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Abstract: This paper provides a framework for analyzing competitiveness and competences. What is
competitiveness and how could it be obtained? How competences should be developed in
organizations? Which competences are more relevant for competing successfully, human capital or
technological competences? Are there any correlations between these variables? This paper aims to
summarize the results of our empirical study conducted in Romania and to answer all the above
questions. It also aims to present our view regarding competitive positions.
Of course, each organization’s competitiveness level depends not only on their own competence
development process, but also on competitors and their strategies. Dynamics is a main issue that was
taken into account when developing our model. The model was tested on a sample of 98 Romanian
organizations from different fields of activity.
Intelligent organizations can develop useful competences in a shorter period and/or at a higher level
than competitors do. The main idea of our model is just a basic one: organizations need to become
more and more intelligent.
1. Introduction
This paper aims to analyze the relationship between organizations’ developed competences and their
level of competitiveness.
We define competitiveness as the capability to successfully compete, to provide products and
services as or more effectively and efficiently than relevant competitors for a specific time frame.
Competitiveness is clearly a time-dependent structure (a currently competitive firm is not necessarily
competitive in the future).
Our main interest was the evaluation of dynamic competitiveness, since we consider that any
organization is interested in results not just at a given time, but in dynamics. Organization is an open
system that has to adapt to the changing environment (and why not, to determine at least some
elements of the environment to work in its favor). Moreover, we can easily realize that an
organization’s level of competitiveness at a specific time is an effect (which we can measure in
various forms), and is also one of the factors influencing the level of competitiveness in future (cause).
We followed this causal relationship to develop a model for analyzing the dynamic competitiveness.
2. Literature review
2.1 Organization’s Level of Competitiveness and Knowledge Management
According to modern approaches, knowledge management is considered a key driver of
organization’s competitiveness, as it deals with different resources that can aid decision makers in
many ways (Keen, 1991).
It is clear that effective knowledge management has become a crucial issue for businesses (Renzl,
2008), the main base for creating and sustaining organizations’ competitiveness and their core
competence capabilities. The present competitive environment means more information sources,
rapidly changing technologies, new management practices, more competences and shorter life
cycles, therefore organizational change is more and more important (Tseng, 2009).
Managers need complete and updated information and they hope to rely on their knowledge workers;
as expected, this hope is useless if these experts are not effectively motivated to continuously deepen
thei levels of knowledge (Carneiro, 2000).
Knowledge sharing practices contribute to organizational performance through the development of
human capital (Hsu, 2008). It is very important to manage employees, their knowledge and
competences in such a way that the organization can build a long-term competitive advantage
(Ordóñez de Pablos and Lytras, 2008)
3. Conceptual framework
3.1 Model for analyzing organizations’s competitiveness in dynamics
The model we propose is a result of a dynamic perspective on competitiveness. It is important to
focus not only on performance (competitiveness as a “result”), but also on the competitive potential,
on the organization’s ability to defend and to renew its sources of competitive advantage
(competitiveness as a “driver of competitive advantages” ).
Measuring dynamic competitiveness is quite a big challenge, as it is clear that parts of the game are
won by different players. If two organizations have at a point approximately the same level of
competitiveness (measured on a pre-defined scale), their actions will be those which will make a
difference for the future (competitiveness as a driver of performance is equal for the two
organizations, while competitiveness as a result is different). Dynamic competition is an ongoing
challenge for organizations to continuously improve their game on the market and many times to seek
to rewrite the rules of competition (Carpenter and Sanders, 2007).
An analysis of the competitiveness of a company at a given time (static) requires a thorough activity
which consists of centralizing a large amount of data (which is sometimes difficult to obtain or
inacurate), an adequate analysis of this information on the basis of a well-structured model, and
especially a demarcation of position regarding the competitors. If such an analysis appears to be very
difficult, a dynamic positioning with respect to the competitors is even more difficult. However, such an
analysis is also more useful.
Competitiveness is a controversial issue that requires continuous investigations that consider the
permanent dynamics of the involved variables. The main idea of this model is that future level of
competitiveness is a result variable that depends on a series of cause variables: current level of
competitiveness, current actions of the analyzed organization as well as of organization’s main
competitors, leadership development, organization’s current competences and potential of
competitiveness and all the external environment. Future level of competitiveness is the result of a
transformation process that takes place depending on all the above mentioned factors (Radu, Grigore
and Cătăneţ, 2009).
Briefly, our proposed model can be seen in the following figure:
Our proposed model is based on the hypothesis that an organization’s level of competitiveness at
moment N+1 is certainly influenced by the organization’s level of competitiveness at moment N (as
stated in the resource-based theory). However, a very high level of competitiveness at moment N
does not necessarily lead to very good results also for the moment N+1, as between the two moments
there is a transformation process that depends in its turn on several factors, one of which refers to
the developed competences within organization.
4. Methodology
4.1. Data collection and analysis
In order to test our hypotheses, we have developed a questionnaire of 54 questions. The
questionnaire was applied in two stages, June-September 2007 and June-September 2009. The idea
was to analyze the evolution over time (moments N and N+1).
Initially we distributed 223 questionnaires to middle or top managers of different Romanian
organizations (7 of them nonprofit organizations and 216 companies of all sizes and from different
fields of activity). The response rate in 2007 was 56.95% (127 completed questionnaires). However,
our final analysis was limited to only 98 of these organizations, as 4 of the organizations analyzed in
2007 did not exist anymore in 2009, 5 did not respond anymore in 2009 and 20 were eliminated after
completing the questionnaire as the questionnaires were not correctly completed.
We analyzed a series of statistical indicators – mean, median, standard deviation, smallest value and
largest value. These are presented in Table 2. As we will see from this table, the difference between
mean and median for each of the five variables considered is quite small, indicating little effect of
outliers. Also, the standard deviation is small (taking also into consideration the fact that we used a
scale of 1 to 10).
Comparing the level of competitiveness at moment N (2007) with the one at moment N+1 (2009), the
mean is the same, but the median is further from the mean in 2009, when the standard deviation is a
little higher. Both minimum and maximum decreased, but the smallest value decreased more than the
largest value.
Table 2: Statistical indicators for the five variables
Of course, these comparisons are not very useful, because it is important to analyze what happened
to each organization separately (if the level of competitiveness of an organization decreased, while
another one increased by the same amount – what it acually happened – the average remains the
same, but in fact the interpretation is more complex). The following sections will test our hypotheses
by considering what happened with each organization separately.
5. Hypotheses Testing
5.1 Hypothesis 1
H1.1. Core competences related to human capital have a direct and positive influence on the
organization's current actions.
We can express graphically the relationship between the two variables, with the corresponding
regression line.
As we can see, the relationship can be expressed by a linear regression. The coefficient of
2
determination R is 0.6508 – 65.08% variation in the organization's current activities is explained by
the variation in human capital competences. However, in this case, the number is not very precise,
because of multicoliniarity reasons which we will explain in another section.
The F-test value is 178.9393, and p value is very low (1.16 · 10 – 23), which confirms the validity of the
regression model anayzing the dependence between the two variables (results are only slightly
distorted).
H1.2. Core competences related to technology have a direct and positive influence on the
organization's current actions.
This relationship can also be expressed graphically:
Figure 3: Regression line “Technological competences – Organization’s current actions”
Both the graph and the coefficient of determination R2 (this time smaller, of only 0.3719) show that
between these variables there is a dependance relationship, although not as strong as the one that
took into account the human capital. F test and p value have suitable values in order to validate the
model (56.8362 and respectively 2.65 · 10 – 11), yet the dependence is indeed weaker.
5.2 Hypothesis 2
The current level of competitiveness is a variable closely correlated with the organization’s current
actions, without being a causal relationship.
To test this hypothesis, it is enough to calculate Pearson’s correlation coefficient for the current level
of competitiveness and the organization’s current actions. The coefficient is 0.95, an extremely high
value indicating the fact there is indeed a strong correlation between the two variables.
We excluded the causal relationship between the two variables because they have a common “cause”
– the organization’s actions at moment N-1. These, on the one hand, continue more or less at
moment N and also lead to a level of competitiveness at moment N (as organization’s current actions
influence the level of competitiveness at moment N+1).
5.3. Hypothesis 3
The organization’s current actions and those of competitors influence the future level of
competitiveness, leading to a transformation process that explains the transition from the level of
competitiveness at moment N to the level of competitiveness at moment N+1.
We formulated this hypothesis thinking of strategy games. The result depends very much on both a
player’s actions and those of its competitors.
Figure 4 shows the dependence relationship between the organization’s current actions and its future
level of competitiveness.
2
The coefficient of determination R has a high value (0.773). Linear relationship of dependence
between the two variables is strong, as it can be seen from the figure, as there are quite few distant
points (outliers). F test and p value show that the model is valid (F test value is 326.9442 and p value
is 1.13 · 10 – 32).
The only influence which could not be tested by using the questionaire was the one of the actions of
competitors on the organization’s level of competitiveness (in fact the only negative relationship in our
model). However, this relationship is supported by many real examples. Moreover, the relationship is
still demonstrated, because we already validated the hypothesis that the organization’s current
actions positively influence its future level of competitiveness. In other words, effective actions will
increase its competitiveness. If we measure competitiveness, for example, by market share, it means
the organization's market share will increase because of its actions. A competitor’s market share
cannot increase unless other competitor’s market share decreases. In other words, if there are two
competitors A and B, the positive actions of A will reduce the level of competitiveness for B and this is
clear not only for market share, but for any other indicator that measures an organization’s
performance related to the performance of others (therefore any indicator of competitiveness).
Figure 4: Regression line “Organization’s current actions – Level of competitiveness at moment N+1
6. Conclusions
All our hypotheses were validated, the model was empirically confirmed by analyzing data from the
completed questionnaires.
Organizations need to increase their intelligence in order to develop competences that should
enhance their level of competitiveness.
With respect to core competences and their importance, we were a little disappointed by the fact that
the organizations included in our sample do not consider neither technological competences, nor
human capital competences to be very important (they recognize their importance, but not very
clearly). However, we positively note that in the second phase of applying the questionnaire a
progress could be seen (although the responding managers took into account the effects of financial
crisis in their area – 2009 compared to 2007) and that progress was higher with respect to human
capital , which is a more "stable" competence than technology (data shown in Table 1 do not prove
this aspect, because the analysis focused on how the competences at moment N influence the level
of competitiveness at moment N+1, yet data were collected on competences also in 2009 – moment
N+1).
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