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DOMESTIC MARKETS AND INTERNATIONAL COMPETITIVENESS: GENERIC AND PRODUCT‐SPECIFIC COMPETENCIES IN THE ENGINEERING SECTOR
Author(s) -
ARORA ASHISH,
GAMBARDELLA ALFONSO
Publication year - 1997
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/(sici)1097-0266(199707)18:1+<53::aid-smj919>3.0.co;2-v
Subject(s) - business , industrial organization , international market , product (mathematics) , new product development , marketing , international trade , mathematics , geometry
This paper develops a theory of how the size of the domestic market shapes firm competencies. Our theory implies that large markets are beneficial even if factors such as economies of scale or learning effects are absent. We validate our model by an international comparison of the performance of firms that provide engineering services to the oil and petrochemical industry. We conclude that, relative to the United States, the competitiveness of European or Japanese industries is greater in activities whose underlying competencies are not product specific and can be utilized across a variety of products. The benefits of large markets are greatest for activities based on product‐specific competencies. © 1997 by John Wiley & Sons, Ltd.