A System Dynamics Approach for Assessing Business Competitiveness
25 Pages Posted: 5 Jan 2017
Date Written: September 2016
The analysis of the interconnectedness between resources and capabilities, and the way organizations use them as competitive weapons have become a central element of the strategic management literature. Drawing on the resource-based view and the configuration theory, this study proposes a multidimensional competitiveness index formed by ten competitive pillars that incorporates system dynamics in the analysis. Using a unique sample of 625 Hungarian small and medium-sized firms, we empirically illustrate how the proposed index functions for managerial decision-making. Results show that the impact of competitiveness-enhancing strategies is conditional on the configuration of the businesses’ system of competencies. Low-competitive businesses benefit more from investments in the weakest competitive pillar, while strategies oriented to improve more than one competitive pillar yield higher competitiveness improvements among high-competitive businesses.
Keywords: Competitiveness, resource-based view, system dynamics, small business
JEL Classification: L25, L19
Suggested Citation: Suggested Citation