Academic journal article Journal of Competitiveness Studies

Looking for a Distinctive Model with Which to Analyze Competitiveness

Academic journal article Journal of Competitiveness Studies

Looking for a Distinctive Model with Which to Analyze Competitiveness

Article excerpt

INTRODUCTION

Trade theories based on competitiveness led by Michael Porter are consistent with the realities of developed countries. However, developing countries require a methodology that can be adapted to their own environment. Additionally, there are criticisms about the role of governments and the international field which are restricted by their "domestic" diamond of competitiveness. Some developing countries have linked their schemes of management to business schools from developed countries. However, there is no empirical evidence that the thorough use of the mainstream model has affected the outcome of government policies implemented by developing countries. Therefore, there are many doubts as to whether these methodologies are a true reflection of the competitive environment in which enterprises operate.

This paper proposes a more flexible model than the existing mainstream model. Business conditions in developing countries need different approaches and determinants such as government and external sectors which are set apart from the mainstream model and which are also critical for current market conditions. It assumes that the resulting model does not have limitations when applied to sectors and/or countries with dissimilar levels of development. That is, the present model is comprehensive, but also flexible. Furthermore, the role of governments is increasingly important under our current economic conditions and transnational firms (not necessarily corporations) are reassessing the concept of competitiveness which has been limited to the domestic sphere by the mainstream model.

This work is the result of a review of literature regarding different models of competitiveness where elements are drawn to make a comprehensive and eclectic scheme that applies to companies in countries with different development levels.

This paper proposes a cluster-value chain model using the determinants of competitiveness set by "Porter's Diamond" (1990), making some adjustments in the relationship between the government and the external sector both located analytically as exogenous to the model by Porter and including the meso-level of analysis, as an input of the German Development Institute's Systemic Model of Competitiveness.

For the plan of the model, the first step requires a definition of competitiveness to serve as an analytical parameter of location. In the second part, concepts of value chain and cluster will be discussed. Thirdly, mainstream model assumptions which are subject to criticism need to be established and those cases adapted to the conditions of competitiveness as featured by the model. The last part will offer some conclusions.

CONCEPT OF COMPETITIVENESS

There is a consensus that there is no single definition for competitiveness (Krugman, 1994; Ezeala-Harrison, 1999; Mahmood & Ezeala-Harrison, 2000; Chavarria et al., 2000; Ibañez, 2001). The definition is the one that the researcher or policy maker uses in order to fit their own model. For this article, specifically, there is an analytical difference between two concepts: competitive environment and competitiveness. It is essential to understand competitive environment as the analytical space where businesses, industries, sectors, and resulting products are located and cooperate to reach international success.

The first element to consider is the level of analysis where the concept has to be placed. That is the analytical space of aggregation to locate a definition. Considering economy as the discipline involving competitiveness, one can speak about the macro and micro levels of analysis. German scholars have included the meso - level (Altenburg et al., 1998, Meyer-Stamer, 2001) as an intermediate between the macro and micro level and where specific policies apply to specific sectors.

A stable macroeconomic environment is required to develop the competitiveness of firms, sectors, and/or industries at the micro level. …

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