Competition between firms in developing and developed countries

Koichiro Kimura

No 469, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: We analyze competition in emerging markets between firms in developing and developed countries from the viewpoint of the boundaries of the firm. Although indigenous firms generally face a disadvantage in technology compared with foreign firms, they have an advantage in marketing as local firms. Moreover, they have opportunities to leave weaker fields to independent specialized firms and use lower wages. On the other hand, foreign firms also have their own advantages and disadvantages for growth. Therefore, entry conditions for indigenous firms can vary greatly depending on the situation. We classify these conditions into eight cases by developing a model and showing each boundary choice for indigenous firms.

Keywords: Developing countries; Developed countries; Business enterprises; Foreign affiliated firm; Indigenous firms; The boundaries of the firm; Foreign firms (search for similar items in EconPapers)
JEL-codes: F23 L22 O12 (search for similar items in EconPapers)
Date: 2014-06-01
New Economics Papers: this item is included in nep-bec, nep-com and nep-cse
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 469. 2014-06-01

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