In times of a digital economy, intensifying East Asian/Sino-African relationships, leapfrogging but also stuttering economies, China’s Belt & Road Initiative (BRI), and recent trade wars, new questions emerge about competitiveness.
Who is winning, who is losing, and why?
Harvard University Professor Michael Porter has long introduced ideas such as “competitive advantage” and the “competitiveness of nations” that can be used to explain changed market dynamics.
In a novel way, Seoul National University’s (SNU) and Macquarie University’s collaboration developed a new construct titled Competitive Productivity (CP). This paradigm shift looks at CP at three levels:
- The nation (macro level) with national competitive productivity (NCP).
- The firm/organisation (meso level) with firm competitive productivity (FCP).
- The individual worker or student (micro level) with individual competitive productivity (ICP)
Leapfrogging individuals, firms/organisations and nations follow CP: “In essence both an attitude and behaviour directed at beating the competition or at least better one’s own performance through pragmatism”.
Often management approaches for a nation, a firm or even an individual have isolated perspectives, detached from the competition. CP dictates to measure and manage performance with that relative lens, that is in relation to the competition and/or one’s own previous performance.
This shift is well reflected in the auto manufacturer industry. Some markets have been “priced” out of the market with such isolated cost/pricing perspectives. For example, Australia once hosted Holden, Toyota, Mitsubishi, Nissan and Ford car factories, but they have all but disappeared.
East Asia, Eastern Europe and Thailand have taken over as competitive places for car manufacturing. Cars may be designed in Western design studies in Germany or California, but the profitable brands manufacture elsewhere.
Firms with a CP spirit have taken over struggling brands. India’s Tata has a pragmatic approach labelled “jugaad” (meaning that frugal and flexible innovators adapt quickly to unforeseen situations in an intelligent way) and that has taken over British brands such as Jaguar and jump-started their brands and products.
Or the Chinese conglomerate Geely Holding Group took over Sweden’s Volvo which was on the verge of bankruptcy, and Chinese management has turned around the brand as an innovative premium brand. Volvo is now at the forefront of green cars, but with an up-market positioning, not least targeting the emerging wealthy Chinese upper middle class.
Education and Management styles based on Confucian dynamism appear to result in strong performance at the individual (micro) level.
Educational systems that encourage strong competition among students for entrance into high-ranking universities is also an example of CP, and so is East Asia’s Confucian-based pedagogy with a focus on a disciplined learning environment.
Societies with strong performance at the individual level would, by the very logic, also have firms and organizations that would perform strong, and ultimately this would be reflected in high levels of national competitiveness, or national competitive productivity (NCP).
In developing markets, previous Western approaches of “foreign aid” were not always designed to fuel an attitude and behaviour that would improve performance. It is now that East Asian nations and their conglomerates transfer capital and CP to developing markets like Africa and areas along the BRI that now develop.
Schools, infrastructure are built, and factories set up. East Asian technology and innovation is transferred along with educational programs such as Confucian Schools that aid with the build-up or improvement of CP. In other words, Confucian dynamism brought CP to other parts outside the Confucian orbit and this is increasingly leading to enhanced prosperity.
The CP construct itself has an interesting journey. It first emerged in 2013 in the media, including in The Korea Times, and has now emerged as a scholarly piece in the Cross Cultural & Strategic Management (CCSM) journal as an article titled: Competitive Productivity (CP) at macro-meso-micro levels.
In a special issue in the same journal (CCSM), CP shall be tested how it drives outcomes such as welfare of a nation, profitability of a firm, and life satisfaction of employees/students.
In times of artificial intelligence (AI) and robotics, new technologies and new business models, disruptive innovations, challenges with climate change and new solar, wind and water technologies, many youngsters in the gig economy, a fresh look at business dynamics more broadly is necessary, with CP offering that paradigm shift.