The Competitiveness of Nations 2

The following sections are included:

• About the Authors
• About the Contributors
• Acknowledgments
• Contents
• Introduction

The first part of this book introduces the theoretical framework of IPS national competitiveness research and summarizes the key findings of NCR 2022. It is composed of the following five chapters: “Extant Literature on National Competitiveness and Evidence from the Russia–Ukraine War,” “Conceptual Framework and Analytical Methodologies,” “Highlights,” “Application of MASI: The Cases of Switzerland and Korea,” and “Snapshot of Top 30 Economies”…

“National competitiveness” has long been a source of focus in economics with traditional scholars such as Adam Smith and David Ricardo having laid down some of the important bases in this regard. The real breakthrough though came in 1990, when Michael Porter introduced a new competitive theory, the Diamond Model, which was further adapted by later scholars to develop many extended models and conduct new empirical studies. In order to better understand the concept of national competitiveness, this chapter first conducts a historical review of the definition and models conceptualizing and measuring national competitiveness. Next, the literature review explains how the IPS model is more comprehensive by integrating extended models of Porter’s Single Diamond Model. The IPS model is the basis for evaluating and measuring the national competitiveness of IPS National Competitiveness Research. This chapter then applies the IPS model to systematically analyze the impact of the Russia–Ukraine War, and such analysis verifies the comprehensiveness of the model in capturing the various impacts in a systematic manner.

In Chapter 1, we reviewed the existing studies on national competitiveness and validated the comprehensiveness of the IPS model by comparing it to other analytical models of national competitiveness. This chapter presents the theoretical background of IPS National Competitiveness Research and the MASI methodology that is used in our research and discusses how it differs from other national competitiveness reports published by the International Institute for Management Development (IMD) and the World Economic Forum (WEF).

The following sections are included:

• Overall Rankings
• 2022 IPS Competitiveness Ranking Changes by Cost and Differentiation Strategies
• Intra-group Rankings
• Simulation
• The Text Information Analysis (TIA) Method
• References

This chapter examines the cases of Switzerland and the Republic of Korea (hereafter Korea) to assess the application of the MASI framework (Cho and Moon, 2013) that was introduced in Chapter 3. Despite their differences in some areas, such as the size of their economies, cultural backgrounds, and geographic characteristics, the two countries hold similarities in many areas. In fact, the two countries are both developed economies that are classified as a strong group in the overall competitiveness index under the differentiation strategy. Switzerland plays an important role as a business hub in Europe, and similarly Korea also seeks to play a bridging role in East Asia. In this respect, this chapter aims to analyze the two countries from the competitiveness perspective and examine their complementarity in the areas where each holds strengths and weaknesses, thus suggesting the possibility of a further partnership between the two. The analysis of the two countries will serve as a good example to inspire other economies to analyze their competitiveness and cooperative relationship with other economies.

The following sections are included:

• #1. Denmark (0)
• #2. Canada (0)
• #3. Singapore (+2)
• #4. Netherlands (–1)
• #5. Switzerland (+1)
• #6. Sweden (–2)
• #7. Finland (+2)
• #8. Australia (–1)
• #9. United States (–1)
• #10. Hong Kong SAR (+1)
• #11. United Arab Emirates (+2)
• #12. New Zealand (–2)
• #13. Belgium (–1)
• #14. China (0)
• #15. Austria (0)
• #16. United Kingdom (+3)
• #17. Taiwan, China (+1)
• #18. Germany (–2)
• #19. Israel (–2)
• #20. Saudi Arabia (+1)
• #21. Kuwait (–1)
• #22. France (+1)
• #23. Korea, Republic of (+1)
• #24. Japan (–2)
• #25. Czech Republic (+1)
• #26. India (+1)
• #27. Italy (+2)
• #28. Poland (0)
• #29. Malaysia (+1)
• #30. Chile (+4)
• References

This part intensively examines an issue in business that has attracted increasing attention in recent years, namely, Environmental, Social, and Governance (ESG). In doing so, we can lay out a clearer direction for firms to engage in ESG without simply sacrificing their benefits. The first chapter of Part II entitled “Environmental, Social, and Governance (ESG): Where Has It Come from, and Where Will It Go?” discusses the evolution of the concept of ESG and suggests how it can be developed further in the future. Moreover, it effectively explains the rationale for firms to incorporate ESG values into their everyday practice, discussing both theoretical and philosophical perspectives. In summary, this chapter suggests that a clear goal for a firm is not just to create profits but also to address social values and to become successful in the long run…

Environmental, Social, and Governance (ESG) is a rising business trend reflected by the recent imposition of stronger regulations and initiatives by more firms. This chapter unravels the concept of ESG by analyzing how it has developed and how it will be developed further in the future. In doing so, this chapter provides a theoretical and philosophical explanation of why firms are engaging in such efforts. Moreover, the chapter comprehensively integrates concepts related to ESG such as CSR, Creating Shared Value (CSV), and Sustainable Development Goals (SDGs). It clearly states that the role of firms in society is to serve social values, and that simply focusing on profits does not sufficiently justify a firm’s existence in society. In conclusion, this chapter drives meaningful business implications for firms, introducing the required conditions for maintaining longer lives for corporations.

Despite the extensive existing studies on environmental, social, and governance (ESG) issues, many of them are insufficient in explaining the financial implications of ESG activities of firms. Moreover, there is inconsistency in the relationship between ESG and firms’ financial performance. Some argue that ESG has a negative impact on a firm’s financial performance, while others argue the opposite. To fill the gap in the literature, we identify the root causes of this inconsistency in the existing studies and highlight the significance of the strategic approach in conducting ESG activities that will lead to coevolutionary results between firms and society/environment. In this respect, we suggest an analytical framework of ESG strategies by extending Porter and Kramer’s (2011) strategies for creating shared values (CSV). Moreover, by studying the case of Walmart’s ESG engagement and discovery of value creation opportunities from ESG activities, we identify the importance of an effective and win-win approach from the sustainability perspective. The four ESG strategies help firms transform the view on ESG activities from a cost burden to opportunities for higher value creation.

The final part of this book, Part III, discusses the cases of ESG from the perspectives of both firms at the business level and governments at the national level. In doing so, this part demonstrates the contrasting roles of these actors in actualizing and incorporating ESG values, which in turn contributes to the advancement of national competitiveness. This part is composed of seven chapters…

Since the Sustainable Development Goals were adopted by the United Nations in 2015, there has been a growing awareness that addressing environmental issues is not only the duty of political leaders but also the social responsibility of companies. Focusing on the automotive industries in Japan and South Korea, this chapter assesses their efforts to promote green transition through their business operations alongside the institutional settings of their countries. In particular, it examines the leading automakers in the respective countries, namely, Toyota and Hyundai. These two automotive groups can potentially play a key role in facilitating environmental sustainability in Asia and beyond if their competitiveness and their countries’ policies are properly aligned. In the eco-car segments, however, Toyota’s performance is lagging behind its competitors, while Hyundai is still struggling to gain a leading edge in the global market. This chapter pays particular attention to electric vehicles and hydrogen vehicles, and considers their potential, as well as technological and institutional obstacles that the companies may face, in the process of green transition in the automotive industry.

Proactive industrial houses in India have progressed rapidly in promoting environmental sustainability and incorporating environmental, social, and governance (ESG) values. However, despite their continued efforts, the complex challenge of climate change has made it extremely difficult for these businesses to balance their environmental and economic objectives. So far, only a few studies have attempted to understand how industrial houses can achieve eco-synergy and how achieving eco-synergies can impact their environmental performance and international competitiveness. In our study, we point out this gap in the literature and apply the Agility-Benchmarking-Convergence-Dedication (ABCD) framework to an Indian conglomerate to address the same. Our findings hint at the possibility that the ability of a conglomerate to achieve eco-synergy helps it improve its group-level environmental performance. Moreover, improved environmental performance helps conglomerates climb the ladder of international competitiveness, possibly initiating a virtuous loop.

Ghana is one of the world’s largest cocoa producers and supplies most of the global chocolate manufacturers. However, the vital role that the country plays in the chocolate industry has come at a cost in terms of human and environmental problems which have led to deforestation and child labor. Although chocolate manufacturers are implementing new strategies to solve these ESG issues, the results have been incomplete in terms of their effectiveness. This chapter seeks to understand how firms can generate social and financial benefits while tackling ESG issues through the application of Moon’s (2012) CSO framework. It examines the case of the global chocolate manufacturer Fuji Oil Holdings Inc. and its sustainable procurement activities in Ghana. The research investigated how the company is tackling ESG issues by applying the CSO framework. While it shows that there is a high compatibility between the company’s implemented activities and CSO, the results illustrated in ESG and sustainable reports should be improved to better understand their outcomes. The paper provides empirical examples to tackle ESG issues through CSO and contributes to introducing a framework (CSO) other than Porter and Kramer’s (2011) CSV, which is currently widely employed in academia.

The chapter explores mixed environmental effects on national competitiveness in emerging markets by focusing on the Russian Federation, the largest country in the world with an extraction-based economy characterized by an orientation toward hydrocarbon exports but limited by ineffective sustainability practices. We acknowledge the relatively greater role of “factor conditions” in the Russian Federation’s national competitiveness and discuss opportunities and threats that climate change and the evolution of the natural environment bring to the Russian Federation’s economic development. We conclude that the concept of sustainability is still poorly developed. At the same time though, we do acknowledge the visible shift in recent years among selected stakeholders’ approaches to environmental challenges as evidenced in the government’s new policies and large state-owned and state-controlled companies’ strategies that emphasize sustainability and response to climate change. Furthermore, we state that the role of a large group of medium and small businesses is indifferent to environmental challenges and the role of civil society while highlighting the current limited role of activist groups in sustainable development.

In recent years, there has been growing concern about economic, social, and environmental challenges that are developing throughout the world. In response, there have been calls for the implementation of more sustainable practices in the business environment that respond to the needs of the population and also guarantee economic benefits. The Collective Benefit and Interest Company (known by its Spanish acronym BIC) is a model born out of these demands. It seeks to develop tools to solve environmental and community problems through everyday business activities. It is found that many of the Peruvian BIC companies emerged due to indifference and lack of support from the government for vulnerable populations. We analyze and compare the situational context of the legal framework of the BIC Law in the region and the challenges of implementation in the regulatory frameworks of these countries. Furthermore, we look at how this can be adopted by developing countries to achieve a greater global and regional impact. The research methodology is based on a documentary and case study review of the creation of BIC companies in Peru.

The healthcare industry in India provides an essential service to everyone in society yet the costs involved have deterred access to the public. This is driven by the incompetent use of healthcare technology, an incomplete system of payments, additional medical services, and limited involvement by patients in the decision-making process of the healthcare system. The spread of COVID-19 vividly demonstrated these weaknesses associated with India’s healthcare system. Given this situation, this chapter identifies the causes of unsustainable healthcare expenditure in India and discusses how to curtail healthcare costs while contributing toward improving the environmental and social impacts of this sector. We conducted research by exploring how the healthcare companies can curtail costs by implementing new practices such as improving the efficiency of utilizing technology. In doing so, this study reveals that only limited efforts in research and development are taking place. The findings of this chapter signify that India’s healthcare is in a weak shape and requires massive transformation. Other developing countries should take India as an example of how to progress and improve their own healthcare sector.

Firm shareholders are becoming more conscious and compliant with Environmental, Social, and Governance (ESG) issues as the significance of corporate social responsibility (CSR) is growing. For some firms, the ESG footprint serves as a tool to gain a competitive strategic advantage within an existing legal framework. Still, other firms simply perceive ESG activities as philanthropic activities. Hence, to what extent each firm will engage in ESG activities is largely determined by the collective and structural arrangements of the country or society. In this regard, several reviews have raised the importance of legal frameworks to boost ESG performance. Despite the considerable literature, they only recommend the enhancement of governance to assure firm accountability and information disclosure on ESG. However, most of these assumptions are based on high-income countries where social hardship is less of a challenge. Moreover, only limited research discusses the concept of creating shared value (CSV) within the 2030 Agenda of Sustainable Development Goals (SDG). The object of this chapter is to explore the required conditions to motivate more firms to engage in ESG affairs in the Sub-Saharan Africa (SSA) region. As our study points out, environmental issues are not a core objective for SSA Governments as of now. This shows that social hardship and regulation gaps are influential factors for business competitiveness and government policy adjustment toward ESG arrangements.

The following sections are included:

• Appendix
• Index