Inner confidence, the power that comes from within, develops from years of self-reflection and personal growth. Partly a product we create ourselves and partly something given to use from our social environment we are able to formulate a sense of self that shows in our personal characteristics and demeanor. Those who have inner self-confidence feel they can handle most of the challenges of life and continue to move forward when many others give up.
There is a difference between arrogance and confidence. Arrogant people are partially delusional in their sense of self. They have so buried their faults that they no longer can see them. As a weakness, they do not do well taking in information or learning from their mistakes. In many cases, they leave organizations and people worse off then when they meet them.
Confident people have a deep intuitive sense of themselves that they have gained throughout their lives. They know their strengths and their weaknesses and can draw on their skills to create overcome challenges. Because they feel positive about themselves and have gained significant experience in life they are "confident" in social situations.
When we think of confidence it isn't about always being right or better than people. Their humbleness makes them better than others because they are slow to judge without information and quick to recognize when they made a mistake. They are in essence the type of happy, honest, and helpful people that we want to raise from childhood. Their capacity of honesty leads them to the highest stages of human development.
Modern pop culture often pushes people to be vain and arrogant. While this can be attractive on the outside such people are difficult to work with, make lousy partners, and often soak up unnecessary resources feeding their egos. To have confidence is to attract people to you from your genuine beliefs and true leadership skills. Arrogant individuals often crumble when pressures are high and they must perform because they have not developed the true skills beyond showmanship.