Competitiveness is the ability of a firm to produce goods and services that successfully match the market’s needs. Firms compete with one another over their share of domestic and global markets. A firm’s competitiveness depends on its ability to innovate and upgrade, to adapt quickly to market changes and to improve quality by expanding its market share at the expense of less-efficient firms. To improve efficiency, firms focus on core competencies and reduce costs by frequently reducing employment and outsourcing noncore functions to less-developed countries. Although less precise and more difficult to define, competitiveness is also used to evaluate the economic performance of cities, regions and countries.
Published in Chapter:
Scales and Dynamics in Outsourcing
Iva Miranda Pires (Faculdade Ciências Sociais e Humanas, Portugal) and Torunn Kvinge (Fafo Institute for Labour and Social Research, Norway)
Copyright: © 2008
|Pages: 8
DOI: 10.4018/978-1-59904-885-7.ch184
Abstract
Outsourcing is used to describe the situation where a firm decides to subcontract assembly and/or service functions to an external supplier, either locally or abroad. When activities are subcontracted abroad, the term offshore outsourcing often applies. While offshore assembling activities have taken place for some time, the phenomenon of outsourcing services abroad is quite new. Several factors have contributed to these altered circumstances. First, the development of information and communication technologies (ICT) implies that services can, to a great degree, also be located at arm’s length or elsewhere in the flat world (Friedman, 2005). Second, institutional changes have opened access to new markets for goods and services as well as skilled labor, for instance in Eastern Europe and China. Third, the increased competition through globalization pushes firms to adapt quickly to new contexts and to achieve efficiency in order to maintain competitiveness.