Rents are the dependent variable of strategy. Despite this fundamental importance, commonly used rent definitions emanating from neo-classical economics have faced long-standing critiques. As a result, providing an unambiguous rent definition that is useful in strategic management has remained elusive. This study's goal is to make a new step in the field's journey toward a more solid conceptual definition of firm performance, using a combination of verbal and formal theory. The umbrella concept of net rents is introduced, with a formal derivation of its key properties. Then several examples of net rents are provided. Four of these net rent measures are united in a new framework, designated the strategic balance sheet. The study contributes to recent works reopening the discussion on the foundations of strategy. It also provides a theoretical foundation to recent introductions of new empirical measures, such as VCA, LIVA, dynamic value, and LTP.
