In This Review

How We Compete: What Companies Around the World Are Doing to Make It in Today's Global Economy
How We Compete: What Companies Around the World Are Doing to Make It in Today's Global Economy
By Suzanne Berger and the MIT Industrial Performance Center
Currency, 2005, 352 pp.

This book summarizes and generalizes from interviews with 500 enterprises conducted between 1999 and 2004 by the Industrial Performance Center of the Massachusetts Institute of Technology. It offers a vivid, and highly variegated, bottom-up view of what globalization actually means -- and does not mean -- for firms operating in an increasingly competitive global setting. To focus their work, the interviewers concentrated mainly on the electronics and software industry, the textiles and apparel industry, and the automotive industry -- all of which are increasingly global, although at different paces and in rather different ways. Economic activity, including manufacturing, has become increasingly modular, with bits of the chain from original idea to final product taking place in different firms, sometimes in different countries. Contrary to some claims, low wages do not necessarily attract firms to countries, since they are usually associated with low skills, low productivity, and poor quality control. Moreover, firms do not lose their nationality when they venture abroad. Each successful firm has a distinctive legacy, the research team found, and needs to draw on it to thrive. Firms must identify and concentrate on their distinctive skills, farming out other activities to specialized firms, some of which may be in other countries. The book itself is cited as an example of modular production: a German-owned American publishing house contracted out six different activities to bring out the book.