Models of Competition Between Firms: The Case of Slovenia's (Post)Transitional Economy

Zusammenfassung

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The process of competition between firms can be described as a causal-consecutive sequence. The paper is built on the findings of empirical research based on a sample of 225 Slovenian firms. By using statistical methods we examine which approaches firms use to ensure their competitiveness and, based thereon, offer a judgement on the existence of potential models of competition in a posttransitional Slovenian economy. We conclude that there are four such models. They mainly differ in the sources of competitive advantage, financial and nonfinancial performance, size of firms and firms' strategies, whereas differences regarding the forms of competitive advantage are much less significant. Slovenian firms are therefore taking different paths towards competitiveness, which is not very surprising given the complexity of the competition process.

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Models of Competition Between Firms: The Case of Slovenia's (Post)Transitional Economy

1. Introduction

The discussion on a firm's competitiveness takes place literally every day, not only among managers but also among academics, politicians and others. In spite of its relevance, however, the discussion is usually too simplified. It seems that many people do not properly understand how complex the process of competition between firms really is. In the paper we try to bring the abovementioned discussion on a higher level, building on a presumption that the process of competition between firms can be described as a causal-consecutive sequence 'sources of competitive advantage [arrow right] forms of competitive advantage [arrow right] performance'. In other words, if a firm wants to build a competitive advantage, certain sources of competitive advantage must first be developed. The scientific literature usually discusses four basic schools concerning the sources of competitive advantage, i.e. the industrial organisation school, the resource-based school, the capability-based school and the knowledge-based school, along with two fundamental forms of competitive advantage, i.e. lower price (costs) and differentiation. This paper's purposes are to examine the approaches that firms use to ensure their competitiveness and, based thereon, offer a judgement on the existence of potential 'models of competition' in a (post)transitional (Slovenian) economy. More specifically, we first group the firms into several clusters, which are created according to the relevance of the sources of competitive advantage for each firm. We then analyse the differences between the identified clusters in terms of firms' sources and forms of competitive advantage, their performance and their basic characteristics such as legal form, sector, size, age, type of ownership etc. Finally, building on the discovered differences we offer a discussion on the existence of potential 'models of competition' in a (post)transitional (Slovenian) economy. After briefly reviewing the relevant theory on the sources and forms of competitive advantage, the paper mainly involves a presentation of the empirical findings of a study of 225 Slovenian firms. By comparing the empirical evidence with the theoretical findings drawn from the literature, we believe some new insights can be offered to scholars and researchers in the area of competitiveness, especially in a (post)transitional business environment.

2. Sources and forms of a firm's competitive advantage literature review

2.1. Four schools of thought on the sources of competitive advantage of a firm

Within the industrial organisation school th...

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