Technological complexity’s impact on the sustainability of competitive advantage from innovation

Firms outperforming their competitors face imitation and substitution of their innovations which theoretically erodes their competitive advantage. Based on resource based theory we investigate the influence of substitution and imitation on the sustainability of firms’ competitive advantage constituted by innovations as knowledge based resources. We analyze their influence on the continuous outperformance of firms differentiating between complex and discrete technologies and product and process innovation. Our findings refine and enhance previous research in this area and advance our knowledge on imitation’s and substitution’s relevance and impact on sustained competitive advantage in different contexts. We contribute the important moderating influence of technology complexity within the resource based view and highlight the limited explanatory power of this theory for highly complex technologies. We provide extensive discussions of these implications.