Ensuring Competitive Advantage through Innovation Capability and Clustering in the Thai Automotive Parts Molding Industry: A SEM Approach

Abstract

Accepted: 2 September 2017 Thailand hosts over 50 percent of the world's top OEM automotive parts suppliers and additionally is home to over 2,400 Tier 1-3 manufacturers and suppliers. Given the significance of these numbers and Thailand's leading ranking and contribution to the global automotive industry, research was undertaken to determine how manufacturing clusters and innovation capability effect competitive advantage as it relates to automotive production part management. Multiple objectives were established which included the study of the effects and overall influences of the various variables on competitive advantage as well as the development of a structural equation model (SEM) to define how innovation and manufacturing clustering affects the competitive advantage within the Thai automotive parts molding sector. Quantitative methods analysis was conducted on the data from 240 automotive production and components suppliers' questionnaires collected from industry managers with the research results partially obtained from the analysis by use of (PLS)-graph. Qualitative research was also obtained by use of purposive sampling from in-depth interviews from ten senior managers. The results obtained indicated that clusters and innovation capability has a significant and positive effect on competitive advantage. Thus, the findings from the research illustrate that if an organization focuses on clusters, there will be a knock-on effect within the automotive parts groups leading to the increase in innovation capability, which creates a greater competitive advantage, not only for the enterprises, but also for Thai society as well.

Analyzing the drivers of sustainable value creation, partnership strategies, and their impact on business competitive advantages of small & medium enterprises: a PLS-model

“…This provides sufficient evidence for H4 to be accepted. These results are in line with research by [48], where they show that a partnership strategy with all stakeholders will strengthen the company's strategy in expanding markets and distribution and improve performance through developing company resources. Given the latent variable PS is also a predictive variable for SCA, the moderating effect that occurs can be categorized as Quasi Moderation.…”

Evaluating the innovation capability of cluster-based firms: a graph-theoretic approach

“…Although there is no common definition for industrial clusters, the advantages of this collaborative network are recognized, as the firm’s possibilities to innovate and develop competitive advantages (Porter, 1998; Cooke, 2001; Purwanto et al , 2015; Tiengtavaj et al , 2017; Yström and Aspenberg, 2017; Bittencourt et al , 2019). This is possible because the distinctive collaborative environment of industrial clusters increases access to technology, knowledge and skills, making it possible to improve firms’ innovation capability (Porter, 2003; Wonglimpiyarat, 2006; Antolin-Lopez et al , 2015; Strand et al , 2017).…”

A review of global automotive industry’s competitive strategies

“…Most efforts are initiated by governments in their policies such as in South Africa (Lamprecht and Tolmay, 2017), China (Lee and Mah, 2017), Canada (Sweeney and Mordue, 2017) and in Japan (Buigues, 2017). Besides policies, there are numerous efforts by governments, such as China has import quota system (Chen, 2017), Koreans push for export markets (Bartnik et al, 2018), Turkey promotes flexible firm structures (Senlier and Salihoglu, 2017) and Thailand supports to develop mold and die industry quickly (Tiengtavaj et al, 2017). Suppliers play a big role in automotive industries for India, Japan, Thailand, Malaysia, Germany and Turkey.…”

“…India practices suppliers and manufacturers relationship in product development (Mathivathanan et al, 2018) similar to Japan (Ishida et al, 2017), and Germany (Hertenstein and Williamson, 2018) supports a long-term relationship with suppliers. Thailand, once championed as the "Detroit of Asia" (Chamsuk et al, 2017;Ariffin and Sahid, 2017), hosts over 50 percent of the world's top OEM automotive parts suppliers (Tiengtavaj et al, 2017). Suppliers in Malaysia are forced to shift paradigm in green production strategy (Rashid and Shami, 2018).…”

“…There are numerous studies regarding how a firm can maintain its sustainable competitive advantage and improve its performance in fast changing and unpredictable environments (Rahim and Zainuddin, 2017). Competitive strategy is about being different, choosing a different set of activities than competitors (Viltard, 2017) and when other companies cannot duplicate the benefits it provides, a competitive advantage becomes sustainable (Tiengtavaj et al, 2017). Hence, automobile companies have to make adjustment in their strategies (Sanghavi et al, 2015).…”