nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2005‒11‒19
fourteen papers chosen by
Bernardo Batiz-Lazo
Bristol Business School

  1. Outsourcing and Organizational Change, An employee perspective By Roe,Robert A.; Smeelen,Mariska; Hoefeld,Carola
  2. Affordability of Medicines and Patients' Cost Reduction Behaviors: Empirical Evidence Based on SUR Estimates from Italy and the United Kingdom By Vincenzo Atella; Peter R. Noyce; Karen Hassell
  3. Investment-Specific Technical Change and the Production of Ideas By Roberto M Samaniego
  4. HRM and Value Creation By Michel PHILIP & Patrick Micheletti
  5. Contracting for the transfer of technology within multinational corporations: Empirical evidence from Spain By Mendi, Pedro
  7. Dynamic analysis of an institutional conflict within the music industry By Oleg V. Pavlov
  8. Financing Technology: An Assessment of Theory and Practice By Pasquale Lucio Scandizzo
  9. Measuring the performance of international logistics outsourcing partnerships: A dyadic perspective analysis By Jane, Joan; Lago, Alejandro; Ariño, Africa
  10. Hypermarket Competition and the Diffusion of Retail Checkout Barcode Scanning By Jonathan Beck; Michal Grajek; Christian Wey
  11. Cooperacion y competencia: algunas lecciones del caso argentino. By Viego Valentina
  12. Corporate Governance and the Design of Stock Option Programs By Sautner, Zacharias; Weber, Martin
  13. Dominant Firms, Barriers to Entry Capital and Entry Dynamics By Willi Semmler; Mika Kato
  14. Linking Strategic Interaction and Bargaining Theory. The Harsanyi - Schelling Debate on the Axiom of Symmetry By Alessandro Innocenti

  1. By: Roe,Robert A.; Smeelen,Mariska; Hoefeld,Carola (METEOR)
    Abstract: Outsourcing seems to have become the new trend in organizational strategy. In outsourcing, part of the organization’s production or service process is discontinued and transferred to another party, along with personnel and other resources. Although the potential economic benefits of outsourcing are thought to be considerable, a growing number of evaluation studies show disappointing outcomes. Cost savings tend to be less than expected and quality sometimes declines. A reason for these outcomes may be that - just like with downsizing and mergers-acquisitions in earlier days - managers tend to focus almost exclusively on economic aspects, ignoring the human and social impacts. Morespecifically, one might explain unsatisfactory economic results from a failure to consider the change implications of outsourcing. This paper analyzes the nature of the organizational change implied in outsourcing, comparing it to mergersacquisitions and downsizing. Next, it identifies some critical aspects of the transition management process which, when dealt with effectively, may enhance the success of outsourcing. The theoretical analysis is contrasted with findings from an empirical study on outsourcing in the Netherlands. In interviews with 11 experts and 10 workers on three phases of outsourcing, 70 aspects of(un)successful transition management were identified. Next, 36 employees involved in outsourcing rated the importance of these aspects and indicated their presence during the outsourcing process. Discrepancy ratings, showing which aspects of transition management received insufficient attention, confirm the results of the theoretical analysis. This underlines the importance of organizational change when implementing outsourcing.
    Keywords: Economics ;
    Date: 2005
  2. By: Vincenzo Atella (University of Rome II - Faculty of Economics); Peter R. Noyce (University of Manchester - School of Pharmacy & Pharmaceutical Sciences; University of Manchester - School of Pharmacy & Pharmaceutical Sciences); Karen Hassell (University of Manchester - School of Pharmacy & Pharmaceutical Sciences)
    Abstract: The aim of the paper is to shed some light on consumers' attitudes to adopting strategies to contain the cost of medication. Using micro-data from an ad hoc survey conducted in Italy and the UK, several hypotheses are tested regarding patients' decision-making behavior and how it is influenced by health status, socio-demographic characteristics and the novel concept of a self-rated affordability measure. Results show that there is a discernable tendency for both UK and Italian patients to use cost reducing strategies and that these strategies are strongly influenced by income and drug affordability problems. These are important findings in two countries, where the National Health System (NHS) should provide health care services that are accessible to all citizens in need, and provide interesting insights for policy makers in other countries, such as USA, where patients have to pay a large share of their drugs out-of-pocket.
    Keywords: Health policy reform, health services demand, re-distributive impact, prescription charge, co-payment
    JEL: C35 C81 D12 I12
    Date: 2005–01–13
  3. By: Roberto M Samaniego
    Abstract: I argue that an aggregate model in which the generation of knowledge is an important factor of economic growth can be reconciled with several otherwise puzzling empirical findings on this link if knowledge affects output through investment-specific technical change. In the model, there may be a weak empirical relationship between measures of knowledge and total factor productivity even when the generation of knowledge is the predominant channel through which economic growth takes place. The results also suggest that intertemporal spillovers in the production of knowledge are likely to be small
    Keywords: ideas' production, quasi-endogenous growth, patent stock, investment specific technical change, price of capital.
    JEL: E30 O30 O40
    Date: 2005–11–11
  4. By: Michel PHILIP & Patrick Micheletti
    Abstract: It’s conceptually attractive to look for connection between performance, HRM and economic situation. How measure epiphenomenon’s impact when we can’t isolate that from global strategy? If casual relations maybe established, event can be interpreted in several ways (e.g. its chicken and egg situation…). This paper presents the results of a research on corporate performance measured by the creation of shareholder value. To do that we test empirically forced ranking’s performance versus all other classic human resource managements’ result first with a statistical comparison of share based on fortune 100 (from 1996 to 2000); second with Standard & Poor’s (S&P) 500 value creation (from 1997 to 2000) with “Marakon Associates†(the growth between Market-to-book values ratio and the ROE spread (ROE – Cost of equity capital)
    Keywords: Forced Ranking, Classic HRM, Value Creation
    JEL: C0 G1 L14 L2
    Date: 2005–11–11
  5. By: Mendi, Pedro (University of Navarra)
    Abstract: This article analyzes a sample of contracts that includes transfers of technology to Spanish subsidiaries in 1991. First, know-how is more likely transmitted within multinationals than between unrelated firms, highlighting the key role of multinationals in the diffusion of tacit knowledge. The determinants of scheduled payments are also studied to find, among other things, that multinationals adjust scheduled payments depending on differences in taxes between the source and host countries.
    Keywords: Contract; technology; multinationals:
    Date: 2005–09–07
  6. By: Xavier Fageda
    Abstract: In this paper, we analyze how an airline can take advantage of airport dominance of a whole network in a market characterized by short-haul routes and congestion. In order to tackle this issue, we estimate an equation system, which is based on theoretical grounds, for the Spanish domestic market. We find that costs and demand benefits of airport dominance have to do with providing a high flight frequency. Such benefits can damage seriously the effectiveness of competition as long as the competitive status of major airline’s rivals is threatened.
    Keywords: Air Transportation, Multiple Equation Models, Oligopoly.
    JEL: L
    Date: 2005–11–16
  7. By: Oleg V. Pavlov (Social Science and Policy Studies WPI)
    Abstract: Peer-to-peer technology has made massive music piracy possible, which, in turn, has arguably had a significant economic impact on the recording industry. Record labels have responded to online piracy with litigation and are also considering self-help measures. It is currently not obvious whether or not these counter-piracy strategies will ultimately stifle online file sharing in the long term. With this paper we attempt to add to our understanding of the conflict within the institution that is the commercial music industry. We conduct an institutional analysis of the industry in transition and extend the traditional pattern modeling methodology with a formal resource-based model of a representative online music network. The model accounts for complex causal interactions between resources, private provision of common goods, free riding and membership dynamics. The numerical implementation of the model is the basis of a decision support system, which is used in a series of computer experiments that emulate anti-piracy scenarios. We show that a peer-to-peer system may be quite resilient to outside disturbances. The experiments also demonstrate that policies rank differently in their effectiveness based on a selected yardstick.
    Keywords: Peer-to-peer (P2P) networks; Online File Sharing; Copyright; Simulation
    JEL: K40 H40 C60
    Date: 2005–11–11
  8. By: Pasquale Lucio Scandizzo (University of Rome II)
    Abstract: Financing technology poses a special challenge to economic institutions for several reasons. First, the uncertainty surrounding all the investment decisions is particularly acute and pervasive in the case of R&D, as well as developing and testing process and product innovation. Second, while the banks appear to have an important role to play, for many types of innovative businesses, they cannot be the sole source of financing. Third, technology ventures appear to face a basic trade off between profit and growth, which may be exacerbated by a difficult relationship with a credit institution. The paper examines these questions both theoretically and empirically, focusing on the US market as the leading financial center capable of providing imaginative solutions and on the Arab countries as a case study of developing economies facing a financial and institutional constraints.
    Keywords: Innovation, finance; growth, new economy, risk evaluation, credit supply, Arab countries, government policies, science and technology parks
    Date: 2004–01–16
  9. By: Jane, Joan (Hewlett-Packard); Lago, Alejandro (IESE Business School); Ariño, Africa (IESE Business School)
    Abstract: We analyze the validity of five performance measures of international logistics outsourcing partnerships, using information from both partners. Each partner's assessment of performance is captured by a single construct, which underlies four of the measures. This construct, however, is different for each party. Consequently, we examine a focal partner's perceptions of the other partner's performance assessment, and show that these inter-party perceptions are a poor measure of the latter's actual performance assessment.
    Keywords: strategic alliances; logistics outsourcing partnerships; performance measurement; construct validity;
    Date: 2005–09–14
  10. By: Jonathan Beck; Michal Grajek; Christian Wey
    Abstract: This paper presents a set of panel data to study the diffusion of retail checkout barcode scanning in ten European countries over the period 1981-1996. Estimates from a standard diffusion model suggest that countries differ most in the long-run diffusion level of barcode scanning and less in timing or diffusion speed. We present evidence that the emergence of hypermarkets raises competitive intensity and use hypermarket data, among other variables, in a pooled estimation. Results suggest that hypermarket competition reduces longrun adoption of information technology (IT) in retailing. In particular, the emergence of hypermarkets seems to deepen retail segmentation by inducing potential adopters (e.g. supermarkets) to exit the market and/or by discouraging adoption by other retail formats. Consistent with expectations, scale and income effects spur IT diffusion and there is a classic substitution effect: when wages rise, diffusion of a labor-saving technology such as barcode scanning is more intense. We do not find a significant impact of employment protection legislation. <br> <br> <i>ZUSAMMENFASSUNG - (Wettbewerb durch Hypermärkte und die Diffusion von Scannerkassen im Einzelhandel) <br> In diesem Papier stellen wir einen Datensatz zur Diffusion des Barcode- Scannens im Einzelhandel in zehn europäischen Ländern zwischen 1981 und 1996 vor. Schätzergebnisse auf Basis eines bewährten Diffusionsmodells ergeben, dass diese Länder sich hauptsächlich im langfristigen Verbreitungsniveau des Barcode-Scannens unterscheiden, und weniger in Diffusionsbeginn und -geschwindigkeit. Wir präsentieren Evidenz dafür, dass die Verbreitung von Hypermärkten die Wettbewerbsintensität im Einzelhandel erhöht und verwenden Daten zu Hypermärkten, zusammen mit anderen Variablen, in einer gemeinsamen Schätzung. Die Ergebnisse legen nahe, dass Wettbewerb durch Hypermärkte sich langfristig negativ auf die Diffusion von Informationstechnologie (IT) im Einzelhandel auswirkt. Insbesondere scheint die Verbreitung von Hypermärkten die Segmentierung im Einzelhandel zu vertiefen, indem sie potentielle Nutzer von IT (z.B. Supermärkte) zum Marktaustritt verleitet und/oder andere Einzelhändler von der Nutzung abschreckt. Wie erwartet stärken Skalen- und Einkommenseffekte die Diffusion von IT, und es gibt einen klassischen Substitutionseffekt: bei steigenden Löhnen ist die Diffusion einer arbeitssparenden Technologie wie dem Barcode-Scannen intensiver. Gesetzgebung zum Kündigungsschutz scheint keine signifikanten Auswirkungen auf IT-Diffusion zu haben.</i>
    Keywords: IT diffusion, retail competition, hypermarkets
    JEL: L5 L81 O33
    Date: 2005–11
  11. By: Viego Valentina (UNSUR)
    Abstract: La interacción virtuosa entre cooperación y competencia ha sido destacada en la literatura reciente sobre desarrollo localizado. Esencialmente, la colaboración permite superar obstáculos (tecnológicos, logísticos, de escala, etc.) que individualmente las firmas no son capaces de vencer mientras que la competencia introduce el estímulo necesario para que las empresas se vean impulsadas a innovar en forma continua. La literatura sobre las experiencias que exhiben dicha combinación en las regiones desarrolladas o de industrialización reciente destaca su rol impulsor en los procesos de desarrollo local. Sin embargo, al pasar a ámbitos de menor desarrollo industrial, los resultados son menos contundentes. Las razones se basan en dos factores: por un lado, la mayor debilidad de los lazos entre empresas y, por ende, el escaso impacto que las conductas colectivas tienen sobre el desempeño de los aparatos productivos. Por otro lado, aún cuando la cooperación alcanza cierta magnitud entre las firmas, presenta algunas peculiaridades que afectan, a su vez, a su capacidad de contribuir al despegue de un territorio. En este trabajo se ofrece un estudio de caso de una región de tamaño intermedio de Argentina donde ambos elementos (debilidad más especificidad) se hacen presentes. El aporte aquí consiste en ofrecer algunas explicaciones microeconómicas útiles para comprender la ausencia y/o debilidad de conductas colectivas en territorios económicamente rezagados.
    Keywords: cooperation, competition, barriers to internal trade
    JEL: L
    Date: 2005–11–15
  12. By: Sautner, Zacharias (Lehrstuhl für ABWL, Finanzwirtschaft, insb. Bankbetriebslehre); Weber, Martin (Lehrstuhl für ABWL, Finanzwirtschaft, insb. Bankbetriebslehre)
    Abstract: Investors and academics increasingly criticize that features of employee stock option (ESO) programs reflect rent-extraction by managers (managerial power view). We use a unique European data set to investigate the relationship between the design of ESO programs and corporate governance structures. We find that ownership structures are related to the ESO design in a way that is consistent with the managerial power hypothesis: when ownership concentration is low and the exposition to the U.S. capital market is little, executives extract rents by designing poor ESO plans. Moreover, firms with weak creditor rights more often have badly designed option plans. Our findings also suggest that ineffective board structures (insider-dominated boards) are related to ESO design in a way that supports the arguments of the self-dealing view.
    Date: 2005–10–12
  13. By: Willi Semmler; Mika Kato (Department of Economics Howard University)
    Abstract: Recent literature in Industrial Organization has shown that the threat of entry limits the price setting power of dominant firms and stimulates the incumbents to increase innovations ---both leading to welfare improvements. On the other hand dominant firms as incumbents strive to build up entry preventing capital. In such an environment of heterogeneous firms, we study the dynamics of competition as suggested in an earlier paper by Brock (1983). When dominant firms face a threat of the competitive fringe’s entry in the industry they, therefore, will have an incentive to prevent it. Investing into barriers to entry capital through engaging in production activities with increasing returns and high adjustment cost of investment as well as through advertising, lobbying and patents the dominant firm can create thresholds above which fringe firms cannot induce price competition and stimulate innovations. The dominant firms thus face two types of investment: Entry-deterring investment and investment in physical capital for production activities. Depending on how the competitive fringe responds to the first type of investment, complex dynamics, multiple steady states and thresholds, separating different domains of attraction, may emerge. Since the effectiveness of entry-deterring investment depends in part on regulatory rules set and enforced by antitrust institutions, we show how an antitrust and competition policy can be designed that may prevent the build up of entry preventing capital strengthening incentives for price competition and innovations
    Keywords: entry-deterring investment
    JEL: L1 L4
    Date: 2005–11–11
  14. By: Alessandro Innocenti
    Abstract: This paper analyses the early contributions of John Harsanyi and Thomas C. Schelling to bargaining theory. In his work, Harsanyi (1956) draws Nash’s solution to two-person cooperative games from the bargaining model proposed by Zeuthen (1930). Whereas Schelling (1960) proposes a multi-faceted theory of conflict that, without dismissing the assumption of rational behaviour, points out some of its paradoxical consequences. Harsanyi and Schelling’s contrasting views on the axiom of symmetry, as postulated by Nash (1950), are then presented. The analysis of this debate illustrates that, although in the early 1960s two different approaches to link strategic interaction and bargaining theory were proposed, only Harsanyi’s insights were fully developed later. Lastly, the causes of this evolution are assessed.
    Keywords: bargaining, game theory, symmetry
    JEL: B21 B41 C78
    Date: 2005–11

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