| Summary: | 碩士 === 國立臺灣大學 === 國際企業學研究所 === 91 === Comparative and competitive advantages have been characterized as two major sources of advantages for multinational corporations to pursue in their foreign expansion endeavors. Comparative advantage is created by allocating value-added activities in foreign countries where factors costs are significantly lower than the home country. Competitive advantage, however, refers to advantages created through leveraging and building competence based on scale, scope, or proprietary learning effects. The sustainability of comparative advantages will be reduced as competitors follow the entry, industrial buyers further squeeze the supply price, and local imitators quickly catch on. It is the development of competitive advantages that could sustain the company’s competitiveness and hence superior economic performance. This proposition, however, has received scant attention in empirical literature.
As a follow-up research, this thesis is to empirically validate the above mentioned proposition within the context of Taiwanese manufacturing firms’ investments in Mainland China. The scope of empirical research covers 193 publicly listed companies in five major industries (electronics, textile, plastics, food, and petrochemical industries) during 1997-2001. We employ random effect regression model to process this panel data.
The empirical results show that: Short-term comparative advantages do exist. However, in the long term, there is only limited association between the factor of comparative advantages and business performance. In electronics industry, it is found that comparative advantages can enhance competitive advantages and affect a firm’s performance indirectly. Compared to comparative advantages, competitive advantages is the better catalyst for a firm’s long-term profitability. Moreover, first mover advantage does not exist. Compared to “non-investors”, firms invested in Mainland China generally have better business performance.
For the conclusion of this study, it is suggested that electronics industry should enforce cost leadership advantages and transform accumulated comparative advantages into competitive advantages. For companies in the traditional, it is advised that they should broaden their market size in order to pursue economies of scale, and to empathize on differentiation strategy which provides greater value-added benefits. Finally, we suggest that while moving to Mainland to pursue lower factor costs, companies have to try their best to establish imitation barriers so that long-term growth and profitability could sustain.
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