Peru became one of the fastest growing economies in Latin America following its adoption of promarket reforms. However, trade openness and market liberalization created new pressures. Entrance of foreign competitors to Peruvian markets triggered upgrades to core competences by local companies. This chapter presents the way successful firms from different sectors faced institutional turmoil by upgrading specific capabilities and developing strategic responses to obtain a competitive edge. Our analysis covers companies from different sectors: Deltron (low-tech domestic firm), Cantol (low-tech exporter), Resemin (high-tech multinational), Alicorp (low-tech multinational), Alicorp (low-tech multinational), and Lolimsa (service multinational).While the upgrading of strategic capabilities in these firms focused on improving product, service, and operational capabilities and on controlling retail operations, their strategic responses focused either on exploiting new windows of opportunity or on defending against the entrance of foreign competitors.

In this chapter, we highlight the strategic capabilities that have enabled six Brazilian companies to achieve competitive advantage. We selected firms from different industries and stages of internationalization in order to show a broad perspective of local and international successful firms. WEG and Fanen developed technological capabilities associated to both world-class manufacturing and product innovation, whereas Stefanini and Integration have consolidated knowledge about servicing emerging markets. Grendene’s production and operations are its key capabilities for international operations through exports, while innovative design and processes support their strategy in the local markets. The key capabilities of Dr.Consulta are entrepreneurship and innovation. In sum, due to highly turbulent institutional and economic environment, Brazilian firms have had to develop some specific capabilities, especially those related to financial management and organizational flexibility.

To what do we ascribe the far-reaching success of companies from emerging economies in domestic and global markets? What do emerging markets companies do differently? This chapter studies and provides a comparison of the cases of seven successful Colombian companies in different industries to identify specific attributes and capabilities that have helped these firms to overcome the liabilities associated with being situated in emerging markets, enabling them to become market leaders domestically or internationally. The findings of this study suggest that the most relevant capabilities for the success of these companies are their ability to obtain resources, their product adaptation capabilities, and their understanding of local consumers’ needs.

Polish firms focused on international markets only recently, as they were not present in the international markets during the planned economy era and thus did not develop managerial capabilities to compete. With the 1989 transition, huge opportunities for growth and development in the local market absorbed entrepreneurial talentat first. As a result, exports and outward foreign direct investments gained momentum only from the late 1990s. This chapter begins with a general picture of the economic transformation of Poland, and then analyzes the internationalization strategies and capabilities enhancing the efforts of a selected set of firms in foreign markets. Our findings reveal that the firms’ performance in foreign markets is shaped mainly by their ability to develop strategic competences related to product and technology improvement, management of relationships with partners, and those specific sensitivities to the cultural and business environment that enable the firm to gain reputation and the trust of local partners and customers and to overcome any legacy liabilities ascribed to country of origin.

Introduction

Sustainable progression is necessarily defined by the basic system of morality on which democracy itself is based. It is fundamental to political-economic decision making, but it is not simply a matter of GDP growth, however that is defined.

Economic progression almost invariably depends on political decisions and political decisions almost invariably have economic consequences for the fabric of civil society about which there have been many heroic expressions of human aspiration throughout history.

The 1776 American Declaration of Independence expressed it as being ‘self-evident, that all men are created equal’, and that they are endowed with ‘certain unalienable rights’ such as ‘Life, Liberty and the pursuit of Happiness’, to which Lincoln's Gettysburg address 100 years later added the democratic principle that ‘government of the people, by the people, for the people, shall not perish from the earth’. At the time there were almost 4 million African Americans held in bondage as slaves – ‘Willingly, with deliberate purpose, our fathers bartered honesty for gain, and became partners with tyrants, that they might share in the profits of their tyranny.’

All men – interpreted as all humanity – may have been created equal, and in terms of innate potential, nominated by intelligence and capability, that certainly appears to be the case. However, relatively few people have been permitted lives where their equality has been allowed fulfilment. That is not unique to the US, but an aspect of the human condition in most societies. Moreover, it is a widespread if not universal experience that a single sub-group of a population is permitted to manipulate systems for their own benefit, no matter the harm that might be done to others. Such is today's organised money establishment.

The UK has governed without a written constitution and so relies on the more pragmatic pursuit of humane principles being incorporated in its laws and cultural processes. That might be argued as in the spirit of Magna Carta, though more than 500 years later the UK was a major operator and beneficiary of the slave trade. Despite progress, the achievement of equal opportunities is far from complete, and in recent decades that process appears to have been reversed.

Introduction

That people are an organisation's most important asset is an obvious truism, despite having the ring of pseudo management speak about it. Both individually and in collaboration with others, people are the creative force, inventers and improvers of organisational systems, and innovators of new products and processes in their various forms. It is real interdependent human beings who are capable of achieving all the changes necessary to achieving progression without destruction.

Major contributions are also anticipated from artificial intelligence and robotisation which might pose massive threats as well as opportunities. The basic assumption here is that, in due course, their regulation will catch up to ensure they will be made ultimately benign to human purpose, and it is human beings that will develop the regulation.

For the present it is the simplistic 19th century assumption of ‘greed is good’ economic man which poses the threats. It bears no relation to the complex reality. It is sometimes nominated as homo economicus, as though to give it the gravitas it so obviously lacks. It is necessarily based on impossible assumptions simply to make the mathematical models work. It clearly ignores inconvenient realities, but more than that, it is a self-fulfilling prophecy of human behaviour.

Real people are, of course, perfectly capable of negative contributions. They are likely to respond to their treatment in an equal and opposite manner. Treated as greedy, they may respond as such, rejecting their interdependence, minimising their contribution, and being actively destructive of organisational achievement. That is how homo economicus is expected to behave.

There is a huge empirical literature on human behaviour and motivation, which economic theorising is simply incapable of taking into account. The following sections provide a brief outline of the main critical contributions, the aim being to identify how people might best contribute to getting us to where we want to be. It is based on observation of human behaviour, both individually and collaboratively, in a wide variety of organisational settings.

Hierarchies of human need

Human beings are naturally curious animals, always ready to pursue new and different ways of doing things if the promise is sufficiently inviting and the risks not too threatening. But that preparedness to innovate is exercised within the context of human needs.

Introduction

The previous two chapters outlined how we get to where we want to be. They considered the internal components of organisational systems, the real people who are the engines of enterprise, and their coordination through life cycle progressions, noting the vital importance of protecting real competition in supposedly competitive markets and rejecting pretend competition in markets where real competition is not relevant or available.

This chapter now focuses on external interactions of organisational systems as they serve the different layers of the real economy, fulfilling their defined existential purposes and contributing to the fulfilment of the democratic commitments outlined in Chapter 4.

Constituents of organised money could also serve the real economy. They have the power and capability to make massive contributions, perhaps even decisive ones, to fulfilling sustainable democratic commitments. But, for the time being at least, they remain focused on MST, claiming neoclassical belief to cloak their actions with assumed academic respectability.

In that pursuit, constituents of organised money are limited only by the question of legality, which is sufficiently opaque as to permit much tax evasion and energetic tax avoidance as well as financial frauds, criminality and destructions already noted. Though fines are paid for such illegalities when identified, individuals are not generally held personally responsible, despite their contractual duties. Consequently, the financialised economy, driven by organised money, remains focused on destructive pursuits, rather than the fulfilment of the democratic commitments outlined in Chapter 4.

Galbraith flagged up the interdependence of public and private enterprise as key to real economic progression. That social balance is even more important now, when so much more is understood about ecological destructions that will impact everyone. Technological innovation focused on ending and reversing those destructions will depend on contributions from organisational systems in both the public sector and the private, both of which are vulnerable to abuse by their designated owners.

To be effective innovators, public and private organisations depend on an appropriately focused strategy and a progressive culture. That way their capacity for invention and innovation will enable the development of new ways of progression without destruction, as has been demonstrated by successive technological revolutions.

Introduction

After thousands of years of virtual stagnation, the real economy took off in the 18th century, supporting huge rises in population and standards of living. It was a real revolution of invention and innovation, involving the development of a transport infrastructure to carry the raw materials to the new mills and factories, initially by canal, later by rail. At first the new machinery was driven by waterpower and later by steam, creating whole new industries in textiles, iron and chemicals. All were developed without recourse to economic theory, the prime requirement being for human creativity and industry to improve and progress.

However, it was a revolution which needed to be properly understood if the best political-economic decisions were to be taken as to its control and direction. Moral philosopher Adam Smith sought that understanding with his Inquiry into the Nature and Causes of the Wealth of Nations, which was published in 1776, the year Richard Arkwright's first water-powered cotton mill commenced production and the American colonies declared their independence.

Smith opened his inquiry with observations of the processes of pin manufacture. From that practical account of the work and its outcomes, he drew some conclusions as to the creation of wealth. As moral philosopher, he developed ideas as to how that wealth might best be accumulated, employed and distributed among ‘ranks of people’ as well as allocated to state provision of defence, justice, education and public works and institutions ‘which may be in the highest degree advantageous to a great society’.

That approach to understanding was fundamentally based on the observation of real operations, processes and systems, and their apparent outcomes. An alternative approach was to theorise ideas and models which were not based on empirical observation, but more according to an internal logic. Jean-Baptiste Say conjectured Say's Law, an early example of such theorising. It stated that supply creates its own demand, because production earns the money that is spent on other productions. There is obviously some truth in that idea, but absolutely no possibility of mathematical precision. It is also dependent on the assumption of economic equilibrium: that prices will adjust to equate supply with demand through the processes of competitive supply.

Introduction

Adam Smith's observation of the pin factory was an early description of an organisational system at work. It comprised a number of individuals working in collaboration with each other to fulfil the system purpose – in that case the production of pins. The individuals all carried out different parts of the production process and developed their particular skill and expertise, learning how best to use, and to invent or develop, specialised tools needed to carry out their part of production with continually improving efficiency. The result from such collaborative effort was, Smith estimated, around a 240 times increase in productivity per head, over and above what one individual could produce alone.

Despite the obvious and radical changes in technology since those days, that broad analysis remains valid. Individuals still need to collaborate with each other, rather than compete, in order to fulfil their system's purpose. As Deming pointed out, collaboration rather than adversarial competition is a fundamental of everyday life everywhere, most examples of which are so natural they are not recognised as cooperation. We all accept hours of the day based on Greenwich Mean Time. Similarly, calendar dates and the international dateline are accepted across the globe. Red and green traffic signals are understood as meaning the same everywhere. As is the metric system of measurement. The list of such agreements is endless and by such cooperation, everybody wins.

Collaboration of internal system components requires their effective coordination. That requires understanding of human behaviour, motivation and demotivation, as already outlined. Such considerations are far beyond the capability of neoclassical mathematical modelling. But even if it were not so, a theory of the firm is completely superfluous, when the reality is there to be observed and understood.

Though organisational systems fall into many different categories, neoclassical belief makes the simplistic division between state owned and controlled organisations and privately owned for-profit businesses.

The former are assumed to be inefficient and bureaucratic, while the latter are assumed efficient and innovative. That is the neoclassical orthodoxy based on theoretical models which take no account of reality.