business world is that it is equivalent to a firm’s or an industry’s ability to compete, or to acquire its favorable relative position, in an international market, reminding of the concept of “competitive advantage.” The term is referred to in strategic management studies (e.g., Porter [1990]).

In general, the concept of competitiveness includes both comparative and absolute advantages. The former is of a concept used in international economics, while the latter is equivalent to competitive advantage. Microeconomic studies focus on absolute advantage rather than comparative advantage, because the former is thought to be the key determinant of industrial and economic development. In other words, business competitiveness or absolute advantage is not the same as, but closely related to, an industry’s or a country’s competitiveness. Therefore, the above definition of absolute advantage is used in this study, although being vague.

Before we discuss the effects of competition, we have to mention what firms’ successful overseas operations suggest. If firms successfully develop overseas operations, this suggests that; 1) they hold greater capability, 2) they engage in international activities, and 3) they enjoy greater benefits from the activities. That is, overseas operation includes the following three dimensions: capability for internationalization, internationalization activities, and performance from internationalization. Capability is related to sources of competitive advantages; international activities involve both foreign trade and foreign direct investment (FDI); performance is outcomes from competitive advantage. And the three factors have mutually interdependent relationships: sources $ \leftrightarrow $ operation $ \leftrightarrow $ performance.

Therefore, competitiveness may be reflected in three aspects: 1) sources of competitive advantages, 2) extent of internationalization activities, and 3) outcomes of competitive advantages, suggesting multi-dimensionality of competitiveness (see Figure 1). The first factor is called “ex-ante competitiveness,” while the remaining two factors are called “ex-post competitiveness.” Existing studies usually utilize one of those aspects.

In addition to the problem on the definition mentioned above, it is similarly difficult to connect the notions of competitiveness to indicators measuring competitiveness. The above-mentioned three dimensions of international activities suggest that the extent of competitiveness could be measured by some quantity indicators in the respective aspects.

As suggested earlier, competitiveness could be captured in three aspects: potentials, operation sizes and its resulting performances. The first measure is ones capturing the sources of competitive advantage, which include intangible factors like marketing, brand & reputation and patents, and tangible factors such as cost efficiency. These are the indicators of ex-ante competitiveness.

The second one picks up the degree of overseas operations or global presence of a firm or an industry. It is for example global market share, the ratio of foreign sales (or employees) to total sales (or employees), the ratio’s growth rate, and also growth rate of foreign sales. It is in character an ex-post indicator.