RETHINKING COMPETITIVENESS.

In the era of globalization, the forces that dictate and shape events are intense, dynamic, and numerous. This makes many of the existing conceptualizations about competitiveness and the global firm's role in society obsolete if not totally irrelevant. The global firm, for example, has experienced

both dramatic and novel changes. In fact, there is an understanding that global firms are the most influential actors in speeding along the course of globalization and integration. Nevertheless; the academic business literature still focuses solely on the old role and functions that firms play in society (e.g., increasing the financial return to shareholders, providing an acceptable work environment for their employees). Global firms, as world actors, assume various functions and are highly concerned with the conditions of life for both customers and employees around the world. Indeed, global firms assume three vital new functions on the global stage: integrating the world economy, facilitating the acceleration of profound social and technological changes, and improving the quality of life for members of the world community. These functions, in fact, are often discussed in the trade literature, and executives appear to take note of their involvement in carrying out these functions. This clearly means that there is a new arena for competition and that a firm's performance should not be judged solely by return on investment in the short term.

Global firms provide new and never-ending value to the world community. In addition, there is an increasing realization that today's competitiveness no longer stems from ownership of natural resources but from access to and acquisition of knowledge. These considerations warrant new thinking about competitiveness. At the national level, both sound definitions and comprehensive measurements of competitiveness have been provided in the last few years by the World Economic Forum (WEF) and the International Institute for Management Development (IMD). The WEF issues the Global Competitiveness Report (GCR). The GCR includes four indices: The Growth Competitiveness Ranking, Current Competitiveness Index, Economic Creativity Index, and Environmental regulatory Regime Index. All of the indices shed light on the national factors that sustain a higher level of prosperity. Similarly, IMD issues the Worm Competitiveness Yearbook. This report analyzes and ranks the national forces and conditions that sustain the competitiveness of firms.

The measurements that are provided by WEF and IMD are significant developments and necessary for theory building and understanding the direction and trends in national competitiveness. Nevertheless, it should be mentioned that during the colonial era, the colonial nations achieved high prosperity and a rapid growth rate in their per capita income. According to many observers, this was accomplished through careful exploitation of the natural resources and wealth of the colonized countries. For example, Russia during the Soviet era exploited the resources of the countries that were under its control such as Azerbaijan, Kazakhstan, and Turkmenistan, and left many of them in severe poverty. In the era of globalization, the emergence of the hegemonic nation could lead, contrary to expectations, to misuse of other countries' resources through various means, coercive seduction, and economic sanctions. In addition, the hegemonic state may be selective in its applications of certain principles (human rights, democracy, etc.). This selectivity can hinder global economic integration, just and equal distribution of wealth, and stability, and may mitigate against the creation of an environment conducive to normal business conduct and operations. Therefore, any measurement of competitiveness at the national level should include reference to civility in behavior and conduct at home and abroad.

At the industry level, Porter (1985) has contributed significantly to the understanding and measurement of competitiveness. His "Diamond" model provides a practical framework for dealing with complex competitiveness issues and ultimately an answer to many questions faced by both researchers and practitioners. Many researchers have suggested revisions and additions to the model. These suggestions, however, do not diminish the vitality of the original model.

At the firm level, however, conceptualization and measurement are vague and inadequate. It is certainly true that both Porter (1990, 1986) and Hamel and Prahalad (1994) have contributed to the advancement of the competitiveness literature. The first views competitiveness as "productivity growth." The second define competitiveness in terms of "core competence" a bundle of skills and technologies that a company has. These definitions are useful during the initial stages of intense internationalization of many firms' activities and the early emergence of a new era of competition. In addition to economic interdependence, however, globalization involves the integration and connectivity of business, political, and cultural affairs. These developments have caused the global firm to be the most important world actor. A new definition of competitiveness at the corporate level, therefore, should take into consideration the globalization reality, changing nature of competition, and the magnificent role that global corporations play on a worldwide scale. In this context, we suggest a workable definition of competitiveness: the ability of the firm to be imaginative and agile, either in defining competition or in shaping the existing competitive game to the firm's advantage. This definition stresses that a firm must be ahead of its competitors and must provide ever-changing value to the world community. Getting and staying ahead of competitors demands that corporations innovative and have an infinite capacity to detect and shape market opportunities and to improve quality and productivity. Providing fresh value to society means that the firms relentlessly improve their products/services to make better the quality of life and ensure that in their conduct and involvement the rights of any community is not violated. Certainly, a progressive construct of the above definition should include: productivity and quality improvement; product differentiation; innovation; technological improvement; marketing strategies; effective networking and alliances with other firms, influential groups, including non-government organizations; sound labor practices; respect of human rights; contributions to sustainable development, and positive involvement that enhances the welfare of the communities where they operate. The Body Shop, Microsoft, and Nestle, among others, have shown remarkable progress in revitalizing themselves while observing civility in their worldwide conduct, and a consistent respect for human rights.

It is our belief that competitiveness at the firm level is currently the most challenging and rewarding subject. Measuring it and providing a practical conceptual framework will set the stage for creative and sound theoretical development.

REFERENCES

Hamel, G. & Prahalad, C. K. (1994). Competing for the future. Boston: Harvard Business School.

Porter, M. (1986) (ed.). Competition in the global industry. Boston: Harvard Business School.

Porter, M. (1990). The competitive advantage of nations. New York: The Free Press.