The paper "Global Strategy and Competitiveness" is a good example of management coursework. Peng and Heath (pp. 492-99) document different organizations adopt different models of growth of firms [hence different globalization/internationalization strategies] that are dependent on characteristics of the markets and economy. Organizations in a given region adopt a shared type of globalization strategy that defines organizational growth which results in homogeneous organizations that lack competitive advantage. Different regions have different models of growth of the firm that are brought about by convergence or divergence of cultural values. The growth of firms has been determined to fall under three-strategic-choice model (Peng & Heath, p.492-3) namely generic expansion, mergers and acquisition and inter-organizational approach. Peng and Heath (pp. 492-517) provide analysis of globalization strategy and model of growth of firms that are specific to planned economies with regard to Eastern Countries, for instance, China.
Peng and Heath (pp. 492-95) claim the three models of growth of firms could be applied in planned economies that are in transitions, however, firms in planned economies in transitions implement the network-based strategy (pp. 492-3). Peng and Heath (pp. 499-512) claim models of growth of firms are affected by formal and informal constraints that are brought about by institutional framework [depending on the type of economy].
The study, as a result, sought to identify formal and informal constraints that affect the globalization of firms in Eastern Countries. Introduction The models of growth of firms provide that firms achieve a competitive advantage based on the capacity for the globalization strategy to support the creation of innovation value and support manager’ s capacity to implement strategic choices that can form firm core competencies. The globalization strategy that a firm implements, influences capacity for the firm’ s implementation of Chandler and Hanks 1994 model of venture performance and Resource-Based View Model.
Firms in planned economies implement the network-based strategy. Inter-organizational globalization strategy has been cited to contribute into the achievement of competitive advantage in traditional economies and sustains organizational economic growth in economies that are transiting from traditional economies into open-market or market-based economy and information/knowledge-based economy. Network-based strategy as a growth model of a firm is cited to enhance the sustainability of stakeholder relationships. Western firms that implement either generic expansion or acquisition strategies face challenges when they set up subsidiaries in international markets that are characterized by firms that are transiting from planned economies (pp. 494-6).
There has been a need to identify values of network-based strategy that is implemented by firms transiting from planned economies. As a result, determination of values of hybrid or network strategy is important towards determination of rationale firms could penetrate markets that are transiting from planned economies. Appropriateness of an internationalization strategy depends on managerial competencies towards determination of strengths and weaknesses of an organization, quality of the organization, organizational capabilities, organizational self-efficacy and network potential of the organization (pp. 499-509). Review of Literature Westerns firms (Peng & Heath, pp. 494) achieve globalization through either generic expansion approaches or mergers and acquisitions or both.
However, firms in socialist markets demonstrate a different growth model that exploits competencies of network-based strategies that are implemented through firm network alliances, joint ventures, hybrid organizations, partnerships, corporate groups and research consortia which don’ t satisfy characteristics of market or hierarchical organizations growth models (pp. 493-5). In eastern nations, planned economies form a foundation of entrepreneurship.
In China, for instance, the planned economy is characterized by firms that are state-owned and growth is minimal due to lack of firm acquisition or resource allocation towards firm expansion (pp. 494). The managerial and entrepreneurial capabilities for firms operating in planned economies are low to support organizational competition and achievement of core competencies.