Strategies for Enhancing the Competitiveness of MNEs

Strategies for Enhancing the Competitiveness of MNEs

Neeta Baporikar (HP-GSB, Namibia University of Science and Technology, Namibia)
DOI: 10.4018/978-1-5225-0276-0.ch003
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Abstract

Globalization has dramatically changed the competitive landscape in many national markets. Dunning (1993) provided evidence that Foreign Direct Investment (FDI) had doubled and even tripled in the last fifteen years in Less-Developed Countries (LDCs), generating a tremendous impact on the economic development and welfare of these countries. Yet, less attention has been given to the role that domestic customers and domestic competitors play in shaping the strategic behaviour and performance of MNEs in the targeted markets and the strategies which need to be adopted to enhance the competitiveness of MNEs. Through grounded theory approach and in depth literature review, the chapter aims to examine the positioning of MNEs to extend existing perspectives and incorporating competitive interactions between the external environments, competitive strategy and in particular, evaluates the strategic positioning and competitive behaviour of MNEs.
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Background

Competitiveness is a concept very discussed among academics and it has been applied to several levels of analysis; the most pertinent applications of it is at firm level because it refers to a comparative notion of competition or market gains, but it has also been broadly applied at the national level in last decades (Fagerberg, 1996; Nelson, 1993; Porter, 1985; Roessner et al., 1996). A general definition of competitiveness relates to productivity and growth of countries (Krugman, 1994) while the more tractable one focuses on the ability of a country to compete by exporting (Fagerberg, 1996; Lall, 2001). Most of the time, the concept of competitiveness reminds us of competitive advantage. According to the largely consolidated view of competitive process, a firm’s performance is affected by its competitive advantages. In its turn, the nature of such advantage results in one or more specific sources of competitive advantage which a firm controls. The concept of competitive advantage is central in strategic management studies (Porter, 1985; Ghemawat, 1986). It recalls that of comparison and rivalry. It can be interpreted as “the asymmetry or differential among firms along any comparable dimension that allows one firm to compete better than its rivals” (Ma, 2000: 53). A competitive advantage refers to the position of superiority within an industry that a firm has developed in comparison to its competitors. Firm level competitiveness indicated a firm’s ability to design, produce and market products superior to those offered by competitors, where superiority can be evaluated from several factors, like price, quality, technological advancement, etc.

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