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The following "Perspective" article by Wiggins and Ruefli poses a deceptively simple question relevant to the strategy, economics, and macroapproach to organizations literature: Is there evidence that firms actually obtain persistently superior economic performance as a consequence of attaining sustained competitive advantage? While many have investigated the impact of sustained competitive advantage on economic performance, most studies have examined only limited time frames, and few have addressed the temporal dynamics of sustained economic performance over long periods of time. The authors ask whether superior economic performance actually persists over time. If so, is this a rare event, or is it readily observed across a large number of firms and industries? This paper departs from the typical Perspective article because the authors have assembled substantial data to investigate their question: a sample of 6771 public firms in 40 industries over 25 years. The authors find that only a very small percentage of firms exhibits superior economic performance, and the phenomenon rarely persists for long time frames. Why should these findings capture our attention? Reviewers of this paper have noted that it addresses an important problem in economic and strategic literature, using unusual and appropriate analyses, which bear on a number of theoretical perspectives. Because achieving the outcomes associated with sustained competitive advantage are found to be limited to only a handful of firms, and for most firms this is limited to relatively short periods of time, the reviewers believe that it may be time to reexamine several theories of the firm. The reviewers recommend this paper to you and suggest that we reflect on our favorite theories or worldviews of competitive advantage in strategic management-i.e., industrial organization economics, the resource-based view of the firm, neoclassical economics, the Austrian school of economics, the hyper-competitive model, and the edge of chaos approach-in light of these findings.

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The stratification of entities into statistically distinct levels of performance over time is a problem encountered in a number of research and management settings. Traditional techniques to address this issue (e.g., cluster analysis) often require, either ex ante or ex post, the exogenous specification of the number of groups to be employed in further analysis—and are not especially suited to dealing with distributions over time. The methodology presented here iteratively applies the Kolmogorov-Smirnov two-sample test to identify the number and membership of statistically significantly different performance strata on a longitudinal basis. Monte Carlo simulations compare the new methodology with traditional clustering techniques. An application that stratifies mutual funds by returns illustrates the technique.