Identify the key routines and capabilities of your firms. How were they developed? Key capabilities of Adidas are in depth costumer knowledge and understanding. Niche marketing and longstanding sponsoring relations with the German national team and a lot of prestigious sporting events, as well as high quality products, earned Adidas a strong, difficult to replicate, brand recognition. Adidas is able to sell their shoes at a premium, but is still selling them cheaper than its prime competitor Nike. Adidas is an innovative company that invest a significant amount of financial resources into research and development; with their removable spikes and the intelligent shoe designed, Adidas was able to drive the innovation of the entire industry. Adidas has production facilities in Europe and North America and has a huge historical output leading to a smooth production process, excessive knowledge, understanding of different production processes, as well as a cost advantage due to its mass production. In addition, many patents concerning high end materials, modern fibers, etc. give Adidas a certain technological advantage within the athletic-shoes industry. Can Evolutionary Economics help us understand the long-term evolution (and associated performance) of your firm? Explain. Evolutionary economics is not able to accurately explain Adidas’s portfolio diversification and positioning within the industry. Even though they started out only producing athletic footwear in