Firm-Specific Advantage

Firm-specific advantage on the firm level manifests itself in a higher productivityof comparable assets (tangible and intangible) than competitors (Caves, 1996).Since imitation of the advantage by competitors entails high costs and high risks,the owner of the advantage is protected for a certain period of time. Since thecrucial firm-specific advantages are intangible (including strategic behaviour),they are mobile within the firm at low marginal costs. Hence, integration of value-added activities (Feenstra, 1998) within the firm (i.e., internal exploitation ofadvantages) is an optimal strategy.Location-advantage, on the other hand is immobile and is of a public-goodnature as firms have access on equal terms (putting aside congestion problems).As location-advantage is bound to regions, it may lead to geographical fragmen-tation of value-added activities. f sports goods