In recent years, "involutionary competition" has emerged as a salient and defining feature of China's new energy vehicle (NEV) industry. Between 2018 and 2024, approximately 400 NEV firms exited the market amid intensified price wars, excessive capacity expansion, and escalating cost pressures. While involutionary competition may initially accelerate market selection and resource reallocation, prolonged competition driven by aggressive price-cutting and extreme cost compression has increasingly undermined technological innovation, distorted industrial ecosystems, and constrained high-quality development. Against this backdrop, a critical question arises: how can firms break through involutionary traps and construct sustainable competitive advantages under conditions of persistent and system-wide competitive pressure?

Existing studies on involution primarily adopt a macro-institutional perspective, emphasizing policy regulation, industrial governance, and the restoration of market order. These studies have contributed valuable insights into the structural and institutional origins of involutionary competition, particularly the role of government intervention in shaping industry dynamics. However, they provide limited explanations of how firms, at the organizational level, respond to and survive under sustained involutionary pressure. This limitation is especially evident in the NEV industry, where rapid technological iteration, high capital intensity, and converging technological trajectories expose firms to continuous environmental shocks. As a result, the micro-level mechanisms through which firms adapt to involution and achieve strategic breakthroughs remain theoretically underexplored.

To address this gap, this study introduces an organizational flexibility perspective and develops a process-oriented analytical framework to explain how firms achieve the continuous emergence of competitive advantages in involutionary environments. Drawing on theories of organizational flexibility and emergence, this research conceptualizes competitive advantage not as a deliberately designed or static outcome, but as an evolutionary process shaped by ongoing interactions between firms and their environments. Organizational flexibility is understood as a firm's capacity to adjust resource configurations, strategic orientations, and organizational arrangements in response to environmental disturbances. Extending prior static interpretations, this study emphasizes the dynamic evolution of flexibility itself under sustained competitive pressure.

Methodologically, this research adopts a comparative case study design, examining XPeng Motors and WM Motor-two Chinese NEV manufacturers that were exposed to similar external conditions but experienced divergent outcomes. By systematically comparing a "breakthrough" firm with an "exited" firm, this study constructs an analytical framework of "involutionary environment-flexible construction-advantage emergence" to reveal how different flexibility trajectories shape organizational evolution. The comparative approach enables the identification of key mechanisms through which flexibility influences firm survival and strategic outcomes under involutionary competition.

The findings reveal three main insights. First, the involutionary environment of the NEV industry evolves through three distinct stages: uncertainty, structural convergence, and polarization. Each stage imposes different adaptive pressures on firms. Second, under escalating involutionary pressure, organizational flexibility evolves from foundational flexibility to partial flexibility and ultimately to global flexibility. Foundational flexibility enables low-cost experimentation and rapid adjustment in uncertain environments; partial flexibility supports coordinated responses at critical organizational nodes; and global flexibility integrates resources, structures, and strategies into a system-wide adaptive capability. Third, driven by the evolution of flexibility, firms' competitive advantages emerge along a continuous path, progressing from agile trial-and-error advantages to path-based collaboration advantages and finally to system-level synergy advantages.

This study makes three primary theoretical contributions. First, it develops a process model that explains firm breakout mechanisms within China's involutionary context, thereby localizing organizational theory to a distinctive competitive environment. Second, it extends organizational flexibility theory by demonstrating how flexibility dynamically evolves under high-frequency environmental disturbances. Third, it reconceptualizes competitive advantage as a multi-stage emergent process driven by flexible evolution rather than static resource endowments.