct under investigation (Kerlinger and Lee, 2000; Trochim, 2006),
i.e. firm competitiveness. The selected construct is the one of firm performance, because most
scholars in strategic management acknowledge that competitive advantage and superior
performance are conceptually distinct (Barney, 1991 Ma, 2000; Powell, 2001; Arend, 2003;
Newbert, 2008; O’Shannassy, 2008). Furthermore, since competitive advantage, namely the
above industry average competitiveness, and superior performance, namely the above industry
average performance, are conceptually distinct, it follows that firm competitiveness and firm
performance will be conceptually distinct too. Firm performance was measured via Delaney and
Huselid’s (1996) widely used subjective measure (Perry-Smith and Blum, 2000; Richard, 2000;
Newbert, 2008) that includes both financial, i.e. sales growth, profitability, and nonfinancial, i.e.
marketing, market share, items or indicators. The items of the measure are positively coded such
that the higher the response’s score, the greater the firm performance.

The assessment of discriminant validity was carried out using Principal Component Analysis with
Promax as rotation method. Oblique rotation method of Promax was adopted since it allows
correlated components instead of maintaining independence between the rotated components (Ho,
2006; Hair et al., 2010). Based on the leading proposition in strategic management that superior
performance arises from competitive advantage (Barney, 1997; Grant, 1998; Roberts, 1999,
Durand and Vaara, 2009), we can advance to the conclusion that firm competitiveness and firm
performance will be closely related, justifying the use of oblique rotation method. In support, the

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correlation of the two components that was extracted from Principal Component Analysis is equal
to 0.467, higher than 0.32, meaning that there is more than 10 percent overlap in variance among
components, enough variance to warrant oblique rotation (Tabachnick and Fidell, 2007).

Insert Table 3 about here

The value of Kaiser-Meyer-Olkin measure of sampling adequacy test is equal to 0.781, Bartlett
test of sphericity is statistical significant and the cases-per-variable ratio, using listwise deletion
method for missing values, is 33:1. In addition, the extracted two components, from the un-
rotated component matrix since in oblique rotation methods the variance cannot be added
(Costello and Osborne, 2005), accounts for 65 percent of the total variance. Given that the first
four items in Table 3 discriminate from last four items measuring the other construct, which is
firm performance, and converge with items measuring the same construct, which is firm
competitiveness, it is concluded that the newly developed variable is indeed a valid measure of
the firm competitiveness construct.

Concurrent Validity

Following the literature guidelines, the assessment of concurrent validity was carried out by
correlating the newly developed measure of firm competitiveness construct with a second
measure of the same construct but with a different method (Kerlinger and Lee, 2000). The
selection of firm competitiveness measure as derived from a different method was based on the
fact that there is no other existing qualified measure in the literature for firm competitiveness or
competitive advantage (Sigalas and Pekka Economou, 2013). For that reason, consistent with the
selected operational definition, we have developed a second variable for firm competitiveness
based on Guttman scale. The second variable that was based on Guttman scale was developed
because Venkatraman and Grant (1986) have argued that Likert and Guttman scales can be used
as different methods in assessing the construct validity of a measure.

The variable of firm competitiveness with items measured by Likert scale, was constructed from
the components scores of the Principal Component Analysis, whereas the variable of firm
competitiveness with items measured by Guttman scale, was constructed by averaging the scores

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of its items. Since the Z values of skewness and kurtosis of the two variable are less than 1.96 it is
assumed that their distribution would not materially deviate from normal distribution (Hair et al.,
2010). For that reason, the correlation analysis was based on parametric Pearson product-moment
correlation coefficient.

The correlation coefficient of the two variables measuring firm competitiveness with Likert and
Guttman scaling method was found to be positive and statistical significant in confidence interval
of 99 percent. In particular, it is equal to circa 0.478 indicating a strong positive relation between
the two variables, since in social sciences a correlation coefficient equal or higher than 0.5
signifies high relation (Cohen, 1988; 1992). Thus, in view of the fact that the two concurrent
measures of firm competitiveness correlate well to each other, we can assume that the newly
developed measure of firm competitiveness construct demonstrates concurrent validity.

Predictive Validity

In order to assess the predictive validity of the newly developed measure of firm competitiveness,
we needed to demonstrate that the construct under investigation predicts something it should
theoretically be able to predict (Trochim, 2006). For that reason we used Delaney and Huselid’s
(1996) subjective measure of firm performance, because in strategic management literature it is
well acknowledged that firm competitiveness, and subsequently competitive advantage, is
positively related to its performance (Newbert, 2008, Durand and Vaara, 2009). The variable of
firm performance, alike the variable of firm competitiveness, is operationalized from component
scores as derived by Principal Component Analysis in order to factor in the different weigh
attributed to each item.

The relationship between firm competitiveness and firm performance was tested using ordinary
least squares (OLS) regression model with firm performance as the dependent variable and firm
competitiveness as the predictor variable. As can be seen from the results of these analyses
reported in Table 4, the F-statistics of the regression model is significant, suggesting that the
model fits the data well. The results also show that the model explains a considerable amount of
the variance (23 percent) in firm performance. This specific empirical evidence seems to verify
theory, which suggests that apart from firm competitiveness there are other exogenous factors to
the firm that affect firm performance, such as luck (Barney, 1986b), governmental regulations
(Baron, 1995; Bailey, 1997) and environmental shocks (Meyer, 1982). Furthermore, the
parameter estimate for the predictive variable shows that firm competitiveness is significantly and
positively related to firm performance. This finding, which is consistent with prior recent research

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(Newbert, 2008; Dibrell et al., 2009; Liou and Gao, 2011; Ndofor et al., 2011), suggests that the
higher the level a firm competitiveness, the greater its performance.

Insert Table 4 , 5 about here

In addition, as can be seen from the results in Table 5, Ramsey Reset Test with null hypothesis
the linear functional form, White Test with null hypothesis the residuals’ homoscedasticity and
Jarque-Bera Test with null hypothesis the normality of the error distribution, are all statistically
insignificant indicating that their null hypothesis cannot be rejected. In addition, Durbin-Watson
Test suggests that the null hypothesis of independence of error terms cannot be rejected.
Therefore, all the assumptions underpinning OLS regression are been supported, suggesting that
the parameters’ estimators are unbiased, consistent and efficient.

Based on the above, the newly developed measure of firm competitiveness seems to be able to
predict what it should theoretically be able to predict, i.e. firm performance, therefore establishing
its predictive validity.

Reliability

Cronbach alpha coefficient was computed to test the reliability of the firm competitiveness scale.
Typically this coefficient, which is an estimate of the average of all the correlations of the items
within a test (Cronbach, 1951), should fall within a range of 0.70 to 0.90 for narrow constructs
and 0.55 to 0.70 for moderately broad constructs (Van de Ven and Ferry, 1979). But, the
generally agreed lower limit for Cronbach’s alpha is 0.70 (Cronbach, 1951; Nunnally, 1978),
although it may decrease to 0.60 (Robinson et al., 1991; Hair et al., 2010).

Insert Table 6 about here

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In the full study, the Cronbach alpha coefficient for firm competitiveness variable is equal to
0.84, suggesting that all of the items are reliable and the entire measure is internally consistent
(Ho, 2006). In addition, the Corrected Item-Total Correlation for all items is higher than 0.33
criterion, indicating that more than 10 percent of the variance in the scale is accounted for by each
item (Ho, 2006). Thus, all four items must be retained, since by deleting any of the four items will
reduce the overall reliability of the scale (see Table 6). Therefore, the value of Cronbach alpha
coefficient indicates high overall internal consistency among the four items measuring firm
competitiveness, and subsequently competitive advantage, construct.

8. Concluding remarks

In sum, this study has attempted to develop a reliable and valid measure of competitive
advantage, by identifying a conceptually robust stipulative definition, composing a
comprehensive operational definition and constructing a qualified variable.

In particular, following the findings of its measure development process, the identified stipulative
definition of competitive advantage can be further crafted as:

the above industry average manifested exploitation of market opportunities and

neutralization of competitive threats.

The above stipulative definition has been documented to be clearly stated and conceptually
robust, given that it incorporates all the latent characteristics and particulars of the competitive
advantage concept. In addition, it completely separates competitive advantage from the
performance, since it does not incorporate any latent characteristics of the performance concept,
or any judgments about its own value.

Based on the above stipulative definition, the results of cognitive interviews as well as the
findings of the pilot and full study, the operational definition of competitive advantage can be
rendered as:

‘The above industry average manifested

exploitation of:

a) all market opportunities and b) full (exploitation of) the market opportunities,

and neutralization of:

a) all competitive threats, b) full (neutralization of) the competitive threats.

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The above operational definition is considered to be ample, sound and comprehensive, given that
it captures all the aspects of the different dimensions, or latent expressions, of competitive
advantage. This operational definition can be used as the basis of valid measures of competitive
advantage in empirical research. In particular, from the observable attributes, as has been
described in the operational definition, we can create the items and the scales of competitive
advantage variable. 

This study has constructed the variable for measuring competitive advantage from the variable of
firm competitiveness, because competitive advantage is a relational construct and therefore in
order to be measured it must be compared with firm’s industry level of competitiveness. The
variable of firm competitiveness contains four items properly crafted from the observable
attributes of competitive advantage’s operational definition (see Figure 4 and appendix). The
variable of competitive advantage had been created by comparing each firm competitiveness with
the average competiveness of its industry. The firms that exhibit a level of competitiveness higher
than industry’s average were assumed to have competitive advantage. Therefore, the variable of
competitive advantage only takes two possible values, since a firm may either have competitive
advantage, or not.

Insert Figure 4 about here

This paper contributes to the academic stream of strategic management by providing a measure of
competitive advantage in order to test the research hypotheses, which employ the concept of
competitive advantage, that to date remain tautological (Powell, 2001; Newbert, 2008; Tang and
Liou, 2010; Sigalas and Pekka Economou, 2013). Our newly developed measure provides the
empirical indicators of competitive advantage, which due to its latent nature is not directly
measurable but its existence is indicated by other phenomena, e.g. exploitation of market
opportunities and neutralization of competitive threats. The empirical indicators of our measure
are not associated with performance thus the measure of competitive advantage does not contain
any judgments about its own value or firm’s performance. Therefore, our measure of competitive
advantage can not only resolve the tautology of strategic management propositions, which
employ the concept of competitive advantage, but also all the other problems and fallacies arising

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from its current conceptualization (see Sigalas and Pekka Economou, 2013). Newbert (2008) in
his conceptual-level empirical investigation of the resource-based view of the firm has also
contributed towards this end by operationalizing competitive advantage in a way that segregates
firm competitive advantage from firm performance. However, Newbert’s (2008) measure of
competitive advantage is operationalized squarely for resource-based theory. On the other hand,
we have developed a measure of competitive advantage that is free from performance antecedents
and applicable under any leading theoretical perspective in strategic management, i.e. industrial
organization perspective, market-led perspective, resource-based view and dynamic capabilities
perspective. Conclusively, the findings of the article provide academics and researchers with a
valid and reliable measure of competitive advantage in order to empirically investigate the
competitive advantage-related research hypotheses in the field of strategic management.

From a practitioner standpoint, the composed operational definition of competitive advantage can

increase practicing managers’ awareness relating to the conceptual nature of competitive
advantage. The improved understanding of its conceptual nature by practicing managers, in turn,
can specify the latent expressions of competitive advantage, describing what is and is not
competitive advantage. This is extremely important because due to the confusion that competitive
advantage, as an unobservable concept (Godfrey and Hill, 1995), causes to practitioners
(Markides, 2000), the practicing managers may not be able to distinguish competitive advantage
from other concepts, such as the sources of competitive advantage, i.e. firm’s resources, a firm’s
capabilities, market positions, or market barriers. Therefore, the findings of the article provide
practicing managers with the mapping of competitive advantage’s manifestations or latent
expressions.

Naturally, due to the lack of previous efforts to develop a measure of competitive advantage
regardless of its underlying theoretical perspective that can resolve the problems and fallacies
arising from its current conceptualization (Sigalas and Pekka Economou, 2013), the findings
presented herein need further investigation. Although the statistical analyses described above
suggest that the newly developed measure is in fact valid and reliable, because the measurement
of competitive advantage, like all unobservable constructs, is inherently complicated (Godfrey
and Hill, 1995), it cannot be concluded with certainty that no error exists in the measurement of
this construct. Therefore, future scholars are encouraged not only to replicate this study, but also
to test the qualitative aspects of construct validity, such as face and content validity, as well as to
estimate other forms of reliability, such as inter-rater reliability, test-retest reliability and parallel-
forms reliability. In addition, scholars wishing to replicate this study may nevertheless wish to

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examine convergent and discriminant validity using alternative methods, such as Campbell and
Fiske’s (1959) Multitrait-Multimethod Matrix, or more contemporary methods such as
Confirmatory Factor Analysis. Moreover, future scholars may wish to measure competitive
advantage via alternative metrics, scales and methods in an attempt to improve further the
empirical content of this cornerstone construct of strategic management field.

In so doing, we as a scholarly community will have a more rigorous construct for competitive
advantage by which to confirm, refine, supplement, and/or refute the strategic management’s
fundamental hypotheses, thereby enriching our understanding of the role that competitive
advantage plays in a firm performance as well as of what accounts for differences in performance
across firms. Along this vein, shedding further light on the construct of competitive advantage
coupled with new insights that will stem from empirically tested research propositions, will
increase practicing managers’ awareness relating to the latent expressions of competitive
advantage and will navigate managers and practitioners in their quest to establish competitive
advantage from their firms’ resources, market positions and firm idiosyncrasies.

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Appendix: Scales of Measures

Firm competitiveness (Likert Scale)

Five-point Likert scale ranging from strongly disagree to strongly agree.

Over the past 3 years your competitive strategy has allowed your firm to:

C1 exploit all market opportunities that have been presented to your industry

C2 fully exploit the market opportunities that have been presented to your industry

C4 neutralize all competitive threats from rival firms in your industry

C5 fully neutralize the competitive threats from rival firms in your industry

α = 0.84

Firm competitiveness (Guttman Scale)

Select one of the following statements which best applies to your firm.

CII1 Over the past 3 years your firm has:

1. not exploited any of the market opportunities that have been presented to its industry.
2. exploited some of the market opportunities that have been presented to its industry, but fewer
in contrast to the opportunities that have been exploited by its main competitors.
3. exploited more market opportunities from its main competitors.
4. exploited all the market opportunities that have been presented to its industry.

Select one of the following statements which best applies to your firm.

CII2 Over the past 3 years your firm has:

1. not neutralized any of the competitive threats from rival firms in its industry.
2. neutralized some of the competitive threats from rival firms in its industry, but fewer in
contrast to the competitive threats that have been neutralized by its main competitors.
3. neutralized more competitive threats from its main competitors.
4. neutralized all the competitive threats from rival firms in its industry.

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Firm Performance (Delaney and Huselid, 1996)

Five-point equal intervals scale ranging from much worse to much better.

Compared to other rival firms in your industry, how would you evaluate your firm’s performance
over the past 3 years in terms of:

P1 marketing?

P2 growth in sales?

P3 profitability?

P4 market share?

α = 0.80

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Figure 1: Development Process of Competitive Advantage Measure

Step 1: Identifying a Stipulative Definition (Concept)

Step 2: Composing an Operational Definition (Construct)

Step 3: Constructing a Variable (Measure)

Step 4: Purifying the Measure

Step 5: Assessing the Validity and Reliability of the Measure

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Figure 2: Levels of Measurement of Firm Competitiveness

Variable Attributes / Items Values

C1: exploitation of all market opportunities Five-point Likert

scale

C2: full exploitation of market opportunities Five-point Likert

scale

C3: exploitation of more market opportunities from Five-point Likert

competitors scale

Relationship: Positive Correlation

C4: neutralization of all competitive threats Five-point Likert
scale
Firm
competitiveness C5: full neutralization of all competitive threats Five-point Likert
scale

C6: neutralization of more competitive threats than Five-point Likert

competitors scale

C7: reduction of total expenses at a higher rate than Five-point Likert

competitors scale

C8: reduction of operating expenses at a higher rate Five-point Likert

than competitors scale

C9: reduction of total expenses divided by revenue to a Five-point Likert

higher extent than competitors scale

C10: reduction of operating expenses divided by Five-point Likert

revenue to a higher extent than competitors scale

Figure 3: Levels of Measurement of Firm competitiveness post Measure Purification

Variable Attributes / Items Values

C1: exploitation of all market opportunities Five-point Likert

scale
Relationship: Positive Correlation

C2: full exploitation of market opportunities Five-point Likert

scale

C4: neutralization of all competitive threats Five-point Likert

scale
Firm
competitiveness Five-point Likert
C5: full neutralization of all competitive threats
scale

C7: reduction of total expenses at a higher rate than Five-point Likert

competitors scale

C9: reduction of total expenses divided by revenue to a Five-point Likert

higher extent than competitors scale

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Figure 4: Final Levels of Measurement of Firm competitiveness

Variable Attributes / Items Values

C1: exploitation of all market opportunities Five-point Likert

scale

Relationship: Positive
C2: full exploitation of market opportunities Five-point Likert
scale
Firm
competitiveness
C4: neutralization of all competitive threats Five-point Likert
scale

C5: full neutralization of all competitive threats Five-point Likert

scale
 

Table 1: Principal Components Analysis for Convergent Validity Assessment

Items Component 1 Component 2 Communality

Loadings* Loadings*
C1: exploitation of all market opportunities 0.857 0.057 0.737

C2: full exploitation of market opportunities 0.812 0.104 0.671

C4: neutralization of all competitive threats 0.786 0.191 0.654

C5: full neutralization of all competitive threats 0.769 0.215 0.638

C7: reduction of total expenses at higher rate than 0.115 0.929 0.876
competitors

C9: reduction of total expenses divided by revenue to 0.197 0.905 0.857

a higher extent than competitors

Eigenvalue 3.071 1.362 4.433

44.3% 29.6% 73.9%
Variance Explained*
* from rotated component matrix (converged in 3 iterations)

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Table 2: Iterative Principal Components Analysis for Convergent Validity Assessment

Items Component 1 Communality

Loadings*
C1: exploitation of all market opportunities 0.844 0.713

C2: full exploitation of market opportunities 0.808 0.653

C4: neutralization of all competitive threats 0.814 0.662

C5: full neutralization of all competitive threats 0.807 0.652

Eigenvalue 2.679 2.679

Variance Explained* 67.0% 67.0%

* from un-rotated component matrix

Table 3: Principal Components Analysis for Discriminant Validity Assessment

Component 1: Component 2:
Items Communality
Competitiveness Performance

Loadings* Loadings*
C1: exploitation of all market opportunities 0.822 0.454 0.682

C2: full exploitation of market opportunities 0.780 0.486 0.627

C4: neutralization of all competitive threats 0.838 0.314 0.710

C5: full neutralization of all competitive threats 0.829 0.324 0.693

P1: marketing 0.312 0.674 0.454

P2: growth in sales 0.442 0.868 0.755

P3: profitability 0.325 0.753 0.567

P4: market share 0.384 0.854 0.729

Eigenvalue 3.840 1.376 5.217

Variance Explained** 48.0% 17.2% 65.2%
* from rotated component structure matrix
** from un-rotated component matrix

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Table 4: OLS Regression Analysis for Predictive Validity Assessment

Unstandardized Std.
Variable t-statistics Sig.
Coefficients Error

Constant 0.004 0.054 0.076 0.939

C: Firm competitiveness 0.475 0.054 8.767 0.000

F-statistics 76.865
Sig. of F-statistics 0.000
Number of Cases (N) 264
Pearson Correlation Coefficient 0.476
Sig. of Pearson Correlation Coefficient (1-tailed) 0.000
Coefficient of Determination R Squared 0.476
Adjusted Coefficient of Determination R Squared 0.227
Std. Error of the Regression 0.881
Sum of Squares – Residual 203.343

Table 5: Tests of OLS Regression Assumptions 

Test /
Statistics
(statistics) df Sig.
Value

Linear Functional Form, Ramsey Reset Test

0.608 (1, 261) 0.436
(F-statistic)
Residuals Homoscedasticity, White Test
4.382 2 0.112
(Obs*R-squared)
Normality of the Error Distribution, Jarque-Bera Test
1.313 - 0.519
(Jarque-Bera statistic)

Statistics Critical Critical

Test
Value Value dL* Value dU*

Independence of Error Terms, Durbin-Watson 2.140 1.758 1.779

* from Durbin-Watson tables (level of significance: a=5%, number of observations: n=200 and number
of independent variables: k=1)

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Table 6: Reliability Assessment

Cronbach’s Cronbach’s
Corrected
Alpha if Alpha Based on
Variable Items Item – Total
Item Standardized
Correlation
Deleted Items
C1: exploitation of all
0.697 0.78
market opportunities
C2: full exploitation of
0.645 0.80
C: Firm market opportunities
0.84
competitiveness C4: neutralization of all
0.665 0.79
competitive threats
C5: full neutralization of
0.656 0.80
all competitive threats

37 
 

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