The strategy literature posits two sources of economic rents: valuable resources and superior information. The theory-based view of strategy argues for a third source: rents from superior awareness of theories as causal logics. We set up a game with unawareness to study the conditions under which superior awareness of theories allows a challenger to persuade an incumbent to give them access to resources helpful in disruption. While a challenger with a valid theory of disruption can exploit an unaware incumbent, being aware of her unawareness (fathoming that the challenger may have a theory without knowing what it is) allows her to mitigate her disadvantage by forcing the challenger to reveal his theory. We describe an “unawareness paradox”: interestingly, a challenger without resources will never reveal his theory of disruption, making it rational for the incumbent to give resource-poor challengers access to scarce resources and concede to being disrupted. Overall, we challenge conventional wisdom about strategic factor markets and contribute to the theory-based view of strategy by linking theories to competitive advantage in an interactive setting. Practical implications include that the incumbent’s assessment whether the challenger has a valid breakthrough theory is central to mitigating a disadvantage.
This paper won the distinguished paper award in the Industry, Competition, and Strategic Entrepreneurship of the Academy of Management's Strategic Managment Division in 2025.