Abstract: This paper proposes an analytical framework that can comprehend how and to what extent the interaction of institutions, industries, and enterprises has contributed to the decline of US competitiveness. The analytical framework builds on the notion that, ultimately, competitive advantage depends on the strategies and structures of the business enterprises on which Americans rely for most of the nation's productive investments. It is argued that, over time, to gain sustained competitive advantage, business enterprises in the United States and elsewhere have had to achieve increasingly higher degrees of ‘organizational integration’, and that, as a general rule, the US's prime competitors, and particularly the Japanese, have gained competitive advantage by becoming more organizationally integrated than their American rivals. For some industries, moreover, organizational integration is more important than others, hence the variation in the extent to which certain American industries have been affected by foreign competition; and even within the more vulnerable industries such as electronics and automobiles, some American companies have responded to the competitive challenge more quickly and effectively than others. The organizational integration hypothesis argues that an important determinant of differences in the quickness and effectiveness of strategic responses to competitive challenges among American companies in the same industry is the extent to which these companies are organizationally integrated.

Keywords: American companies, American industries, competitive advantage, competitive challenges, decline of US competitiveness, foreign competition, organizational integration, strategic responses, US competitiveness,