REGIONAL COOPERATION AND ECONOMIC INTEGRATION

CEFTA-2006 AND ANHANCING COMPETITIVENESS OF THE REGION - SOME SECTORAL ASPECTS
in relation to the business environment, the physical infrastructure and the knowledge
infrastructure and the essential conditions of competitiveness that good policy inputs
create, including business performance metrics, productivity, labor supply and prices/costs
for business.
There is quite a large body of literature that examines the sources of competitive
advantage at the firm level. There are several approaches to competitiveness at the firm
level. One approach deals with resource-based view which examines internal resources
and competencies of the firm (Barney, 1991). Another approach explores the competitive
advantage as a positional advantage, which describes a firm’s low-cost or differentiation
strategy (Porter, 1985).
Firm performance is directly affected by competitive strategy (cost leadership and
differentiation) and manufacturing strategy (Amoako-Gyampah and Acquaah, 2008).
Theory suggests that successful companies can follow either or both a low cost or
differentiation strategy (Hall, 1980; Porter, 1980; Karnani, 1984). Both the competitive
position and resource-based approaches have been integrated into a theory of competitive
advantage that links sources of competitive advantage with positional advantage and
performance in a single model (Wensley and Day, 1988). The model posits that superior
skills and resources lead to positional advantage or competitive strategy which, in turn,
leads to superior performance in the marketplace, and the results of superior performance.
Key issues in the concept of competitive advantage deal with the questions of which skills
and resources are most effective, how they can be transformed into competitive positional
advantage, and which combination of differentiation and low-cost strategies will product
the best performance. Numerous previous studies have analyzed the causal links between
growth and profitability, exports and productivity, market share and profitability, R&D and
profitability, investments and growth, firms’ size and productivity and the like (Goddard et
al. 2005; Czarnitzki and Kraft, 2004; McKinsey, 2002; Koerner and Weiss, 2001; Bernard
and Jensen, 1999).
This paper focuses on one particular economic sector - manufacturing industry in Croatia,
which relies on the adapted competitiveness framework. This approach examines the
relationships between the firms’ characteristics, firms’ strategic behavior and their
performance. The conceptual framework used in this study is presented in figure 3.
This paper links three firms’ characteristics variables and nine strategic behavior variables
to value added per employee performance variable. A number of empirical studies have
focused on productivity as a surrogate measure due to the limited access to other performance
measures (Smith and Reece, 1999). Value added-based labor productivity is shown to be
the single most frequently used performance measure (Fischer and Schornberg, 2007).
219