chapter  7
16 Pages

Globalization and Competitive Strategy in Europe’s Vulnerable Regions: Firm, Industry and Country Effects in Labour-intensive Industries

ByGORDON L. CLARK, THEO PALASKAS, PAUL TRACEY, MARIA TSAMPRA

INTRODUCTION and employment. Global competition has placed a premium on the adjustment potential of small-andAs the process of market integration reaches into the medium-sized enterprises (SMEs) in these ‘vulnerablemost remote corners of the European Union (EU) and regions’, suggesting a rather bleak map of future Euro-beyond, it is increasingly apparent that long-term strucpean regional growth. Even so, those firms and theirtural imbalances may be exacerbated by EU expansion regions that can enhance labour productivity throughand global competition (Hudson , 2002). Not withthe adoption of technology, innovation and productstanding case studies of the successful ‘exemplary development may be the winners in global markets,regions’ of the Third Italy and Baden-Wurttenburg, just as those firms not so adept may simply contributeGermany, many of Europe’s non-metropolitan regions further to existing poor rates of local employmentare dominated by labour-intensive industries and high creation and out-migration (Martin , 2001).levels of unemployment beset by competition from

The present paper looks closely at the adjustmentwithin and without an enlarged Europe. In many capacity of these types of firms concentrating on SMEscases, these firms are small family or community-

based organizations with low levels of capitalization in four labour-intensive industries located in vulnerable

regions of Europe. Using EU Objectives 1 and 21 status market share. This is an immediate implication of recent theoretical work by Greenwald and Stig-designations, a set of similarly placed regions was identi-

fied for five countries including Greece, Italy, Ireland, litz (1995) and matches the present authors’ intuitive understanding of the predicament faced by many ofSpain and the UK (Guerrieri and Iammarino,

2002). As for the industries, these included apparel Europe’s smallest firms. It could be also suggested that SMEs are more or less ‘competitive’ if they expand or(18), leather and footwear products (19), electrical and

electronic assembly (30-32), and automotive compo-maintain their sales in existing markets. Of course, there are more extensive definitions of competitivenessnents (34). Based on the results of a large multi-country

study of the competitive strategies of SMEs in such that would take into account firm’s strategic goals in adding new markets and/or expanding the range ofsettings, a series of important policy-related questions

was evaluated. For instance, holding the type of region products produced so that their share of market demand may increase over time. By beginning with the firm,constant, can consistent patterns of strategic adjustment

be identified across countries and within or between its market revenue and market share, it was also assumed that competitiveness is a characteristic of firms and theindustries? Most importantly, the data set allows us

to test whether the adoption of labour productivity resources – including geography and history – at their disposal, and is the result of strategic choices made byenhancing technology by SMEs facing heightened

market competition has changed the demand for labour their owners and managers.4 It is not the wish of the authors to exaggerate or idealize the scope of firm-in the home region of the firm, and whether govern-

ment policies have affected the adjustment potentials based strategic decision-making. If markets are highly competitive, firms’ strategic options may be veryof such firms.2