eThesis - Kauppakorkeakoulun sähköiset gradut

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Objective The main objectives of this study are to contribute to the largely under-researched area of paired border cities by identifying the potential competitive advantages border cities may possess, and also the ways in which they can be analyzed and utilized. The two case paired border cities, Nogales-Nogales at the U.S.- Mexico border and Imatra-Svetogorsk at the Finnish-Russian border, demonstrate the opportunities and the existence of competitive advantage in paired border cities. The competitive advantages will be approached through the following question: ”How can border cities as a pair upgrade their competitive advantage?”

Methodology The theoretical part of this study is based on literature on economic geography and competitive advantage. The empirical data in this comparative case study consist of semi-structured interviews, personal perceptions, and border city seminars. The secondary data consist mainly on academic writings. A modified version of Porter’s diamond model of national competitiveness was utilizes as a foundation for theoretical framework. The main determinants of paired border cities examined in the empirical part are 1) factor conditions, 2) demand conditions, 3) related and supporting industries, and 4) business strategy, structure, and competition. Each determinant alone and together with other factors contributes to or detracts from competitive advantage.

Findings and conclusion Paired border cities face many obstacles for development, and that is why the location at the border is often believed to hinder development. However, the advantages the location brings can be significant. The main findings of this research suggest that paired border cities do have potential to gain competitive advantage created by the location, and therefore may succeed better than other cities. This, however, requires policy makers in paired border cities to understand that the cities are constantly competing with other regions and cities. When considering cities, customers are companies, industries and clusters who bring tax revenue. In order to attract more companies to the region, paired border cities should take advantage of the competitive factors created by their locations and act in an entrepreneurial way by identifying, evaluating, and exploiting competitive opportunities.

The modified version of Porter’s diamond model provides paired border cities a framework for recognizing their weaknesses and strengths, thus helping them to concentrate their resources on the right industries and clusters. This is especially important as cities cannot be competitive in all industries. Therefore, cities should be able to identify their competitive advantages, find out the industries that best match their strengths, and then market themselves to those industries.