Global Competition and Latecomer Production Strategies: Samsung of Korea in China

Abstract

This contribution illustrates how latecomer multinational companies (MNCs) have organized international production activities and maintained their competitive advantage under growing global competition. In doing so, an interdisciplinary approach, including an evolutionary theory of MNCs, global strategic management, and organizational and technological learning, is adopted through the case study of Samsung Electronics as a sample latecomer MNC. Samsung reveals that competition in the electronics industry in China is based on the diferential capabilities of players in the market, and their ability to transfer and improve these capabilities faster than competitors. Latecomer MNCs' foreign subsidiaries are under strong pressure to be actively involved in design and product development activities near to production facilities. In order to gain a sustainable competitive advantage, foreign subsidiaries of latecomer MNCs need to rapidly improve their product innovation capability by combining knowledge transferred from the MNC headquarters and global subsidiaries' networks with information about consumer requirements in the foreign location.