Organizational Integration and Competitive Advantage: Explaining Strategy and Performance in American Industry

This paper proposes an analytical framework that can comprehendhow and to what extent the interaction of institutions, industries,and enterprises has contributed to the decline of US competitiveness.The analytical framework builds on the notion that, ultimately,competitive advantage depends on the strategies and structuresof the business enterprises on which Americans rely for mostof the nation's productive investments. We argue that, overtime, to gain sustained competitive advantage, business enterprisesin the USA and elsewhere have had to achieve increasingly higherdegrees of ‘organizational integration’. We arguethat, as a general rule, the USA's prime competitors, and particularlythe Japanese, have gained competitive advantage by becomingmore organizationally integrated than their American rivals.For some industries, moreover, organizational integration ismore important than others; hence the variation in the extentto which certain American industries have been affected by foreigncompetition. And even within the more vulnerable industriessuch as electronics and automobiles, some American companieshave responded to the competitive challenge more quickly andeffectively than others. The organizational integration hypothesisargues that an important determinant of differences among Americancompanies in the same industry in the quickness and effectivenessof their strategic responses — whether they are ‘firstmovers’, ‘fast movers’, ‘slower movers’,‘no movers’, or ‘removers’ — tocompetitive challenges is the extent to which these companiesare organizationally integrated.