New Global Competition
New Global Competition
This chapter examines two popular theories on the shift in competitive advantage, the first of which states that R&D will shift to Asia, just as chip manufacturing has. This is called the “manufacturing-pull” hypothesis. The second theory, or the “large-market pull,” states that China and India, with their rapidly growing economies, will produce national champions primed to becoming world leaders. The first theory is based on the assumption that R&D follows manufacturing, and although engineers in China and India are reportedly less experienced than engineers in the United States, the quality of their university programs continues to improve. The large-market pull theory, on the other hand, assumes that growing markets such as China and India will bring their domestic suppliers competitive advantages. This theory is not very sound, however, when close inspection is made of the steps these countries are taking within the semiconductor industry. In conclusion, it is argued that the threats to today’s leaders lie within their own organizations and national economies.
Keywords: manufacturing-pull, large-market pull, R&D, chip manufacturing, semiconductor industry, competitive advantage
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