Transactional innovation as performative action: transforming comparative advantage in the global coffee business

Abstract

We present a theory about the role of transactional innovation in transforming comparative advantage of countries into competitive advantage of firms in international trade. We test this theory in analyzing one case study, the shift of parts of the Brazilian coffee business from the commoditized to the de-commoditized regime that was triggered by one single Italian quality coffee company. New transactional capabilities created by entrepreneurial action allow performing comparative advantage in novel ways, thus changing the social ontology of international trade as embodied in particular products, such as coffee beans.