The Competitiveness of Firms and Regions

Abstract

In traditional location theory there is a distinction between factors of production for which the costs differ significantly between locations, on the one hand, and production inputs which are in practice available everywhere at more or less the same cost (i.e. so-called ubiquities) on the other. In this article, we discuss the process whereby some previously important location factors are actively converted into ubiquities. With an admittedly rather horrendous term, we label this process ‘ubi-quitification’. It is argued that ubiquitification is the outcome of the ongoing globalization process as well as of a process whereby former tacit knowledge gradually becomes codified. Ubiquitification tends to undermine the competitiveness of firms in the high-cost areas of the world. When international markets are opened up and when knowledge of the latest production technologies and organizational designs become globally available, firms in low-cost areas become more competitive. In a knowledge-based economy, as a consequence, firms in high-cost areas must either shield some valuable pieces of knowledge from becoming globally accessible, or be able to create, acquire, accumulate and utilize codifiable knowledge a little faster than their cost-wise more favourably located competitors. Focusing on learning processes, the article maintains that most firms learn from close interaction with suppliers, customers and rivals. Furthermore, processes of knowledge creation are strongly influenced by specific localized capabilities such as resources, institutions, social and cultural structures.