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This research aims to provide a new perspective on the evolving linkages between LAs and FSAs in the context of the technology-based manufacturing industry. Firm-level competitive strengths in an international context build upon the combination of (largely) exogenous location advantages (LAs) and endogenous firm-specific advantages (FSAs). The authors focus especially on the decay of LAs over time, which has been observed in many highly developed countries during the past decades. The authors show how the strengthening of FSAs can substitute for decaying LAs, thereby safeguarding against the demise of entire industrial regions.

The authors examine the technology-based manufacturing industry in Belgium, building upon an analysis of survey responses by 66 firms including a subgroup of 26 multinational enterprise (MNE) subsidiaries. The professional association representing this industry in Belgium (Agoria) viewed the firms included in the survey as representative for Belgian technology-based manufacturing in terms of the LAs they presently build upon (or location disadvantages they face) and the internal strengths they command relative to (foreign) rivals. The investigation uncovered the decay of critical LAs in Belgium and in parallel, the rise of ‘compensating’ FSAs of Belgian operations relative to foreign firms, including, especially, MNE sister subsidiaries in other countries. The authors also conducted 23 in-depth interviews with senior level managers (CEOs and senior vice presidents) of technology-based firms, including 10 subsidiaries of foreign-owned MNEs, which validated our analysis of the interplay between LAs and FSAs.

The findings reveal that since inception, Belgian manufacturing operations experienced an overall decay in their critical LAs by 23% on average. Despite this, several Belgian subsidiaries of foreign MNEs consider themselves as commanding a resource-base superior to that of the next-best-in-class subsidiaries. Furthermore, when assessing the dynamic interplay between LAs and FSAs, there is some evidence that the decay of LAs fueled the quest for – and firm-level journey toward – stronger FSAs.

The originality of this study is the alternative perspective to the conventionally assumed “positive-positive” relationship between LAs and FSAs. Prior management research has not examined the impact of decaying LAs on new FSA-creation in the realm of technology-based manufacturing.

The purpose of this paper is to offer a systematic assessment of the magnitude of transaction costs of public infrastructure delivery, based on the three attributes of transaction costs, being the asset specificity, uncertainty and frequency of a transaction.

Non-parametric tests were used to test the transaction cost differences between different procurement types.

The authors find empirical support, based on a sample of 172 public infrastructure projects in Belgium, that construction firms make higher relation specific investments to their transaction partners under a public-private partnership (PPP) than a under a traditional public procurement (TPP). In addition, the authors found that PPP transactions are burdened by a greater uncertainty and a less mature market than TPP transactions.

Given the complexity of this research, the scope is limited to: a strict distinction between two procurement types, one geographical area, a limited time scope and a focus on the private sector. Hence, the authors suggest that further research broadens the scope of either one of these aspects in order to get a better understanding of the total transaction cost burden of the public infrastructure market.

This study offers policy makers form a better understanding of the transaction cost implications when evaluating different procurement types.

This paper serves as one of the first systematic comparative analyses of the magnitude and determinants of transaction costs for the delivery of public infrastructure.