Country-Specific Competitive Advantages of Manufacturing Sector Firms in Eastern EU Member States

Egidijus Rybakovas


Rationale. Manufacturing sector is the most active and intensive in international cooperation and competition. The level of firms’ domestic and international competitiveness is determined by number of internal as well as external factors. The clasical competitive advantage model developed by Michael Porter emphasizes the importance of the competitive environment within a home country. Other theories also had made its emphases on the survival potential of a firm as being propelled by innovation and determined by their external environment.

Purpose.  The article is aimed at investigating impacts of competition related factors in external environment on the firm’s competitiveness. The primary question of this study is: do the competition related factors in external environment advance the competitive positions of manufacturing firms in Eastern European Union countries?

Methodology. The character of home country competitive environment in this study was measured using following parameters: the number of domestic and foreign business competitors, customers, suppliers, the level of competitive pressure from domestic and international competitors, as well as the existence of clusters and networks. It is hypothesised that these factors in external environment impact firms’ innovativeness and financial performance as some important signs of its competitiveness. The dependent variables describing firm’s competitiveness were constructed using following indicators: introduction of new or significantly improved products or services to markets, introduction of new or improved production process, change (growth in percent) of domestic and international sales, change of domestic to international sales ratio, sales per employee. Regression models describing tested impact of factors in external environment on firms’ competitiveness were compared among samples of companies from covered Eastern EU member states. The analytic unit is a firm.

Data. The research was done using World Bank’s Enterprise Surveys data. Enterprise Surveys collect information about a country's business environment, how it is perceived by individual firms, how it changes over time, and about the various constraints to firm performance and growth. Standardized data set of year 2013, covering 11 (Bulgaria, Croatia, Check Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovak Republic, Slovenia) Eastern EU member states, was used.

Results. The analyses of statistically tested regression models of external competition related factors’ impacts on firms’ performance in Eastern EU countries is provided. The article concludes with the decision recommendation to improve international competitiveness of local firms by managing count-specific competitive advantages.

The theoretical contribution. The research revealed statistically significant different impact patterns of country-specific competitive advantages on firms’ competitive performance. This difference could be referable to the stage of country’s economic development, social, cultural, political and other factors that are subjects for the further research.

Practical implications. The results of the research are implicative practically through international competitiveness strategy related decisions of covered countries’ governments as well as business representatives. The empirical results of the study make evidence on importance of external competitive environment factors on firms’ competitive performance. The results of the study could be used as background arguments for decisions to strengthen countries competitive environment.

Keywords: competitive environment, firm competitiveness, Eastern EU member states.

Paper type: Research paper.


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