Theories of Strategy · UvA MSc BA Strategy · Prof. J.W. Stoelhorst
Meeting 4.1 — The Schumpeterian View I
Dynamics, uncertainty and profit
Summary of: Porter (1991) · Jacobson (1992) · Lecture 7 slides (Recap & introduction) · clips "Porter's later work", "The Austrian view",
"Rent versus Profit" · your lecture notes (Lecture 7 + Amazon case) · Reading guide & Study guide · Prepared for the exam of 12
October 2026
Contents — 1. The big picture · 2. Recap: what positional views told us · 3. Schumpeter & creative destruction · 4.
Porter's later work (Porter 1991) · 5. The Austrian view (Jacobson 1992) · 6. Risk vs. uncertainty · 7. Rent vs. profit &
Principle 4 · 8. Putting it together · 9. Case: Amazon · 10. Study question 7 — comparison · 11. Links to the rest of the
course & exam tips · 12. Definition list
1. The big picture: from position to process
Block 2 of the course (Porter's early work, High-Church RBV, added-value view, stakeholder view) explained performance
differences with positional logic: firms earn economic profit because of the competitive position they hold at one moment
in time (equilibrium). Meeting 4.1 opens Block 3: dynamic views and asks the question the positional views leave open:
Central question of 4.1: How do firms get into these favorable (resource) positions in the first place? — i.e. what
drives competition "as it plays out"?
Positional views Dynamic (Schumpeterian) views
Competition as position Competition as process (disequilibrium)
(in equilibrium)
Adaptation / learning Move & countermove
Porter early · High-Church RBV
playing against the playing against
Added-value view
general environment specific rivals
"cross-sectional problem"
"longitudinal problem"
Figure 1 — Three views of competition (Lecture 7, slide 18)
Positional views Dynamic Schumpeterian views
Competition as a position in equilibrium Competition as an ongoing process — disequilibrium
Given set of constraints; all possible moves are exhausted Opportunities always exist that are not (yet) exploited
Rigorous (neoclassical / game-theory logic) but less relevant More managerially relevant, but less rigorous; often based on
metaphors and no shared framework
Assumes rationality, black-box firm, unitary agent Relaxes the rationality assumption: uncertainty, subjectivity,
learning
2. Recap: what the positional views told us (Lecture 7)
Principle Statement Theory / mechanism
1 Perfect competition If all assumptions of perfect competition hold, there is no room for Neoclassical economics
performance differences: all firms earn zero economic profit.
Corollary: every deviation from these assumptions is a possible
source of competitive advantage.
2 Market power Firms earn economic profit if they have control over price. Bain-type IO, Porter early —
monopoly/monopolistic rent
3 Ricardian rent Firms earn economic profit without market power if they control High-Church RBV (Barney,
superior resources for which they did not pay full economic value. Peteraf)
4 Schumpeterian Given uncertainty, firms earn economic profit by being the first to Schumpeter, Austrian
profit NEW bring "new combinations" to market — by itself only temporary. economics, Knight
Note: the Study guide table numbers the Schumpeterian principle "5" and complementarities "4"; the Lecture 7 slides call it Principle 4. Know
the content — the number does not matter.
, Sources of advantage Competitive advantage Performance
Structure of competition
Unique resource Favorable asymmetry
Economic profit
position in added value
Figure 2 — Positional views, putting it all together (Lecture 7, slide 14). Favorable asymmetry = Brandenburger & Stuart (1996)
Managerial implication of the positional views: establish a position of competitive bargaining power vis-à-vis
buyers and suppliers (higher willingness-to-pay and/or lower economic costs) by building a resource position that lets
you do so without paying the full economic value of the resources. But: how do you get there? → Meeting 4.1.
Meeting 4.1 — The Schumpeterian View I
Dynamics, uncertainty and profit
Summary of: Porter (1991) · Jacobson (1992) · Lecture 7 slides (Recap & introduction) · clips "Porter's later work", "The Austrian view",
"Rent versus Profit" · your lecture notes (Lecture 7 + Amazon case) · Reading guide & Study guide · Prepared for the exam of 12
October 2026
Contents — 1. The big picture · 2. Recap: what positional views told us · 3. Schumpeter & creative destruction · 4.
Porter's later work (Porter 1991) · 5. The Austrian view (Jacobson 1992) · 6. Risk vs. uncertainty · 7. Rent vs. profit &
Principle 4 · 8. Putting it together · 9. Case: Amazon · 10. Study question 7 — comparison · 11. Links to the rest of the
course & exam tips · 12. Definition list
1. The big picture: from position to process
Block 2 of the course (Porter's early work, High-Church RBV, added-value view, stakeholder view) explained performance
differences with positional logic: firms earn economic profit because of the competitive position they hold at one moment
in time (equilibrium). Meeting 4.1 opens Block 3: dynamic views and asks the question the positional views leave open:
Central question of 4.1: How do firms get into these favorable (resource) positions in the first place? — i.e. what
drives competition "as it plays out"?
Positional views Dynamic (Schumpeterian) views
Competition as position Competition as process (disequilibrium)
(in equilibrium)
Adaptation / learning Move & countermove
Porter early · High-Church RBV
playing against the playing against
Added-value view
general environment specific rivals
"cross-sectional problem"
"longitudinal problem"
Figure 1 — Three views of competition (Lecture 7, slide 18)
Positional views Dynamic Schumpeterian views
Competition as a position in equilibrium Competition as an ongoing process — disequilibrium
Given set of constraints; all possible moves are exhausted Opportunities always exist that are not (yet) exploited
Rigorous (neoclassical / game-theory logic) but less relevant More managerially relevant, but less rigorous; often based on
metaphors and no shared framework
Assumes rationality, black-box firm, unitary agent Relaxes the rationality assumption: uncertainty, subjectivity,
learning
2. Recap: what the positional views told us (Lecture 7)
Principle Statement Theory / mechanism
1 Perfect competition If all assumptions of perfect competition hold, there is no room for Neoclassical economics
performance differences: all firms earn zero economic profit.
Corollary: every deviation from these assumptions is a possible
source of competitive advantage.
2 Market power Firms earn economic profit if they have control over price. Bain-type IO, Porter early —
monopoly/monopolistic rent
3 Ricardian rent Firms earn economic profit without market power if they control High-Church RBV (Barney,
superior resources for which they did not pay full economic value. Peteraf)
4 Schumpeterian Given uncertainty, firms earn economic profit by being the first to Schumpeter, Austrian
profit NEW bring "new combinations" to market — by itself only temporary. economics, Knight
Note: the Study guide table numbers the Schumpeterian principle "5" and complementarities "4"; the Lecture 7 slides call it Principle 4. Know
the content — the number does not matter.
, Sources of advantage Competitive advantage Performance
Structure of competition
Unique resource Favorable asymmetry
Economic profit
position in added value
Figure 2 — Positional views, putting it all together (Lecture 7, slide 14). Favorable asymmetry = Brandenburger & Stuart (1996)
Managerial implication of the positional views: establish a position of competitive bargaining power vis-à-vis
buyers and suppliers (higher willingness-to-pay and/or lower economic costs) by building a resource position that lets
you do so without paying the full economic value of the resources. But: how do you get there? → Meeting 4.1.
