The theory of comparative advantage states that you should allow another firm to perform work activities for your company if that company can do it more productively than you can.

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The theory of comparative advantage is a basic principle of international trade that suggests that each country should specialize in producing those goods or services that it can produce more efficiently than others and should trade with others for goods and services it cannot produce as efficiently. This principle applies to firms as well, as they should focus on their core competencies and outsource or partner with other firms that can perform certain activities more effectively than they can.

The Theory of Comparative Advantage States That You Should Allow