The impact of foreign direct investment on UK manufacturing: is there a profit squeeze in domestic firms?

This paper examines the extent to which foreign direct investment (FDI) in selected UK manufacturing sectors has an impact on reported profits in domestic firms. Foreign manufacturing firms are characterized by relatively high labour productivity and low wage shares. Entry by foreign firms not only impacts on domestic market shares, but also on domestic cost conditions. As a result, profitability in the indigenous sector may be reduced. There are a number of policy implications of this analysis which are explored.

The strategic role of relational capabilities in the business-to-business service profit chain

This paper extends the original service profit chain by examining the role of relational capabilities with employees, customers and strategic partners on process and performance outcomes in a business-to-business context. More specifically, we demonstrate how satisfied and loyal employees are better in developing relationships with customers and strategic partners. These relationships enable firms to be more responsive towards customers and become more innovative, which increase customer satisfaction and loyalty and, ultimately, financial performance. Our results provide support for the development of relational capabilities in a business-to-business environment by extending the service profit chain (SPC) model. However, we find that while the development of strong customer relationships contributes to an improved service responsiveness of the firm, strategic partners do not.