Determinants of firm competitiveness in Latin American emerging economies

Abstract

Purpose – The aim of this paper is to theoretically model and empirically analyze determinants of competitiveness of Brazilian manufacturing firms. Going beyond traditional manufacturing management literature, it integrates firm-, inter-firm, and institutional level theoretical arguments to explain manufacturing competitiveness in emerging economy environments. Design/methodology/approach – The model investigates the influence of firm-, inter-firm, and institutional level factors on the competitiveness of individual companies. The authors surveyed 182 firms, and interviewed a representative sub sample of 15 general managers. The survey and interview questions covered practices at the three theoretical levels, as well as firm performance. In a subsequent step, the authors used this data to statistically model the theory framework through a structural equation system. Findings – The paper finds that institutional level support, in the form of stronger participation in institutional organizations, enhances the effectiveness of inter-firm links. Moreover, this institutional support also provides firms with information and other resources that foster the development of superior intra-firm practices and inter-firm relationships. In sum, the combination of inter-firm and institutional associations lead to stronger performance. Research limitations/implications – The model and findings cannot be generalized across other institutional environments (e.g. developed economies). Moreover, the interplay between horizontal and vertical relationships must be studied further. Last but not least, causality must be better established.Practical implications – Investments in manufacturing capabilities in Brazil have resulted in performance differentials. However, to accrue performance gains from such investments, firms must integrate those investments and alliance links with the appropriate institutional support, given the deficient institutional environment they are immersed in. Originality/value – The paper supplements traditional manufacturing management literature by integrating firm-, inter-firm and institutional level factors to understand the intricate forms by which firms in emerging economies accrue performance gains from their investments in manufacturing capabilities. Differently from other studies on emerging economies, the study spans beyond government investments in infrastructure to highlight that performance gains also depend on a cadre of other investments in firm-, inter-firm, and institutional practices.

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