Economics Insights @ CBS

We examine the mirror image of sustained competitive advantage, namely, sustainable competitive disadvantage. We begin by reviewing the theoretical and empirical literature on sustained competitive advantage. Our review suggests it's not just firms in superior positions that sustain their performance, but also firms in the remainder of the performance spectrum, including those occupying positions around and below the norm.

We find important differences in dollar-based and dollar-neutral G10 carry trades. Dollar-neutral trades have positive average returns, are highly negatively skewed, are correlated with risk factors, and exhibit considerable downside risk. In contrast, a diversified dollar-carry portfolio has a higher average excess return, a higher Sharpe ratio, minimal skewness, is unconditionally uncorrelated with standard risk-factors, and exhibits no downside risk.

Consumer goods and services have psychological value that can equal or exceed their functional value. A burgeoning literature demonstrates that one source of value emerges from the capacity for products to serve as a psychological salve that reduces various forms of distress across numerous domains. This review systematically organizes and integrates the literature on the use of consumer behavior as a means to regulate self-discrepancies, or the incongruities between how one currently perceives oneself and how one desires to view oneself (Higgins, 1987).

Because of the unprecedented pace of globalization, foreign experiences are increasingly common and valued. Past research has focused on the benefits of foreign experiences, including enhanced creativity and reduced intergroup bias. In contrast, the present work uncovers a potential dark side of foreign experiences: increased immoral behavior. We propose that broad foreign experiences (i.e., experiences in multiple foreign countries) foster not only cognitive flexibility but also moral flexibility.