Manufacturing strategy and innovation in indigenous and foreign firms: an international study

Abstract

This paper examines manufacturing strategy and innovation as determinants of competitiveness by comparing indigenous and foreign firms from the International Manufacturing Strategy Survey (IMSS). To this end, we consider indigenous firms, those operating in their home country of origin whereas foreign firms are those who operate outside their home country in foreign host country settings. Manufacturing strategy is examined through clearly distinguished manufacturing priorities, practices and performance. This paper takes the perspective of the Resource Based View (RBV), which sees competitiveness as 'deploying resources in a distinctive way' through a combination of priorities and practices. In examining manufacturing strategy and innovation, we detected a number of differences and similarities between indigenous and foreign plants using data gathered in 17 countries. Although there is growing empirical evidence showing that international firms perform better in almost all areas than their domestic counterparts, we found that innovative firms are more competitive regardless of their origin.