DEFINITION of 'Soft Economic Moat'

A type of economic moat (or competitive advantage) that is based on intangible qualities such as exceptional management or a unique corporate culture that breeds success.

BREAKING DOWN 'Soft Economic Moat'

Soft moats are more difficult to identify than better-known economic moats such as brand name, pricing power, high switching costs and market share. Nevertheless, they can be a great way for companies to ward off competitive pressures.

Many would argue that Jack Welch's exceptional leadership at General Electric as the company's CEO from 1981-2001 provided GE with a soft economic moat.

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