Much of the strategic research work defines competitive advantage as invisible resource bundles and/or the
tacit capabilities of the firm, and suggests that such bundles of resources provide a competitive advantage or affect
long-run firm performance. The problem is that resource and activity bundles are hard to reveal and very difficult to
test. We propose that a firm’s competitive advantage can be inferred by financial performance. Thus through the
segregation of the components of the financial performance we can investigate the competitive heterogeneity within
industry. The present study presents that the du Pont identity of financial return is consistent with the concept of the
competitive advantage in terms of value creation. The ten financial indicators derived from the expanded du Pont
identity are used to investigate the source of the competitive advantage of the worldwide semiconductor industry.