Political Competitive Advantage (PCA)
Dr. George Bowen,
The Queen’s College,
Oxford University
Introduction to, and Origins of, the Concept of Political Competitive Advantage (PCA).
My concept of ‘political competitive advantage’ (PCA)[1] is built upon core concepts derived from competitive advantage theory, the resource-based view of the firm and transaction cost/internalization theory.
I contend that government is a direct and indirect component of firm, industry and national competitive advantage, and should be included in the relevant strategic management theory.
Managers, especially those in multinational firms, spend a good deal of time dealing with government in one form or another. Points of contact with government are numerous, often department-specific and uncoordinated. Government contact ranges from reactively fulfilling statutory requirements, for example on health and safety, engineering, accountancy and employment to proactively working to secure government modifications either in legislation or in the implementation of legislation as defined by government bureaucracies. Examples of proactive persuasion of government are frequently to be found over local and national issues such as applications for planning permission, interpretations of tax and employment legislation, but also include supranational-level and high-profile cases before the World Trade Organization (WTO) over non-tariff barriers, fair trade and ‘dumping’.
PCA research examines the mechanism by which multinational enterprises (MNEs) derive strategic competitive advantage from political sources. Primarily it is concerned with the effect of government on the strategy and strategic management of multinational enterprises (MNEs). One focus of PCA research is the extension of the current competitive advantage, resource-based and internalization literature, to encompass firm-specific advantage derived from political, non-commercial sources termed “political competitive advantage (PCA)”. This definition is deliberately broad since the effects of government upon firm profitability are very varied and complex. From a practitioner viewpoint, an analytical framework that is not sufficiently flexible to permit a holistic strategic analysis and operationalization, is inadequate and PCA research also addresses operationalization issues.
The study of political competitive advantage lies within the overlapping fields of strategic management and international business: (Coase, 1937, 1960, 1988; Chandler, 1963, 1986; Ansoff, 1965, 1984; Caves, 1971, 1982, 1988, 1996; McManus, 1972; Caves and. Porter, 1977, 1978; Bower and Doz,1979; Doz,1979; Rugman,1979, 1981a, 1986, 1996a, 1996b; Teece, 1980, 1981, 1986; Porter, 1980, 1985, 1990, 1996, 1998b; Rumelt, 1981, 1982, 1984, 1991; Wernerfelt, 1984; Doz,1986b; Ghoshal,1987; Lipsey and Dobson, 1987; Ohmae,1989; Rugman and Verbeke, 1990a, 1992a, 1993c, 1995b, 2001; Williamson, 1991; Rumelt, Schendel, and Teece, 1991, 1993; Ketelhöhn, 1993; Peterlaf, 1993; Mintzberg, 1987, 1983, 1994; Markusen, 1995; Rugman and Hodgetts, 1995; Dunning, 1997; Toyne and Nigh, 1997; Bowman and Faulkner, 1997; Mintzberg, Ahlstrand and Lampel, 1998; Jones, 1998; Grant, 1998a; Thompson and Strickland, 1998; Segal-Horn, 1998a; Segal-Horn and Faulkner, 1999; Pitelis and Sugden, 2000; Rugman and Brewer, 2001).
[1] “Political” is defined in the Oxford English Dictionary (OED) as: “Of, belonging or pertaining to, the state, its government and policy; public, civil; of, or pertaining to the science or art of politics” but “government-derived competitive advantage” would be too narrow a definition. The reason for referring to “political competitive advantages” (PCAs), rather than “government-derived competitive advantages”, is that PCAs can be derived from any political source including NGOs, quangos, political parties and individuals, as well as from government.
