nep-bec New Economics Papers
on Business Economics
Issue of 2005‒11‒09
seventeen papers chosen by
Christian Calmes
Universite du Quebec en Outaouais

  1. A methodology of analysis and selection of Business Development Projects on a Regional Subcontinental Scale By Antonio García-Tabuenca; Justo De Jorge; Carolina Perondi
  2. The Neural Basis of Financial Risk Taking By Camelia Kuhnen; Brian Knutson
  3. From outsourcing logistics towards interactive learning in the supply chain: drivers, bottlenecks, enablers, and spatial effects By Evert-Jan Visser
  4. Inventory and the Stock Market By Richard Kum-yew Lai
  5. A comparison of industrial location behaviour within the US and European Semicondictor Industries By Tomokazu Arita; Philip McCann
  6. Relationship lending and competition: Higher switching cost does not necessarily imply greater relationship benefits By Timo Vesala
  7. Airline Price Competition: A Time Series Analysis of 'Low-Cost' Carriers. By David Edward Pitfield
  8. The sustainable development of the European logistics industry: an analytic approach at micro and macroeconomic levels By Flavio Boscacci
  9. Spin-off firms and individual start-ups. Are they really different? By Sierdjan Koster
  10. Measuring Customer Value Gaps: An Empirical Study in Mexican Retail Market By Rajagopal
  11. Decomposition of gender wage differentials among Portuguese top management jobs By Raquel Vale Mendes
  12. Pursuit of Competitive Advantages for Entrepreneurship: Development of Enterprise as a Learning Organization. International and Russian Experience By Anna Dokukina
  13. Proximity and R&D Cooperation between firms: Location, R&D and Output in an Oligopoly with Spillovers By Isabel Mota; António Brandão
  14. Business networking for SMEs as a means to promote regional competitiveness: A Theoretical Framework By Vitor Braga
  15. The Role of Clusters in Knowledge Creation and Diffusion – an Institutional Perspective By Michael Steiner
  16. Enterpreneurship and innovation activites in the schumpeterian lines By George Korres; Emmanuel Marmaras; George Tsobanoglou
  17. The inert firm; why old firms show a stickiness to their location By Aleid E. Brouwer

  1. By: Antonio García-Tabuenca; Justo De Jorge; Carolina Perondi
    Abstract: The objective of this paper is to set up, among a group of projects and by means of multivariate techniques, a selection process that allows to choose those with the best performance and to establish the factors and variables characterising successful cases. This way, we can offer a model for the evaluation and selection of development projects. New ideas and approaches for the promotion politics of business services should come out of the extraction of common models and behaviours among the cases with best performance. More specifically, for the empirical development of this research, we have used the project portfolio of business development services of the Inter-American Development Bank between 1995 and 2002. JEL classification: Keywords: business development project, factor, cluster
    Date: 2004–08
  2. By: Camelia Kuhnen (Stanford Graduate School of Business); Brian Knutson (Stanford University Department of Psychology)
    Abstract: Investors systematically deviate from rationality when making financial decisions, yet the mechanisms responsible for these deviations have not been identified. Using event-related fMRI, we examined whether anticipatory neural activity would predict optimal and suboptimal choices in a financial decision-making task. We characterized two types of deviations from the optimal investment strategy of a rational risk- neutral agent as risk-seeking mistakes and risk-aversion mistakes. Nucleus accumbens activation preceded risky choices as well as risk- seeking mistakes, while anterior insula activation preceded riskless choices as well as risk-aversion mistakes. These findings suggest that distinct neural circuits linked to anticipatory affect promote different types of financial choices, and indicate that excessive activation of these circuits may lead to investing mistakes. Thus, consideration of anticipatory neural mechanisms may add predictive power to the rational actor model of economic decision-making.
    Keywords: neuroeconomics, neurofinance, brain, investing, emotions, affect
    JEL: D81 D83 D84 C91 G11
    Date: 2005–09–06
  3. By: Evert-Jan Visser
    Abstract: This paper focuses on factors driving, hindering and enabling a transformation of arm's length outsourcing linkages in supply chains into strategic partnerships between MNEs and core logistic service providers, and on the effects for logistic product and process innovation, the spatial structure of supply chains, and the location preferences of innovating logistic companies. In a setting of deregulation, globalisation, technological change in transport and communication, and ongoing changes in consumer demand, MNEs and their logistic specialists may engage in strategic partnerships so as to develop the competences required to effectively manage global supply chains with a view to lower costs and enhancing service. This introduces problems of governance and competence, however, and therewith, transaction costs (Coase 1991, Williamson 1985, Nooteboom 1999), power, trust (Nooteboom 2002), learning-by-interaction (Nooteboom 1992, 2000), lock-in and path dependence (Boschma, Frenken & Lambooy 2002). This paper investigates the relevance of these factors in the case of the development of a partnership between a Netherlands-based global logistic service provider and several of its clients. Case-study evidence is thus used for developing an integrated theoretical framework fit to study the commercial, logistic and spatial effects of current developments in the logistic service industry.
    Date: 2004–08
  4. By: Richard Kum-yew Lai (Harvard Business School)
    Abstract: About inventory models, a concern is 'often made [that] any resemblances between the models constructed and reality are purely coincidental.' One set of factors not usually considered in textbook models of inventory decisions is suggested by well-documented evidence in macroeconomics, that the stock market affects investment decisions. Does the stock market also affect inventory decisions, and how? I study four hypotheses. The first is that the market could be a side-show, with no impact on firms' decisions. The second is that the market influences inventory decisions via a financing channel. When the market over-values firms, firms can get easier and cheaper financing, and tend to increase their inventory. The third is a dissipation channel. When the market over-values firms, firms are less disciplined and let inventories rise. The last is a catering channel. When the market discounts high-inventory firms, firms decrease their inventory, and vice versa. I report evidence that rejects the first, weakly supports the second and third, and strongly supports the fourth hypotheses. This evidence contributes to an emerging area for empirical research, at the intersection of finance and operations management.
    Keywords: inventory, stock market, sentiment, operations management
    JEL: G3 L23 M11
    Date: 2005–09–04
  5. By: Tomokazu Arita; Philip McCann
    Abstract: Our paper analyses micro-level data from the US and European semiconductor manufacturers. In particular, we will focus on the plants undertaking the wafer manufacturing processes. We integrate a range of production technological indices with spatial data and regional economic variables in order to understand the issues determining the location behavior of the industry. Our results indicate that the locational behaviors of the US and European wafer plants do not correspond to an orthodox product-life-cycle model.
    Date: 2004–08
  6. By: Timo Vesala (Bank of Finland)
    Abstract: This paper studies relationship lending in a framework where the cost of switching banks measures the degree of banking competition. The relationship lender’s (insider bank’s) informational advantage creates a lock-in effect, which is at its height when the switching cost is infinitesimal. This is because a low switching cost gives rise to a potential adverse selection problem, and outsider banks are thus reluctant to make overly aggressive bids. This effect gradually fades as the magnitude of the switching cost increases, which de facto reduces the insider bank’s profits. However, after a certain threshold in the switching cost, the insider bank’s ‘mark-up’ begins to increase again. Hence, relationship benefits are a non-monotonous (V-shaped) function of the switching cost. The ‘dynamic implication’ of this pattern is that relationship formation should be more common under extreme market structures ie when the cost of switching banks is either very low or sufficiently high. Recent empirical evidence lends support to this prediction.
    Keywords: relationship lending, switching cost, banking competition
    JEL: G21 G24 D82 D43
    Date: 2005–08–31
  7. By: David Edward Pitfield
    Abstract: This paper, after providing an introduction to the operating context of low cost carriers in Europe, examines the competitive pricing behaviour of airlines. Data is collected by route for cases where more than one airline is in direct competition. Data on fares is obtained from the internet for two airlines with competing services to Alicante, Prague and Malaga, departing from Nottingham East Midlands Airport in the UK, for the six working weeks up to and including the actual departure. These destinations represent leisure traffic. Two domestic business destinations were also selected to illustrate price competition on business demand where departure times were within a maximum of 20 minutes of each other and a further examination of competing services from London Gatwick (LGW) was made. Cross Correlation Analysis is used to examine whether, subject to a variety of lags, the prices offered by one airline can be seen to be both correlated with the other price series and to lead it. This provides some insight into the pricing strategy adopted by the competitors. Autocorrelation Functions (ACFs) and Partial Autocorrelation Functions (PACFs) can also be produced on the prices offered by each airline. These suggest the nature of the ARIMA model that can be fitted to the series and these models can show the degree to which series values are correlated with their own past values and whether a reasonable model could be based on an ARIMA approach. The relative strength of these two relationships is examined; are prices more closely explained by the competitor's actions or the airlines own past price setting?
    Date: 2004–08
  8. By: Flavio Boscacci
    Abstract: A large re-structuring process is running in the European logistics market. The main driving forces come from the globalisation of the Economy, encouraged by the decrease of the unit transportation costs and by the contemporaneous upgrading of the labour level costs and the legal environmental costs. So, a good logistics system has become a must for the competition at both micro and macro-economic levels. Given the effectiveness of the single deliveries of goods, the main problem is to increase efficiency of the logistics services. From the micro-economic point of view, the problem consists in minimising the costs of the production processes of goods management services. In Europe, in particular, we are watching a large re-organisation of the logistics enterprises and of their territorial networks to achieve the best scale and scope economies of production. At the macroeconomic level, the problem is to estimate the rate of the logistics services on the GDP. In this paper we investigate the European logistics market transformations both from microeconomics and macroeconomics points of view. Thus, we will analyse the investments of the logistics sector as well as the logistics supply value as a component of GDP and its contribution to the International balance of commerce. Moreover, the infrastructures system quality (railways, roads, telecommunication, ports, airports, etc.) will be considered as a base asset for the reduction of the private costs of service production and as a territorial resource for the sustainable vehicles circulation.
    Date: 2004–08
  9. By: Sierdjan Koster
    Abstract: In the field of firm demography, spin-offs have recently attracted attention as a very successful form of new firm formation. Policy makers see spin-offs as particularly fertile innovators in an economy. Theoretically, following lines of thought from the resource-based theory, spin-offs are also expected to perform better than other start-ups that lack the resource base spin-offs inherited from their mother companies. This paper shows, based on an empirical study of American entrepreneurs (ERC-dataset) that spin-offs are indeed a step ahead of firms that do not receive support from a third party company. In the early stages of their existence, spin-offs are leading other new firms in the development of their products, spin-offs show an increased tendency to hire personnel, and spin-offs receive their first income sooner than other firms. At start-up, spin-outs hardly differ from individual start-ups, which have not received any back-up during the gestation process. After one year they seem to perform slightly better.
    Date: 2004–08
  10. By: Rajagopal (Monterrey Institute of Technology & Higher Education, Mexico City Campus)
    Abstract: The role of customer value has been largely recognized over time by the firms as an instrument towards stimulating market share and profit optimization. The customer values for a new product of firm in competitive markets are shaped more by habits, reinforcement effects, and situational influences than strongly-held attitudes. A basic premise of the paper is that the focus should be on maximizing total customer value and customer satisfaction which are inter-dependent in the decision making process towards buying new products. The framework of the construct is a proposed model which integrates all aspects so as to maximize the potential of the organization and all its subsystems to create and sustain satisfied customers. The discussion in the paper on the customer value gaps in the process of marketing new products and explores the possible situations that may lead to lower the customer value. The model discussed in the study has been subject to empirical testing through analysis of data collected from 369 respondents purposively selected. The study was conducted in the 11 retail auto service stores located in Mexico City.
    Keywords: Product positioning, customer value measurement, retailing, marketing functions, aggregate returns, model construct and estimation
    JEL: B41 C13 C44 C51 D11 M21 M31
    Date: 2005–08–12
  11. By: Raquel Vale Mendes
    Abstract: This paper studies gender wage differentials among top managers in the Portuguese economy. The objective is to investigate whether men and women within the same occupational group, with relatively high levels of human capital, and who are evaluated basically on their performance, are treated unequally in relation to pay. The Oaxaca wage differential decomposition method is used, relying on 1999 micro data gathered by the Portuguese Ministry of Social Security and Employment. The main findings indicate that a substantial portion of the wage gap between male and female top managers in Portugal is explained by wage discrimination.
    Date: 2004–08
  12. By: Anna Dokukina
    Abstract: The range of up-to-date means to achieve success in business is rather extensive. The question is how to use them effectively taking into consideration conceptual changes in modern business strategies. Characteristics of development of the firm as a learning organization and crea-tion of corporate universities has been discussed during last decades by corporate and human resources managers, economic consultants and business education professionals. Most researchers emphasize the role of a corporate training system as an important competitive advantage in the dynamic conditions of modern business activity. Interest of Russian businessmen and economists to the new ways of solving managerial and production tasks has emerged quite recently. The pursuit of effective decision in management and production corresponding to the actual business strategies leads to the increase of significance of intellectual capital as a base of a system of com-petitive advantages of Russian enterprises. The current and planned research is devoted to the problem of pursuit and crea-tion of unique resources such as systems of corporate training and knowledge manage-ment which are main elements of strategic planning and management of a firm. The framework of research includes the following main points: · Analysis of the modern market development and related new business con-cepts. · The role of intellectual capital as an important part of a business life. · Dynamics of business environment and the necessity of learning organiza-tions’ creation and development. · Modern Corporate Universities as the most important institute of the enter-prise. · International and Russian tendencies in accumulation and application of intel-lectual capital and creation of Corporate Universities. The present article is dedicated to the consideration of the reasons and directions of conceptual changes in the business activity realization; to the problems of the devel-opment of business enterprise as learning organization and creation of the corporate universities; to the experience and tendencies of the concentration and realization of in-tellectual capital. Key words: entrepreneurship, economics of the firm, competition, intellectual capital, learning organization, knowledge management, corporate university.
    Date: 2004–08
  13. By: Isabel Mota; António Brandão
    Abstract: This paper aims at explaining how proximity between firms affects cooperation in R&D. For that purpose, it is proposed a three-stage game amongst three firms where each firm decides about location, R&D and output. Firms’ decision about location determines a R&D spillover, which is inversely related to the distance between firms. R&D output is assumed to be cost reducing and exhibit diminishing returns. Cooperation is only allowed in the R&D stage. Our results allow us to conclude that there is a positive relationship between R&D output equilibrium and the distance between firms when firms act independently. When firms cooperate in R&D, R&D output for a cooperating firm increases with the degree of information sharing between them, as well as with a reduction of the distance between cooperating firms. Firms’ decision about location is also affected by R&D activities: if R&D activities run independently, the clustering of firms only occurs for a convex spillover function; if R&D activities run cooperatively, clustering is always observed if there is an increased information sharing between firms. Keywords: Location, R&D cooperation, R&D spillovers
    Date: 2004–08
  14. By: Vitor Braga
    Abstract: The competitiveness of regions, as a means of promoting the competitiveness of a country as a whole, has been one of the main topics on the agenda of policy makers over the last decades. Several attempts at promoting competitiveness have been made with different degrees of success. In most cases, public investment in the regions was perceived as the solution to promote regional competitiveness and top-down policies were implemented. However, competitiveness also has an important dimension that is not related to public investment and depends instead on the cultural and institutional norms of a region. These regional characteristics are not easily addressed by traditional regional policies and require the study of cognitive processes and sociological and anthropological issues. Over recent years regional development has emphasised the importance of endogenous development. From this point of view, national or local governments’ policies must recognise that competitiveness not only comes from public investment in physical infrastructures but also depends on the behaviour, attitudes and capabilities of local entrepreneurs within the business environment. The scientific literature has been unanimous in showing that business networks carry advantages for regional competitiveness. Several key issues are raised regarding this issue including trust, local culture, and transaction costs. The networking of activities gains special emphasis with respect to SMEs. In most cases the regional economy depends on these firms and they are frequently seen as a key element within regional development. Also these firms depend much more on potential networks to gain advantages in information and expertise and often require joint ventures with respect to R&D activities. This paper will address the advantages of networking and its contribution to regional development as a way of promoting competitiveness. In so doing it will analyse the factors that lead entrepreneurs to co-operate and apply these findings in the context of regional and national economic development. Keywords: Network form of organisation, Local development, Trust, Co-operation.
    Date: 2004–08
  15. By: Michael Steiner
    Abstract: Clusters and networks have received renewed attention in recent years not only as a tool for regional development in general but as an institution of knowledge creation and diffusion between the knowledge infrastructure of a region and the firms within the clusters. They are therefore often regarded as geographically condensed forms of economic cooperation and knowledge exchange. The recent renaissance of interest in institutions as a factor shaping economic performance has therefore also implications for the creation and sustained existence of clusters and networks as a tool for knowledge management and as learning organisations within and across regions. This institutional perspective serves to identify additional factors influencing economic behaviour leading to cooperation. Different strands of institutional thinking –institutions as “social technologies” in the tradition of evolutionary economics, clusters as a form of Coase institution integrating positive external effects of technological knowledge, the importance of knowledge sharing in the context of the “New Institutional Economics” – emphasize that connectivity cannot be effectively coordinated by conventional markets. Clusters and networks are among the non-market devices by which firms seek to coordinate their activities with other firms and other knowledge-generating institutions. But it is also important to emphasize that clusters as coordinating institutions are not automatically just there but that they are the result of an evolving process shaped by policy activities and entrepreneurial behaviour responding to new challenges. Clusters as social technologies are co-evolving with new physical technologies and are therefore in constant need to change themselves. They can be regarded as an answer to the problems of achieving agreement and coordination in a context where there is a collective interest. They combine different additional elements that are important for regional development and economic growth.
    Date: 2004–08
  16. By: George Korres; Emmanuel Marmaras; George Tsobanoglou
    Abstract: The importance of diffusion of technology for economic growth has been emphasised by economic literature. Much of the recent work on economic growth can be viewed as refining the basic economic insights of classical economists. The recent debate on the determinants of output growth has concentrated mainly on the role of knowledge, typically produced by a specific sector of the economy, and furthermore in the role of entrepreneurship and the implications on economic growth. This paper attempts to examine the role of entrepreneurship, and those of innovation activities (technical change, research and development and diffusion of technology) and the effects of output growth, according to the Schumpeterian lines. Following on the Schumpeterian tradition, this paper starts from the recognition that there are two main patterns of innovations: the first one is the creative destruction pattern and the second one is a creative accumulation pattern. Also, it emphasizes the role of entrepreneurship and the impact of the diffusion of technology in the inter-country and international economic contexts using some of the empirical implementation of epidemic, probit analysis and moreover from technological substitution models. Key Words: Entrepreneurship, Innovation Activities, Diffusion, Modernization, Competitiveness, Schumperer.
    Date: 2004–08
  17. By: Aleid E. Brouwer
    Abstract: This paper investigates the tendency of older firms to show stickiness to their home-region or fixed location, with the increase of age (in years since founding), as found in earlier research. Empirical evidence supporting this argument is found from a telephone survey under the population of old firms in the Netherlands. In the current paper an analysis is done to determine which other firm characteristics -next to age in years-, influence this stickiness to place; such as innovative behaviour, network relationships, market, size (in number of employees), region and location type. This analysis is done on written questionnaires of 179 firms in the Netherlands, 37 of these firms are specifically labelled as ‘old firms’ (founded before 1851). Tested is whether inert behaviour, which according to the theory of structural inertia increases with age, also has an influence on the location of firms. Furthermore, the relationship between the spatial environment and other firm characteristics is investigated.
    Date: 2004–08

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