Strategizing by the government: Can industrial policy create firm-level competitive advantage?

Authors

  • Sergio G. Lazzarini

    Corresponding author
    1. Insper Institute of Education and Research, São Paulo, Brazil
    • Correspondence to: Sergio G. Lazzarini, Insper Institute of Education and Research, Rua Quata 300, Sao Paulo, SP 04546-042, Brazil. E-mail: SergioGL1@insper.edu.br

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Abstract

Despite the prevalence of governmental action devised to foster firms and industries, the link between industrial policy (IP) and competitive advantage has received scant attention in strategic management. I propose a model where such a link is mediated by the accumulation and churning of local resources and capabilities. I also introduce the concept of support-adjusted sustainable competitive advantage (SASCA), which occurs if a firm's observed performance is superior to the expected performance of competitors had they received the same array of policies. I argue that achieving SASCA through IP is a difficult endeavor and requires the interplay of three conditions: insertion in global production networks, geographical specificity, and governmental capability. Thus, the model expands the potential determinants of competitive advantage into the context of governmental intervention. Copyright © 2013 John Wiley & Sons, Ltd.

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