Academic journal article Multinational Business Review

Unbundling the Construct of Firm-Level International Competitiveness

Academic journal article Multinational Business Review

Unbundling the Construct of Firm-Level International Competitiveness

Article excerpt

1 Introduction

Globalization and changes in the world economy over recent years have raised new challenges for firms, industries, and countries. As a result, competitiveness has become a "hot topic" among managers, policy makers, and academics. The analysis of firm-level international competitiveness builds upon the areas of international business, marketing, and strategic management literatures. Though benefiting from contributions from such different research streams, the literature on the topic remains fragmented and hard to identify. The construct of international competitiveness is often used in different and somewhat ambiguous meanings, and the lack of an organizing framework makes it difficult to "handle" this huge body of literature. Linking the concepts of internationalization, performance, and firm-level competitiveness, this paper sets forth a conceptual framework for the analysis of the different dimensions of international competitiveness, as well as the approaches of the studies in this field.

The paper is structured as follows. In the next section, moving from the distinction between competitiveness as a "driver" and competitiveness as an "outcome", a framework for positioning different research streams within the literature on firm-level competitiveness is presented. The analysis is then shifted from competitiveness, as such, to international competitiveness. The construct is unbundled into three dimensions: competitive potential (ex ante competitiveness), internationalization profile, performance (ex post competitiveness). Some key issues related to the analysis of each dimension are explored, as well as the way they relate to both one another and the construct of international competitiveness as a whole. Finally, directions for future research are outlined.

2 A framework of literature on firm-level competitiveness

Competitiveness can be analyzed at different levels, such as firm, industry, and country. Firm-level analysis focuses on behaviours and performance of firms. At the firm level, profitability, costs, productivity, and market share are all indicators of competitiveness. The concept of firm-level competitiveness is related to competitive advantage, which is central in strategic management studies ([77] Porter, 1985; [37] Ghemawat, 1986). A competitive advantage refers to the position of superiority within an industry that a firm has developed in comparison to its competitors. It recalls the concepts of asymmetry, differential, comparison, and rivalry among firms ([18] Chen, 1996; [70] Miller, 2003).

Competitiveness is also analyzed at industry level or "cluster" level ([80] Porter, 2000). The competitiveness of an industry can be assessed by a comparison with the same industry in another region or country with which there is open trade. Beyond firm- and industry-specific factors, in recent years globalization has emphasized the importance of country-related effects as determinants of performance ([44] Hawawini et al. , 2004; [66] Makino et al. , 2004). Resource endowments, cost of labour and production inputs, financial and technological infrastructure, access to markets, and institutional and regulatory frameworks are examples of country-specific factors that affect firm performance.

The different dimensions of competitiveness are closely related to one another: a country's competitiveness factors are determinants of its firms' international competitiveness. On the other hand, the most evident aspect of a country's international competitiveness is represented by its firms' competitiveness in comparison to other countries' firms. As it is based on comparison, competitiveness is a relative concept in the sense that criteria and variables used to measure such construct cannot be applied regardless of specific time and spatial conditions.

The importance of the analysis of competitiveness at the firm level is indirectly shown by research about the effect of firm-level factors on performance. …

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