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Gaining and Losing Competitive Advantage

Author

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  • Christian Bellak

    (Department of Economics, Vienna University of Economics & B.A.)

Abstract

Efficient policies to stimulate the competitiveness of firms require knowledge of future firm-strategies and a proper as-sessment of the location advantages of a country or region. Therefore, industry comparative advantage analysis needs to be complemented by firm competitive advantage analysis. This yields four hypotheses of firm strategies on the basis of the existing advantage combination. Detailed empirical analysis of a representative sample of Austrian manufacturing firms during 1990-2000 shows that changes in employment, value-added and exports are in line with the suggested de-velopment. Three of the 3-digit industries lost their advantages while seven industries gained advantages, yet overall in-dustry distribution has been remarkable stable over the four advantage combinations. In terms of number of firms, howe-ver, a large share (30%) of the total population shifts between advantage combinations even during short periods of time. The firm strategies outlined suggest a differentiated policy approach, yet the short-term dynamics revealed empirically imply a high potential for policy failure.

Suggested Citation

  • Christian Bellak, 2003. "Gaining and Losing Competitive Advantage," Working Papers geewp34, Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
    • Handle: RePEc:wiw:wiwgee:geewp34
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    References listed on IDEAS

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    More about this item

    Keywords

    Comparative Advantage; Competitiveness; Austria; Manufacturing;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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