Edited by Adriaan Dierx, Fabienne Ilzkovitz and Khalid Sekkat
Chapter 3: Changes in the industrial and geographical diversifi cation of leading fi rms in European manufacturing
3. Changes in the industrial and geographical diversiﬁcation of leading ﬁrms in European manufacturing Laura Rondi, Leo Sleuwaegen and Davide Vannoni* INTRODUCTION For a long period the industrial policies of national governments in Europe aimed at reinforcing the position of leading ﬁrms in the country in order to face the rapidly growing competition from US and later from Japanese ﬁrms (Cox and Watson, 1996). The privileged position of these ﬁrms offered them substantial monopoly power within their markets, which, unfortunately, also often resulted in the use of many inefﬁcient practices. Most governments sustained the privileged position of these national champions through the erection of various kinds of non-tariff trade and investment barriers directed against foreign competitors and creating strong borders protecting national markets. The recognition that these policies failed and were partly responsible for slow growth, high unemployment and inﬂation after the ﬁrst oil shock in 1973 led the European Commission to formulate and implement an ambitious integration programme eradicating all the various barriers to trade and investment. The Single Market Programme came into effect in 1987 and was largely completed by the mid-1990s. The programme concerned mainly the manufacturing industries. Services sectors have more recently become the subject of integration measures. The macroeconomic and sectoral consequences of the integration programme have been intensively discussed in the literature. Surprisingly, the consequences for individual ﬁrms have hardly been documented. The present chapter represents an original attempt to trace the changing industrial and geographical diversification strategies of firms as...
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