U.S. firms face a major global competitiveness challenge. Although the problems relate, in part, to differences in the economic structure, history and cultural differences between the U.S. and foreign rivals, these factors may not explain as much of the variance in competitiveness as they did in the past. Competitiveness problems are also linked to a number of strategic factors under the control of managers. Among them are the absorption of managerial energy in mergers and acquisitions, increasing levels of debt, increasing firm size, greater firm diversification, lack of investment in human capital and inappropriate corporate culture.

In response to these problems, many firms are restructuring. When executed properly, restructuring can help managers regain strategic control and improve the competitiveness of their companies. However, restructuring efforts must be accompanied by a renewed emphasis on competitive strengths, improvements in human resource development programs, a refocus on innovation and quality, promotion of an entrepreneurial culture and a global, long-term strategy.

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Copyright © 1991 Academy of Management. This article first appeared in The Academy of Management Journal 5:2 (1991), 7-22.

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