The competitive advantage of nations and the competitive advantage of companies: what really matters in location?

Abstract

There are two dominant paradigms to explain firm performance: the Industrial Organization and the Resource Based View, both extensively studied. The association between firm performance and the competitiveness of nations is still insufficiently explored. This study aimed to verify whether business performance is related to the environment of the countries where they operate and what factors within them are the most relevant. Evidences of the relationship between the nation's competitiveness indicators and the sustainable performance of their firms were found. The study pioneered the approach relating the concept of competitive advantage of nations to the competitive advantage of companies; empirically tested the model of Michael Porter's Competitive Diamond; highlighted three variables, usually neglected in the line of research of the sources of firm performance (Buyers Sophistication, GDP and Government Purchases); and created a new indicator of performance that also reflects its sustainability, which relates to the line of research on the persistence of abnormal returns.