Much of strategic research has focused on resource and capability bundles as the sources of the competitive
advantage. The problem is that resource and activity bundles are notoriously hard to dismantle since they include
complex linkages, complementarities (Milgrom and Roberts, 1990; 1995) and tacit dimensions (Nelson and Winter,
1982; Reed and DeFllippi 1990). By promoting inductive Bayesian interpretation of the sustainable competitive
advantage proposition, we (2008) proposed that “a firm’s competitive advantage, resource bundle configuration, and
dynamic learning capability cannot be comprehended by outsiders. Its operational performance, however, can be
captured by financial indicators.” From this viewpoint, the presence or absence of competitive advantage may be
reflected in the causal relationship between resource configuration, dynamic capability and observable financial
performance. We introduced a competitive advantage segregation model, the resource configuration (RC) model,
which was based on selected financial ratios, and concluded that the RC model can be used to determine which
potential routes to competitive advantage yield long-term payoffs in performance and profitability, given a specific
context, and which resource bundles really matter. In this paper, we argue that the RC model is consistent with the
definition of the competitive advantage in terms of value creation, using the ten financial ratios derived from the
expanded du Pont identity to investigate the sources of competitive advantage in the worldwide semiconductor
industry.