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Competing at Home to Win Abroad: Evidence from Japanese Industry

Mariko Sakakibara and Michael E. Porter

Posted Online March 13, 2006
https://doi.org/10.1162/00346530151143842

Review of Economics and Statistics

Volume 83 | Issue 2 | May 2001
p.310-322
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Competing at Home to Win Abroad: Evidence from Japanese Industry

Mariko Sakakibara and Michael E. Porter
https://doi.org/10.1162/00346530151143842
Received: October 01, 1998
Accepted: April 27, 2000
Published Online: March 13, 2006
Abstract

The study explores the influence of domestic competition on international trade performance, using data from a broad sample of Japanese industries. Domestic rivalry is measured directly using market-share instability rather than employing structural variables such as seller concentration. We find robust evidence that domestic rivalry has a positive and significant relationship with trade performance measured by world export share, particularly when R&D intensity reveals opportunities for dynamic improvement and innovation. Conversely, trade protection reduces export performance. These findings support the view that local competition—not monopoly, collusion, or a sheltered home market— pressures dynamic improvement that leads to international competitiveness.

Mariko Sakakibara
University of California-Los Angeles
Michael E. Porter
Harvard Business School
https://doi.org/10.1162/00346530151143842
Abstract

The study explores the influence of domestic competition on international trade performance, using data from a broad sample of Japanese industries. Domestic rivalry is measured directly using market-share instability rather than employing structural variables such as seller concentration. We find robust evidence that domestic rivalry has a positive and significant relationship with trade performance measured by world export share, particularly when R&D intensity reveals opportunities for dynamic improvement and innovation. Conversely, trade protection reduces export performance. These findings support the view that local competition—not monopoly, collusion, or a sheltered home market— pressures dynamic improvement that leads to international competitiveness.

Mariko Sakakibara
University of California-Los Angeles
Michael E. Porter
Harvard Business School
Download Options

Competing at Home to Win Abroad: Evidence from Japanese Industry

Mariko Sakakibara and Michael E. Porter
https://doi.org/10.1162/00346530151143842
Received: October 01, 1998
Accepted: April 27, 2000
Published Online: March 13, 2006
Abstract

The study explores the influence of domestic competition on international trade performance, using data from a broad sample of Japanese industries. Domestic rivalry is measured directly using market-share instability rather than employing structural variables such as seller concentration. We find robust evidence that domestic rivalry has a positive and significant relationship with trade performance measured by world export share, particularly when R&D intensity reveals opportunities for dynamic improvement and innovation. Conversely, trade protection reduces export performance. These findings support the view that local competition—not monopoly, collusion, or a sheltered home market— pressures dynamic improvement that leads to international competitiveness.

Mariko Sakakibara
University of California-Los Angeles
Michael E. Porter
Harvard Business School
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