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Locational and Internal Sources of Firm Competitive Advantage: Applying Porter’s Diamond Model at the Firm Level

Author

Listed:
  • EICKELPASCH, ALEXANDER

    (DIW Berlin)

  • LEJPRAS, ANNA

    (DIW Berlin)

  • STEPHAN, ANDREAS

    (Jönköping International Business School, DIW Berlin, KTH)

Abstract

This paper employs Porter’s diamond model to examine the relationships between a firm’s locational environment, its innovation capabilities, and competitive advantage assessed in terms of various performance indicators. This study implements a structural equation model that is estimated with the partial least squares (PLS) approach using a sample of 2,345 East German firms. This investigation shows that a high frequency of cooperation spurs firm innovativeness and performance, but that a strong focus on local demand impedes both. Various types of governmental support as well as the quality of locational factors tend to be more important for less innovative companies compared to the more innovative ones. The results indicate that strong local competition is an impediment to firm innovativeness and performance with conflicts which Porter’s prediction.

Suggested Citation

  • Eickelpasch, Alexander & Lejpras, Anna & Stephan, Andreas, 2010. "Locational and Internal Sources of Firm Competitive Advantage: Applying Porter’s Diamond Model at the Firm Level," JIBS Working Papers 2010-6, Jönköping International Business School.
    • Handle: RePEc:hhb:hjacfi:2010_006
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    Citations

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    Cited by:

    1. Eickelpasch Alexander & Hirte Georg & Stephan Andreas, 2016. "Firms’ Evaluation of Location Quality: Evidence from East Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(2), pages 241-273, March.
    2. Anna Lejpras, 2015. "Knowledge, location, and internationalization: empirical evidence for manufacturing SMEs," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 24(8), pages 734-754, November.
    3. Horbach, Jens, 2013. "Do eco-innovations need specific regional characteristics? An econometric analysis for Germany," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79927, Verein für Socialpolitik / German Economic Association.
    4. Poponi, Stefano & Piovesan, Gianluca & Fulco, Irene & Vessella, Federico, 2022. "Geolocation of mountain businesses: Identifying and characterizing clusters by altitude in the Central Apennines," Land Use Policy, Elsevier, vol. 120(C).
    5. Horbach, Jens & Rammer, Christian, 2017. "Energy transition in Germany and regional spillovers: What triggers the diffusion of renewable energy in firms?," ZEW Discussion Papers 17-044, ZEW - Leibniz Centre for European Economic Research.
    6. Anke Kutschke & Alexandra Rese & Daniel Baier, 2016. "The Effects of Locational Factors on the Performance of Innovation Networks in the German Energy Sector," Sustainability, MDPI, vol. 8(12), pages 1-18, December.

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