Competitive advantage: what’s luck got to do with it?

Luck remains an elusive theoretical concept in the business literature yet a fascinating practical phenomenon in business reality. In addition to effective strategic maneuvering and well‐run internal management, luck often plays a non‐trivial role as a determinant of competitive advantage and firm performance. Understanding the various types of luck and the contextual conditions under which luck strikes is therefore expected to help a firm gain competitive advantage. This paper advances a typology of different scenarios of luck – pure luck, prepared luck, useful weeds, and skunk work – and expounds the strategic implications of these scenarios for the firm’s search for competitive advantage. Taking a proactive approach, it untangles the typical environmental sources of luck as well as the intra‐firm mechanisms and processes through which a firm could better induce, recognize, and exploit lucky incidents of innovations from useful weeds or skunk works.