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2 Defining competitiveness and resilience
BOX 2: Defining competitiveness and resilience
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Several factors at the firm, business ecosystem and national levels influence the capacity of a company to be competitive. ITC’s competitiveness framework classifies these factors under three interrelated pillars – compete, connect and change.
Capacity to compete refers to the static dimension of competitiveness. It focuses on factors for a firm to deliver output of appropriate quantity, quality and cost.
Quality of inventory management and compliance with internationally recognized standards are examples of such factors at the company level. Access to electricity, transport infrastructure and services are examples of factors at the business ecosystem and national levels.
Capacity to connect describes a company’s ability to exploit information to underpin strategy and operations.
At the firm level, this covers efforts to gather information flowing into and from the firm, including through communications with suppliers and advertising to buyers. At the business ecosystem level, this includes links to sector associations, chambers of commerce and other business support organizations. At the national level, the capacity to connect is influenced by the availability and quality of information and communications technology infrastructure and services.
Capacity to change refers to factors that support a firm’s capacity to make changes in response to, or in anticipation of, dynamic market forces.
When companies mobilize financial resources, capital and skills and invest them in innovation, they draw on the information they have to improve competitiveness. Access to finance and appropriately skilled workers are key ingredients in this process. Nationally, education, research and development policies and governance structures affect firms’ incentives to invest in change.
As with competitiveness, several factors influence a company’s resilience. ITC categorized them under three pillars – robust, related and responsive.
Robust firms have strong management and operational procedures to withstand pressure during a crisis.
This involves effective risk management and business contingency plans, inventory management and savings. Pre-crisis practices and resources build shock absorbers into the structure of a robust firm.
Related firms leverage internal and external connections to access resources and support during a crisis.
Firms with strong internal communication are better equipped to navigate shocks.12 Similarly, companies with extensive and strong links to actors in the business ecosystem have a network or social capital they can draw on for help.
Responsive firms overcome crises with inventive, well-adapted strategies to absorb shock, transform and cope with the new reality.
Ingenuity under stress13 tends to be higher among firms that have already learned, through experience, how to navigate a crisis. Availability and good management of human, technological and financial capital are likely to promote an effective response that kick-starts the recovery process.
Source: (Battisti et al., 2019; ITC, 2015; Madni & Jackson, 2009; Kaplan, Leonard, and Mikes 2020; Rose & Krausmann, 2013; Suarez and Montes 2020; Sullivan-Taylor & Branicki, 2011; Torres et al., 2019; UNDRR 2020; van der Vegt et al., 2015; WEF, 2013; Weick & Sutcliffe, 2007).
