Outline – Revised : February 99
Competitive Advantage, Political Advantage and Alliances in the Global Textile Industry: A Study of Relationships between States, Regions and Multinational Corporations.
George Bowen, Templeton College, Oxford University
Supervisor: Professor John McGee.
0. Thesis Outline – Summary
This thesis examines the relationships between Multinational Enterprises (MNEs) and Government and specifically the effect of government on MNE competitive advantage. “Government” is defined here to include regional, national and supranational government and is denoted below as “Government(RNS)”. Various bodies of literature related to the firm, competitive advantage, foreign direct investment, alliances and trade barriers are reviewed. Propositions have been formulated, alternative methodologies assessed and appropriate methodology is selected in order to evaluate the effect of Government(RNS) on firm-specific competitive advantage. The context within which the thesis is embedded is a study of the global textile industry and a brief summary of this work, covering the key thesis issues, is included. Qualitative and quantitative data from the global textile industry has been collected relevant to the study of the impact of Government (RNS) on the market and competitive position of one multinational company within the global textile industry. The position of this MNE within the context of the global textile industry is discussed. The data is examined against a series of conceptual frameworks and hypothetical norms, which have been developed into an issue/area analysis. In the light of this analysis some conclusions are drawn about the impact of Government(RNS) on the global textile industry and on other industries. These conclusions are related to the fields of strategic management and international business studies, to government policy and to the MNE. An embryonic theory of “political competitive advantage” is developed.
Thesis Outline
Chapter 1 examines the literature and conceptual frameworks upon which this thesis is based and outlines the research developments which have led from classical economic theory to recent theories of the firm and the Multinational Enterprise MNE. The concept of competitive advantage and the role of government within it is reviewed, together with recent literature on the MNE and government. The term “Government(RNS)” is used here to collectively embrace regulatory bodies at a regional, national, and supra-national level, crucially including such non-governmental bodies as the World Trade Organisation(WTO).
Recent micro-economic literature on the firm is linked to resource-based strategic management theory. The importance of contextual firm-based and industry-based studies is assessed. Three key areas are identified within the literature – foreign direct investment(FDI), trade protection and MNE/Government(RNS) alliances. The concept of “political competitive advantage” is formulated.
Chapter 2
Places this thesis within Strategic Management Studies and the Resource-Based Theory of the Firm. The research propositions are set out. If validated these propositions would justify the introduction of a new concept of political competitive advantage(PCA) and modify the Theory of Competitive Advantage.
Chapter 3 discusses the paradigmatic assumptions on which this research is based and attempts to justify epistemological and methodological approaches selected. The concept of the paradigm is reviewed along with potential qualitative and quantitative methodologies which are reviewed and assessed as to their suitability to support the research. Appropriate research methodologies are selected and justified. In as far as it is possible within the confines of the thesis format, a grounded phenomenological approach is adopted, using the concept of contextual longitudinal study. A historical analysis methodology is adopted to help create order from a mass of data and to help identify patterns of behaviour. Issue-area analysis is used and hypothetical norms are developed to facilitate a global comparison of the effect of Government(RNS) on the competitive advantage of firms in diverse countries. The background to this study of MNE/Government(RNS) is a longitudinal and contextual study of the global textile industry. A time line has been constructed, where the horizontal level refers to the sequential interconnectedness among phenomena in historical, present and future time, and the vertical level refers to significance of interdependencies between phenomena. This contextualist mode emphasises embeddedness and the need to explore context and action. The context is a product of the action and vice versa. Explanations of change are not simple or singular, but are bound to be holistic and multifaceted. The methodology selected owes much to Pettigrew and Brewer, allowing the research and the theory developed interactively. Rather than setting out to prove or disprove a central hypothesis, the idea is to study various dynamic propositions about MNE/Government(RNS) relationships in the context of the global textile industry.
Chapter 4.
The context into which this thesis is embedded is a study of the global textile industry.
This chapter combines a general overview of global textile industry structure with an introduction to its component parts. This chapter seeks only to give a broad overview of the industry and its structure, and to take a closer look at certain areas which emerged as the fieldwork developed. In spite of the fact that textile and clothing industry remains the largest employer of labour in the world, both in the industrialised regions and the lesser-developed regions, there has been very little academic study of the industry. There is a wealth of technical, sector, and individual country data, usually sponsored in one way or another, by the industry itself, as well as production and demand statistics produced governments. In the last twenty years only one book has attempted to cover the whole industry and this in the form of a student text-book. In the late 70s an attempt at industry study was made in three parts but this work has never been extended or updated. No literature exists connecting recent developments in strategic management theory to the global textile industry.
The role of government in the textile industry is enormous. Governments(RNS) have changed global trading patterns and yet the literature on globalisation and on government policy barely mentions the textile industry. The field of development economics has considered the textile industry in more detail because of its important role in the industrialisation process, but this literature sheds little analytical light onto MNE/Government relations or on MNE strategic management issues.
Finally this chapter looks in detail at the global textile industry in relation to the three key themes identified in chapters 1 and 2: FDI, Trade Protection and MNE/Government(RNS) Alliances.
Chapter 5.
Data has been collected from the global textile industry relevant to the study of the impact of Government(RNS) on MNE competitive advantage. The value chains and financial results of textile MNEs are examined. Frameworks have been developed to help analyse the data. Hypothetical norms have been constructed showing different levels of Government(RNS) intervention and of MNE/Government(RNS) relationships. These norms are compared to quantitative and qualitative data from multinational subsidiaries of a global textile MNE producing similar products in different countries. The contextual history of this multinational textile company is set out and reviewed. An evaluation is made of the effect of Government(RNS) on the market position and competitive position of this MNE. An attempt has been made to estimate the size and significance of ‘political competitive advantage (PCA)’ within the whole global textile industry. Some possible practitioner lessons for MNE strategy and management are set out and discussed.
Chapter 6.
This chapter draws general conclusions for strategic management, international business and government policy. An embryonic theory of “political competitive advantage” is developed which inserts the role of government and MNE/Government(RNS) relations into the existing theories of MNE competitive advantage. This thesis concludes that Porter and post-Porter analyses have largely neglected the importance of MNE/Government(RNS) relationships which can be a critical element of MNE competitive advantage and it is argued that a new framework for MNE/Government(RNS) relationships is urgently required. An attempt is made to insert the concept of ‘political competitive advantage(PCA)’ into contemporary strategic management studies. Finally this chapter points to the weaknesses in this thesis and outlines areas for further study.
