Countries in Latin America want to become more attractive to attract foreign direct investment, to demonstrate abroad that their countries are suitable to receive these investments, competitiveness is used as an integral measure to analyze how reliable a country is to invest in it.
The article discusses how stress affects the competitiveness of companies, as well as increasing the managerial skills of a country can increase its competitiveness.
Introduction
Today we live in an interconnected world, in which all countries compete to obtain greater foreign investment to develop their economies. Those companies and people who make the decisions where they will invest their money take into account in a very detailed way the competitiveness of the countries in which they are seeking to invest, especially when they want to invest in capital goods within those countries (in contract to financial speculation). Competitiveness is a very important indicator for investors, since it allows them to fully understand a country's capacity to generate production (output) for each economic unit invested, as well as the rate of return of capital, its political and economic certainty. and judicial.Those countries that are more competitive will be able to generate more resources with a lesser amount of required investment, which translates into higher capital returns, less risk of operation in that country and greater certainty in government institutions to protect foreign investment.
During 2005 Latin America received large amounts of foreign capital, these capitals were invested in the acquisition of local companies by large international corporations, as well as in the creation of joint projects between national and foreign companies or finally for the creation from scratch of new business units largely financed with foreign capital. According to ECLAC, in 2005 Mexico received 17.9 billion dollars of foreign direct investment, followed by Brazil with 15.2 billion dollars, Chile with 7.2 billion dollars, to mention just 3 countries in the region.
The reception of capital for all of our countries is something very positive for the economy, however it is very important to understand that with said capital, there are also operating policies, financial objectives and in many cases also new foreign directors imposed by the investing countries..
The points described above lead companies to undergo strong organizational changes that, if managed efficiently, can significantly increase the efficiency and competitiveness of companies; however, if they are mismanaged they can lead to catastrophic results in employee morale, loss of key personnel, as well as a negative image of customers and suppliers. Poor results are what we seek to prevent by achieving a better understanding between the relationship of competitiveness and stress.
Those countries that do not understand how competitiveness is measured, what its variables are, how they interrelate and through what type of restructuring the current level can be improved, will not be able to make these changes efficiently.
Currently, the speech is heard a lot in Mexico by various political and business figures talking about the need for structural reforms to increase competitiveness, however, I have not had the opportunity to hear which are the main variables to improve, or through which programs for improvement. Given this need to understand a little more about competitiveness and with the aim of encouraging business groups to make concrete proposals, executable in the short term and aligned with their strategy that favor the competitiveness of their companies, industries, and finally their country comes up with the idea for this article.
Development
I would like to start with a definition of competitiveness for nations taken from the Harvard Institute for Strategy and Competitiveness:
The prosperity of a nation depends on its competitiveness, which is based on the productivity with which it produces goods and services. Sound macroeconomic policies as well as stable political and legal institutions are necessary but are not sufficient conditions to ensure economic prosperity. Competitiveness is grounded in a nation's microeconomics: the sophistication of a company's operations, its strategies, and the quality of the economic business environment in which companies compete. A good understanding of the macroeconomic foundations of competitiveness is essential for a national economic policy.
In this definition, we can identify the importance of a solid macroeconomic environment, with efficient and stable institutions, as well as recognizing that the macroeconomic environment in which companies operate is of great importance for competitiveness. It is clear that economic policies can accelerate or freeze the economy through fiscal incentives, credits, concessions, or through modifying some existing regulations. These economic policies or as structural changes are sometimes mentioned are one of the great catalysts for the microeconomy to be activated, allowing companies to grow and compete in a more appropriate environment for their strengthening and development. For example, in Mexico there is talk that tax reforms should be carried out to encourage investment,as well as modifying some legislation to allow investment in some topics such as energy, transportation, health and education.
However, as long as there is a partisan division and a national agenda is not taken as a priority, these structural changes or economic policies cannot catapult competitiveness through the activation of the economy.
Now that we have a better understanding of the subject of competitiveness, we will now explain how IMD conducts its studies on competitiveness, IMD () is one of the most prestigious institutions worldwide in the study of competitiveness in countries, in the analysis methodology, consider that competitiveness is determined by factors in economic performance, government efficiency, business efficiency and infrastructure as we can see in the following figure.
One of the four main categories corresponds to business efficiency as we can see in the third column of Table 2 shown above. When breaking down the subfactors that make up the Management Practices category within this category under discussion, we can find several aspects to evaluate such as:
- Companies adaptability, ethical practices, credibility of management, corporate boards, auditing and accounting practices, value for shareholders, customer satisfaction, entrepreneurship, marketing skills, social responsibility and health, safety and environmental issues.
All of these sub-factors, as you can see, correspond to certain competencies that modern and efficient companies are expected to have. However, we can find some examples as in some countries these practices are not found within the business field. In an exercise to relate how stress affects competitiveness, a table will be shown below that shows the effects of stress in one column and the competitiveness subfactors that are evaluated in the next column. Factors are applied to surveys of companies in different industries, the sample size depends on the GDP of each country. For the 2005 competitiveness analysis, 4,000 responses were received from more than 60 countries around the world.
Businessmen generally complain that governments should promote competitiveness through structural reforms, however, it is also important to raise awareness among business groups that there are a number of business practices that also promote the competitiveness of companies, industries and finally from the countries. First we will show in the following table those aspects that are evaluated to determine business efficiency, to later be able to relate how stress is a worthy factor to study when trying to understand business efficiency and how it can affect competitiveness.
Several of the previous categories we could classify in a general way in topics related to the management of organizational change, organizational communication, leadership, corporate governance and how these variables affect the performance of the company when evaluating customer satisfaction, social responsibility, health and environmental care.
Clearly, foreign companies will have different ways of thinking, different objectives, values and a different culture, which is why if these elements are not successfully introduced into local companies, people will perceive a great risk to their safety, which It will produce great stress that can paralyze or even in some extreme cases try to boycott the implementation of new practices in companies.
If you believe that stress does not affect companies, it is worth remembering a study by Foster Higgins & Co, which indicates that stress causes direct costs for:
- Absenteeism Stress work lawsuits Trials Accidents Errors of judgment and action Conflicts and interpersonal problems Violence Problems with customer service Resistance to change No time to do things correctly Loss of intellectual capital
Comparing the effect of stress on competitiveness with the aforementioned competitiveness subfactors will allow us to relate how the effects of stress on people can affect the aspects to be evaluated through competitiveness surveys.
| Effects of stress | Aspects to evaluate in competitiveness |
| Resistance to change | Adaptability in companies |
| Customer service issues | Customer satisfaction |
| Conflicts and interpersonal problems | Management and direction credibility |
| Work demands due to stress | Social responsability |
| Violence | Ethical practices |
| There is no time to do things correctly | |
| Accidents | Health, safety and conservation of the environment |
| Errors of judgment and action | |
| Absenteeism | |
| Trials | |
| Claims | |
| Loss of intellectual capital | Shareholder value |
Seeing how stress directly affects competitiveness, companies should implement organizational development programs, since only through an effort led by senior management, which promotes the delegation of authority, learning, problem solving processes, the Empowering employees, increasing communication skills, with a special emphasis on the culture of work teams and proper management of change, companies will be able to reduce stress levels and increase their efficiency to achieve their objectives.
One of the main hypotheses that are argued in this article is that while managerial skills are more developed in a country, there will be better working conditions, which will reduce employee stress and as less stress exists, the competitiveness of employees will increase. each of the companies. Next, we will review the theoretical framework of stress to understand more clearly how we can identify and manage it.
Stress: Conceptual Framework
The word stress comes from the French détresse, which means grief or grief, and from the English strein, which can be translated as tension oppression. It was Hans Seyle, in 1936, the first scientist who seriously studied it and developed the theory of Generalized Adaptation Syndrome.
He defined stress as the nonspecific response of the organism to any demand, the psychophysiological stress that the organism has to make to adapt to any demand from the environment. The scientific community has been studying this problem since the middle of the 20th century, and it is still one of the topics that generates the most publications today, due to its personal and public interest.
Stress is the result of the interaction between a fact or situation, which we will call stressor, and the response of each individual, who translates and perceives that element in a threatening way. This interaction produces in the body a series of physical, emotional and psychological reactions, with different consequences in the short, medium and long term.
It is an automatic and nonspecific response mechanism that depends on two factors:
1. The stressor or stimulus that triggers it
2. The individual's perception and response
There is unanimity in considering stress as the set of physiological and psychological reactions that are automatically triggered, as the body's response to this stimulus perceived as dangerous. Instead, there is some discussion about whether the primary mechanism of stress appearance is emotional, being our organism the one that comes forward to react to the stimulus and then give a cognitive explanation to our response, or if, on the contrary, it is our consciousness and Our reason is the one that perceives the threatening situation, and provokes physical reactions that prepare us to defend ourselves or fight against it.
Eustrés and Distés
Stress is also the positive capacity of the human being to respond to an external or internal stimulus that demands a physiological response of a greater physical effort than usual and for whose wear it is prepared on time.
In physical terms and understanding stress as force, eustrés would mean push, motive, energy. We would speak in this case of the eustrés or positive stress. A certain dose of stress, adequate to the demand and to our abilities, is really positive and beneficial, since it provokes a healthy and attractive challenge stimulus and increases our self-esteem, allowing us a greater and better personal performance and cost-effectiveness ratio.
If the pressure is excessive, lasts too long or we consider ourselves unable to respond adequately, a deformation occurs that is distress or negative stress. The distress would be deformation, distortion, and it is what we normally talk about when using the term stress.
The response of our cognitive and emotional mechanisms is disproportionate, wrong, more or less sustained over time, is what causes distress or negative stress, which is that reaction that does not help us to resolve the demands of the environment, and also reduces capacity of response, causing tremendous wear and tear, leading to physical and psychological deterioration, with the appearance of diseases and psychosomatic disorders that decrease our organic defenses.
| Positive stress or Eustrés | Negative stress or distress |
| v It increases the ability to perform and improves our skills. v It is a necessary tension.
v Stimulates activity and energy. v Makes life more attractive. v It would be the salt of life, a matter of dosage. v The perception is pleasant v Produces balance and well-being |
v Perception is threatening v There is a mismatch between demand and resources.
v The response is inadequate, avoidable, disproportionate. v Decreases the ability to adequately resolve conflicts. v It produces imbalance and bio-psycho-social disorders. v It has consequences in the organism, physical and mental disorders that can lead to serious illnesses. |
How does stress occur?
Thousands of years ago, what caused stress to our stone age ancestors was the perception of the multiple real threats that were part of their lives.
It was really essential to survive, to have the capacity of immediate response that allowed them to face the attacks or flee from them. Living conditions were so harsh that they necessarily had to demonstrate more strength and endurance at specific times to defeat enemies of all kinds that put their lives in real danger.
To do this, certain glands in the body secreted - and secrete substances that they had and have - the virtue of preparing the body for fight or flight. The process was triggered, and those substances secreted by the organism were consumed with the physical wear that came next. Thanks to that capacity of the overstraining organism, the species survived. Now we will review some of the main causes of stress so that we can later identify them by listing the consequences that stress has on our body.
Psychosocial Causes of Stress
These are the result of an interaction between social behavior and the way that our senses and our minds interpret these behaviors. In other words, social stress is determined by the meaning we assign to events in our lives. Here, therefore, we must understand that as each person has a different pattern, their stress will also be different.
Some examples of these types of stressors that frequently arise during the course of our life are: disappointments, conflicts, job changes, personal losses, financial problems, time pressure, retirement, difficulties in making decisions, changes in the family
Bioecological Causes of Stress
Bioecological causes originate from all activity derived from our normal and abnormal functions of the organs and system of the human organism, including those produced by exercise, and those stressors that arise from our physical or ecological environment.
Environmental factors
They are conditions of the physical environment that force us, from time to time, to a stress reaction, such as: heat, cold, noise, optical stimuli, air pollution, injuries or trauma, among others.
Once we have reviewed some external factors that cause us stress, we will review the signs that our body presents in the face of these perceived threats, in order to identify them and be able to control them and try to minimize their negative impact on our lives.
Physiological signs of stress
Vital functions are stimulated, increasing the physical ability to fight or flee.
- They increase blood pressure and heart rate to bring more blood to the musculoskeletal system. They raise the level of glucose and fatty acids in the blood to bring energy support to our muscles. Breathing becomes faster and shallower. Pupil dilation occurs for a better view. Increases sweating, muscle tension and motor skills. The ear is sharpened and the reflex response to stimuli. The pain threshold is reduced, to better withstand external aggressions.
The vital functions that the organism does not consider essential are slowed down:
- Digestion slows and gastric juices increase. Immune system weakens to save energy. Stiffness and pallor appear. Sexual response decreases.
Phases: Generalized Adaptation Syndrome
Developed and described by Hans Seyle. In the development of stress there would be three progressive stages, depending on the duration of the situation and the individual's response:
1. Alarm phase: Fight or flight are the two immediate reactions
- Mechanism of action: The sympathetic autonomic nervous system is activated, the hypothalamus that sends messages to the pituitary gland is stimulated, which releases certain hormones that have a direct effect on the body. Physiological effects:
Increased heart rate, blood pressure, muscle tension, blood glucose levels, respiratory rate, sweating appears, pupil dilation and digestion stops.
2. Resistance phase: The parasympathetic system takes command. Adaptive reactions appear. Internal activities try to return to normal. A large amount of energy is required and consumes.
- Symptoms and physical signs:
- Frequent headaches. Tension and pain in the muscles (neck, back and chest. Chest discomfort. Frequent fatigue. High body temperature (manifested as a fever. Stomach disorders (indigestion, diarrhea. Insomnia and nightmares. Dry mouth) and throat.
- Ø Mental symptoms:
- Nervous "tics" (biting your nails or pencil, repeatedly touching your face, hair or mustache, scratching your head. Irritability and difficulty laughing. Anxiety to eat something. Difficulty concentrating and remembering data. Complex, phobias and fears, and feeling of failure
3. Exhaustion phase: The signs of the alarm phase reappear. Mechanisms of energy adaptation are reduced.
There may already be risk and danger to health and life, and diseases appear.
conclusion
In this article we review the definitions of competitiveness and the factors that determine it. We relate how the effects of stress can directly impact one of the elements of the competitiveness analysis, and curiously, companies can play a very important role in developing through:
- organizational development programs, promotion of managerial and leadership skills of senior management, better management of change considering the organizational culture, finally systemically analyze those other human elements that may negatively influence the implementation of improvement programs in companies to resolve them in depth through human resources systems aligned to the strategy.
It is worth mentioning that we support our hypothesis that the better management skills, the level of stress in companies will be reduced and therefore their competitiveness will be increased. This document is a clear invitation to question the directors of Latin American companies to realize how, through poor management, competitiveness can deteriorate. Some leagues of organizations supported by the World Bank and Georgetown University are attached in the bibliography regarding which aspects they recommend to review as an investment methodology in foreign countries.
Let's imagine to finish 2 different cases, a country called “SIN_BUENA_GESTION” that in the last 5 years has received 100 million dollars of foreign direct investment of which there has not been a positive return on investment due to problems with employees, unions, the culture of the country as well as the main partners within that country. Now let's look at the country "CON_BUENA_GESTION" which has also received 100 million dollars of foreign direct investment in the last 5 years, from which returns on investment have already been generated, part of which was reinvested in innovation projects proposed by the local employees, investor countries are highly satisfied with the quality, efficiency and ethical values of employees, unions, executives, partners and suppliers within this country.
Of course, the previous example is a great simplification of reality, we can find in the recent business literature of cases of foreign investors leaving the country due to the inability to achieve results due to cultural, labor and value issues.
As countries better develop their managerial and stress management skills, they can foster greater development in employees, incomes, the community, and the country.
To achieve this, greater training is required at all levels in companies, greater integration between companies and universities to offer study plans that cover these contents, as well as the support of the government and different organizations to promote a new work culture. Latin American.
Bibliography
1. Economic Commission for Latin America and the Caribbean (ECLAC). United Nations. 2006. www.cepal.org
2. “Doing Business in 2006: Creating Jobs.” Country Data Profile. Doing Business, Benchmarking business regulations. The World Bank Group. http://www.doingbusiness.org/reports
3. French, Wendell & Bell, Cecil. Organizational development. Editorial Prentice Hall. Mexico 1996. pp. 27-35
4. “Growth Competitiveness Index rankings 2005 and 2004 comparisons.” World Economic Forum. Last update on September 27, 2005. http://www.weforum.org/
Competitiveness + Index + rankings + 2005 + and + 2004 + comparisons
5. «Guide to Research: Foreign Country Investment.» Georgetown University Library. Georgetown University. Last update March 2006. 37th
guides.library.georgetown.edu/researchcourseguides
6. Lee, David. Employee Stress. Reprinted with permission from The John Liner Review, Volume 11, Number 3; Fall 1997. Copyright 1997, Standard Publishing Corp., Boston, MA. All rights reserved. http://www.jobstresshelp.com/DV_jobstress.htm
7. Porter, Michael.
"National Competitiveness." Institute for Strategy and Competitiveness. Harvard Business School 2006. http://www.isc.hbs.edu/competitiveness-economic-development/research-and-applications/national-competitiveness/Pages/default.aspx
8. Puchol, Luis. The Book of Management Skills. Editorial Díaz de Santos. Spain 2003 pp. 370-395
9. Rosselet-McCauley, Suzanne. "Methodology and Principles of Analysis". IMD World Competitiveness Yearbook 2005. IMD.
10. World Association of Investment Promotion Agencies. The World Forum for the Exchange of Best Practices in Investment Promotion.
