A framework for the sustainable competitive advantage of foundries in South Africa

Abstract

This study empirically examined the micro and macro-economic circumstances contributing to the closure of foundries within the borders of South Africa. The primary objective was to develop a framework for a sustainable competitive advantage of the industry, as a blueprint for strategy formulation, in the hope of enhancing firms’ competitiveness and sustainability, while at the same time preventing further closures within the industry. The foundry industry has lost over 42% of the total number of firms between 2003 and 2020, significantly reducing the industry’s contribution to economic development and employment creation. The paucity of research that examines the drivers of sustainable competitiveness and provides recommendations on how these can be incorporated into the provision of strategic direction for the industry, makes this study a lynchpin for future research on sustainable competitiveness beyond the foundry industry. Sustainable competitive advantage is seen as the overarching attribute that provides firms with the capabilities to perform better than their competition. The study identified from the extant literature various micro and macro drivers of sustainable competitiveness. These drivers were subsequently tested through the application of a sequential explanatory mixed-methods approach, which used quantitative research during the first phase of the data-collection process, followed by qualitative research in the second phase. During the first phase (quantitative), 108 managers and non-managers participated by completing a SurveyMonkey® questionnaire while the second phase (qualitative) solicited input from 12 interview participants, who included owners and top management. The study confirmed the importance of the drivers identified in the literature in respect of the South African context, and further identified investment in plant infrastructure, employee skills development, ability to innovate and product quality as the most critical micro drivers while government incentives, localisation, energy costs and the availability of substitutes were identified as the most critical macro drivers of the sustainable competitiveness of foundry companies. Furthermore, the study identified competitiveness approaches and strategies relevant to the industry. A sustainable competitive advantage famework for the foundry industry is a significant contribution, as no such framework is in place. This provides an opportunity for academics, management, and champions of the foundry industry to use the framework as a basis for creating sustainable competitive advantage in the ailing industry.