Performance of the Firms in a Free-Trade Zone: The Role of Institutional Factors and Resources

What is it about?

Many countries have tried to establish free zones in order to strengthen the competitive advantage of their local companies in global competition. Judging the role of free zones in the performance of companies without analyzing the relevant institutional factors can be confusing, especially in countries like Iran where the government extensively intervenes in the economy. In such economies, institutional factors (institutional support, political relationship, and legitimacy) coupled with resources (financial, human and physical resources) can be more effective at addressing companies’ performance. Using the resource‐based view (RBV) and institutional theory, this paper surveyed 151 companies located in the Anzali Free Trade and Industrial Zone (AFTIZ). The results show that the resources have a positive impact on the firms’ competitive advantage and performance. While institutional factors strengthen the resources, they do not moderate the relationship among resources, competitive advantage, and performance.

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Why is it important?

This research is one of the first studies that explores institutional factors in free trade zones.