Small, high cost countries′ strategy for attracting MNCs’ global investments Available to Purchase

The strategy literature focuses on the firm or industry as the unit of analysis. In the game of “jockeying for positions”through “a process of creative destruction”, companies create imperfections (dominating suppliers and customers create entrance barriers) to achieve results above average. Very seldom is government,as an entity with its own strategies, discussed in this “war game” between companies. States that government (i.e. central and local) is the unit of analysis with a defined goal of maximizing utility for the inhabitants through the services rendered, i.e. internal efficiency and external effectiveness. To finance the services offered to the public and various organizations, government must develop strategies which will maximize both short‐ and long‐term tax revenues without reducing utility for the users. Consequently government succeeds when companies are competitive. Discusses strategic factors which are under the control of government in order to attract MNCs′ global investments by improving the industry structure and thereby competitiveness; to create a win‐win situation for both companies(domestic and MNC‐subsidiaries) and government in order to secure long‐term domestic growth (performance).