International Competition Enhance Capacity Utilisation: The Evidence from Indonesia, Philippines and Vietnam

Using firm-level data from Indonesia, the Philippines, and Vietnam, this research investigates the relationship between capacity utilisation and international market rivalry, exploring for the prospect of efficient businesses self-selecting rather than learning-by-exporting to enter foreign markets. Capacity utilisation has evolved as a justification for these fleeting productivity gains. According to both linear and quadratic models calculated on an uneven variance of exporting and non-exporting companies, the influence of foreign market rivalry on capacity utilisation follows a curvilinear relationship with a diminishing marginal point as a limitation for further expansion. The non-exporting group’s greater capacity utilisation rate not only demonstrates a strong domestic business orientation of enterprises in general, but it also suggests that exporter SMEs in these nations have chosen the learning-by-exporting entrance approach. The impact of firm and industry physiognomies on capacity utilisation is investigated further in the article, which discovers that wage productivity, competition, company size, and legal structure all have linearly positive and capacity-based effects. The findings continuously stress the relevance of abilities, competitiveness, and institutional performance in encouraging the development of SMEs.

Author (s) Details

Rita R. Pidani
Newcastle Business School, Faculty of Business and Law, The University of Newcastle, Singapore.

Amir Mahmood
Newcastle Business School, Faculty of Business and Law, The University of Newcastle, Singapore.

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