Strategic Competition, Valuation, Costs and Growth Potential: The Example of Global Product Design and Development

Abstract

We study the performance attributes of an international production form that is designed for success in an increasingly global marketplace‐global product design and development. We find that firms elicit higher returns from their global product development when they compete in strategic complements than when they compete in strategic substitutes. These firms are most likely to compete in strategic complements if they have higher free cash flows, but are most likely to compete in strategic substitutes if they are more dominant in their industry. Importantly, global product development reduces cost largely via variable cost reduction. Moreover, we find that global product development contributes to the firm’s growth potential when pursued in conjunction with high multinationalism, aggressive competitive strategy, and high cost saving.

Citation

Monplaisir, L., Malikane, C. and Ojah, K. (2009), "Strategic Competition, Valuation, Costs and Growth Potential: The Example of Global Product Design and Development", Multinational Business Review, Vol. 17 No. 1, pp. 47-72. https://doi.org/10.1108/1525383X200900003