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Can European manufacturing companies compete? Industrial competitiveness, employment and growth in Europe

Author: Loch, Christoph H. ; Chick, Stephen ; Huchzermeier, ArndINSEAD Area: Technology and Operations ManagementIn: European Management Journal, vol. 25, no. 4, August 2007 Language: EnglishDescription: p. 251-265.Type of document: INSEAD ArticleNote: Please ask us for this itemAbstract: The public debate in Europe is turning against business because outsourcing and off-shoring are perceived to destroy jobs, and corporate profitability is seen as inconsistent with a wage stagnation of salaried employees. Managers in Europe feel surrounded by hostile regulation, protected product and labor markets, and pushy unions. On the other hand, companies also use the playing field for their advantage, for example, by benefiting from rigid product markets reducing competition, and by asking governments for bail-outs. Companies in other parts of the world have their own problems. European companies can be competitive on the world stage, and many are. The answer to competitiveness does not lie in complaining about the environment, but in management's responsibility: articulating a clear strategic orientation toward value, mobilizing the workforce to not only execute strategy but contribute to it, and in using globalization as an opportunity offering additional degrees of freedom rather than a threat. Firms in Europe are not sufficiently strong in positioning themselves and executing their strategies, and they are losing the public debate because they are too timid to take a stand in explaining the need, the risks as well as the opportunities from globalization to the public.
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The public debate in Europe is turning against business because outsourcing and off-shoring are perceived to destroy jobs, and corporate profitability is seen as inconsistent with a wage stagnation of salaried employees. Managers in Europe feel surrounded by hostile regulation, protected product and labor markets, and pushy unions.
On the other hand, companies also use the playing field for their advantage, for example, by benefiting from rigid product markets reducing competition, and by asking governments for bail-outs. Companies in other parts of the world have their own problems. European companies can be competitive on the world stage, and many are. The answer to competitiveness does not lie in complaining about the environment, but in management's responsibility: articulating a clear strategic orientation toward value, mobilizing the workforce to not only execute strategy but contribute to it, and in using globalization as an opportunity offering additional degrees of freedom rather than a threat. Firms in Europe are not sufficiently strong in positioning themselves and executing their strategies, and they are losing the public debate because they are too timid to take a stand in explaining the need, the risks as well as the opportunities from globalization to the public.

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