RESPONSIBLE ENTREPRENEURSHIP VISION DEVELOPMENT AND ETHICS

Factors promoting competitiveness in tea manufacturing firms: case study of tea… 107
One of the challenges face in today’s business is to remain constantly innovative since
capacity of firms’ innovation is a crucial factor to succeed in the business. Therefore, tea manufacturing
firms may benefit from adopting EO strategies and thereby would able to enhance
the innovation adoption which is fundamental of gaining competitive advantage.
Conditions for competitiveness
At firm’s level, competitiveness is generally understood by reference to the ability of a
firm to increase in size, market share and profitability. In traditional economic theory, a firm
level competitiveness is determined by comparative cost of production. On the other hand,
recent studies have pointed out non-price underlying determinants of competitiveness. They
include; human resource endowments, ability to adopt and use technologies, and managerial
factors that internal to the firm and external relationships with other parties (Clark & Guy,
1998). Accordingly, Porter’s diamond model can be used to understand the firm level conditions
for promote the competitiveness. He argued that nation’s success in a particular industry
is driven by four interrelated determinants namely; factor conditions, demand conditions,
firm’s strategy, structure and rivalry, and related supporting institutions.
Besides these factors, Porter added two additional elements to his model, namely they are
government and chance (exogenous influences). Accordingly, “Chance” and “Government”
are two factors that influence the four determinants, but are not determinants themselves. Based
on above theoretical background this study proposed external relationships, entrepreneurial
competencies, EO and innovation as factors promoting competitiveness since as those factors
determine the ability of a firm to attain and maintain a competitive advantage of firm as
explained above sections. Additionally, previous research findings imply that positive relationship
between innovation and the business performance (e. g. Avlonitis & Salavou, 2007;
Hult et al., 2004; Subramanian & Nilakanta, 1996).
Based on existing literature this study proposed integrated model to analyze the factors
promoting competitiveness in tea manufacturing firms in Sri Lanka as shown in Figure 1.