Higher technical and vocational education institutions in Taiwan face the pressure of an oversupply of student places and fierce competition from domestic and international institutions. To cope with these challenges, higher technical and vocational education institutions that are better equipped to respond to market requirements are expected to achieve competitive advantage and superior performance. A sector-specific model of competitive advantage for higher technical and vocational education institutions in Taiwan is, therefore, developed and tested. The model integrates theories of strategy and competitive advantage, namely industrial organisation theory and resource-based view theory. It is concluded that integration of industrial organisation and resource-based view theories provides a useful framework in which to comprehensively and systematically analyse an industry sector in relation to competitive advantage. This study also highlights that institutional performance depends on the match between the state of the environment surrounding the higher technical and vocational education institutions and their use of resources. (Contains 6 tables and 1 figure.)