Competitive strategy of small firms: the two mechanisms of competitive advantage

Introduction Following recent changes in global business environments, the competitiveness of manufacturing firms in Japan is beginning to be recognized (Fujimoto, 2004). However, this argument focuses on large manufacturing firms. By contrast, the attention paid to small manufacturing firms (SMFs) is insufficient and thus we need to articulate the competitiveness of these firms, which underpin the strength of manufacturing capabilities in Japan. The examination of the competitiveness of Japanese SMFs may help researchers understand their distinct characteristics for the first time. Therefore, this study captures the fundamental factors that bring about their competitiveness.