AbstractOur theory of competitive advantage, namely the theory of entrepreneurial rent, posits that the firm’s entrepreneurial orientation, their alertness, agility, absorptivity, and proactive adaptability, is a source of competitive advantage. The firm’s entrepreneurial orientation sustained by the entrepreneurial incentives continually updates and enriches the management logics that enhance the execution of the business model mechanism wherein lies the firm’s competitive advantage. The business model mechanism constituting the management logics, core resources, value opportunities, and value activities sustains the firm value creation and appropriation. Superior execution of the business model mechanism sustained by the firm’s entrepreneurial orientation provides a sustainable competitive advantage. The entrepreneurial incentives are at the heart of our theory of competitive advantage. The superior execution of the business model mechanism is sustained by the entrepreneurial incentives, in that the business model execution is enhanced by the management logics that are continually updated with the firm’s entrepreneurial orientation, and the firm’s entrepreneurial orientation is sustained by the entrepreneurial incentives.