THE FACTORS OF COMPETITIVENESS SUSTAINABILITY UNDER CIRCUMSTANCES OF GLOBALIZATION

Abstract

Over the last decade trade liberalization and globalization processes have significantly increased customer expectations and competition between enterprises. In order to respond to the globalization process and benefit from global market opportunities, enterprises face two main challenges: to transform themselves and increase their individual competitiveness and to take synergy effects created by firms’ agglomeration. Numerous studies demonstrate the direct link between globalization and increased SMEs performance. Pro-active globalization reinforces growth, enhances competitiveness and supports the long term sustainability of companies. Yet European SMEs still depend largely on the domestic market despite the opportunities and threats brought by globalization and most importantly, by the enlarged single market. This situation directly curtails SMEs possibilities for greater growth and job creation and reduces a firm’s competitive position as globalization fosters firm competitiveness.

In general, small firms compete based on a narrow focus and specialization, not only with regard to products, markets and customers, but also on price, cost and manufacturing capability. The major competitive priorities for SMES are the quality of design and production, delivery speed and dependability, flexibility and responsiveness to customer requirements, whilst cost is less critical. Because management in these firms is typically informal, competitive advantage often arises accidentally. Strategies emerge through incremental learning processes and tactical decisions. The competitiveness sustainability of small firms is generally attributed to the managerial skills, training and education and the personal background. A second important success factor is the location of the company and in particular the “externalities” that could come from a local area of concentrated and specialized SMEs. Firms located industrial districts benefit from agglomeration effects. A third source of competitive advantage is managerial practice. The main aim of this paper is to investigate the factors of firm’s competitiveness sustainability under the circumstances of globalization and trade liberalization.