Building Country-Specific Advantages (CSA): Understanding How FTZ Incentives Impact Strategic Plant Location and Buyer-Supplier Relationships

We explore how leading companies manage relationships in supply chains that are not formed by natural market forces. Rather, they were stimulated by exogenous forces, such as the Free Trade Zones that are created by the Government’s policy initiatives for purposes of regional development. We researched electronic industry in Manaus, located in the Brazilian Amazon Rain Forest. Multi-methods using qualitative, structured interviews, and quantitative approaches, structural modeling equation, were used. Results indicated that the companies settled for a location that they would not do under normal conditions and, secondly, that there was an expectation of externality as the makers of the strategy, in this case the public entity. Coordination among the members is not enough structured. No strategic supplier was found on the local FTZ, indicating that the local suppliers are only based on the premise of volume vs. logistics cost.