Competitive Advantage in Global Production Networks: Air Freight Services and the Electronics Industry in Southeast Asia

Abstract

Abstract: Drawing upon Porter's diamond theory of competitive advantage and recent work on global production networks (GPNs), this article examines the causes and consequences of spatially uneven air freight services. Air freight flows have grown rapidly because airborne trade enables firms to reconcile time‐based competition and spatially dispersed production. The importance of air freight services in this regard is particularly relevant to electronics manufacturers. Case studies of freight forwarders—the traditional intermediaries between the firms that send and receive goods by air and the airlines that actually move air freight from city to city—in Singapore, Malaysia, and the Philippines are used to demonstrate the manner in which firms and places attain a competitive advantage in the performance of these services and how geographic variation in air freight services, in turn, affects the operations and performance of electronics firms. Finally, the article discusses the importance of these services in mediating the ability of firms and places to move to new positions along the value chains of which they are a part as their former roles become untenable.

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