The Role of Science and Multinationals
Edited by Grazia D. Santangelo
Chapter 6: Creating, Importing and Losing Competitive Advantage: Evidence from the Austrian Manufacturing Sector
Christian Bellak 1. INTRODUCTION There is considerable interest from governments in policies to boost the competitiveness of ﬁrms within their jurisdiction. Designing the ‘right’ policies, which eﬀectively stimulate the ﬁrms’ competitive position in markets, requires not only information on the present competitiveness of a country’s ﬁrms, but also some prediction about the behaviour of domestic and foreign ﬁrms in diﬀerent industries in the future. The possibility exists that policy measures become ineﬀective if they counteract or do not aﬀect the ﬁrms’ strategies at all. Governments have several options in maintaining the competitiveness of their countries and regions: domestic ﬁrms create competitive advantage; foreign ﬁrms investing in the country transfer (‘import’) competitive advantage from their parent; and the linkages which exist between these two groups of ﬁrms may lead to new advantages that could not be developed by either group of ﬁrms alone. A similar argument about the creation of competitive advantage applies to the loss of competitive advantage. It has been argued in various studies that the response of a multinational enterprise (MNE) to a deterioration of its market share or the discovery of new market opportunities (e.g. new markets, new product or process technologies) depends on the current sources of competitiveness, but empirical evidence is still scarce. The conﬁguration of these sources ﬁrst determines whether the ﬁrm will choose to produce in the same location or shift production to a new location; and/or second, whether domestic ﬁrms will supply the good/service or whether this...
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