A new productivity paradigm for competitive advantage

Abstract A decade of observed large differences in productivity driven competitive advantage cannot be explained by traditional productivity notions or conventional strategic analysis. We conclude on both empirical and theoretical grounds that most traditional sources of productivity have encountered diminishing marginal returns. Large competitive differences appear to arise from a new productivity source, nonlinear systems dynamics in business organizations. This has both theoretical and practical consequences for managing toward competitive advantage and requires a new approach to management, control, and organization.