nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2006‒02‒19
seven papers chosen by
Bernardo Batiz-Lazo
Bristol Business School

  1. Access to finance by Chilean corporations By Sirtaine, Sophie
  2. Do Entry Conditions Vary over Time? Entry and Competition in the Broadband Market: 1999-2003 By Xiao, Mo; Orazem, Peter
  3. Social Networks in the Boardroom By Kramarz, Francis; Thesmar, David
  4. Domestic capabilities and global production networks in the clothing industry: a comparison of German and UK firms' strategies By Christel Lane; Jocelyn Probert
  5. Competition, regulation, and pricing behavior in the Spanish retail gasoline market. By Ignacio Contín-Pilart; Aad F. Correljé; M. Blanca Palacios
  6. Los efectos de la estructura monopolística de los mercados en la evaluación de las empresas privatizadas en Colombia By Jaime Andrés Collazos R; Héctor Ochoa D
  7. Trade Marks and Market Value in UK Firms By Christine Greenhalgh; Mark Rogers

  1. By: Sirtaine, Sophie
    Abstract: The author assesses the extent to which Chilean firms have access to sufficient and adequate sources of funds. Access to finance has become an important issue for policymakers in Latin America. Small and medium enterprises (SMEs), in particular, complain that their lack of access to adequate sources of financing is an obstacle to their growth. Chile represents an interesting case study since it has one of the most developed financial markets in the continent, and thus great potential for using products suited to the needs and risk characteristics of SMEs. The author concludes that the largest firms have access to the whole range of financial instruments available in Chile. All smaller firms face financing constraints. She then analyzes the obstacles to downsizing access to the capital market and further increasing the penetration of banks in smaller segments.
    Keywords: Banks & Banking Reform,Investment and Investment Climate,Microfinance,Small Scale Enterprise,Economic Theory & Research
    Date: 2006–02–01
  2. By: Xiao, Mo; Orazem, Peter
    Abstract: We extend Bresnahan and Reiss’s (1991) model of local oligopoly to allow firm entry and exit over time. In our framework, entrants have to incur sunk costs in order to enter a market. After becoming incumbents, they disregard these entry costs in deciding whether to continue operating or to exit. We apply this framework to study market structure and competitive conduct in local markets for high-speed Internet service from 1999 to 2003. Replication of Bresnahan and Reiss’s framework generates unreasonable variation in firms’ competitive conduct over time. This variation disappears when entry costs are allowed. We find that once the market has one to three firms, the next entrant has little effect on competitive conduct. We also find that entry costs vary with the order of entry, especially for early entrants. Our findings highlight the importance of sunk costs in determining entry conditions and inferences about firm conduct.
    Keywords: Broadband, High-Speed Internet, Entry, Exit, Competition, Pricing, oligopoly
    JEL: L8
    Date: 2006–02–16
  3. By: Kramarz, Francis; Thesmar, David
    Abstract: This paper provides empirical evidence consistent with the facts that (1) social networks may strongly affect board composition and (2) social networks may be detrimental to corporate governance. Our empirical investigation relies on a unique dataset on executives and outside directors of corporations listed on the Paris stock exchange over the 1992-2003 period. This data source is a matched employer employee dataset providing both detailed information on directors/CEOs and information on the firm employing them. We first find a very strong and robust correlation between the CEO's network and that of his directors. Networks of former high ranking civil servants are the most active in shaping board composition. Our identification strategy takes into account (1) differences in unobserved directors 'abilities' and (2) the unobserved propensity of firms to hire directors from particular networks, irrespective of the CEO's identity. We then show that the governance of firms run by former civil servants is relatively worse on many dimensions. Former civil servants are less likely to leave their CEO job when their firm performs badly. Secondly, CEOs who are former bureaucrats are more likely to accumulate directorships, and the more they do, the less profitable is the firm they run. Thirdly, the value created by acquisitions made by former bureaucrats is lower. All in all, these firms are less profitable on average.
    Keywords: board of directors; corporate governance; social networks
    JEL: G34 J44
    Date: 2006–02
  4. By: Christel Lane; Jocelyn Probert
    Abstract: In this paper we examine the sourcing strategies of clothing firms in the developed economies of the UK and Germany in the context of their national institutional framework. We argue that, as a result of their embeddedness in divergent national structures, these firms pursue different sourcing strategies and make different locational choices. We place particular emphasis on the different mix of armsÕ length and relational contracting that firms develop, and on the divergent degree of control over the manufacturing process and the product that they retain. We suggest that the construction of global production networks and control over supplier firms is mediated by co-ordinating firmsÕ product strategy and the degree of dependence on national retailers this engenders. In the UK and Germany, firms and their networks differ from the US case which is normally taken as representative of the industry.
    Keywords: clothing industry, global production networks, capabilities
    JEL: L22 L23 L67 J2
    Date: 2005–12
  5. By: Ignacio Contín-Pilart (Universidad Pública de Navarra); Aad F. Correljé (Delft Technical University, and Clingendael International Energy Programme); M. Blanca Palacios (Universidad del País Vasco)
    Abstract: The restructuring of the Spanish oil industry produced a highly concentrated oligopoly in the retail gasoline market. In June 1990 the Spanish government introduced a system of ceiling price regulation in order to ensure that \"liberalization\" was accompanied by adequate consumer protection. This paper examines the pricing behavior of the retail gasoline market using multivariate error correction models over the period January 1993 (abolishment of the state monopoly)-December 2004. The results suggest that gasoline retail prices respond symmetrically to increases and decreases in the spot price of gasoline. However, one the ceiling price regulation was abolished, the \"collaboration\" between the government and the major operators, Repsol-YPF and Cepsa-Elf in order to control the inflation rate results in a slower rate of increase (decrease) of gasoline retail prices when gasoline spot prices went up (went down) than elsewhere in the European Union. Finally, retail margins were by the end of our timing period of analysis, as in the first years after the abolishment of the state monopoly, well above the European ones.
    Keywords: Competition, regulation, pricing behavior, gasoline market
    JEL: L11 L43 L51 L71
    Date: 2006–02–08
  6. By: Jaime Andrés Collazos R; Héctor Ochoa D
    Abstract: Este estudio pretende evaluar si las empresas que fueron privatizadas en Colombia durante los años noventa mejoraron sustancialmente su productividad y rentabilidad, como consecuencia de los cambios gerenciales que se debieron dar, o si por el contrario, continuaron en niveles similares, contrariando la hipótesis de que los nuevos dueños propiciarían cambios sustanciales en su estrategia, como lo demuestra la experiencia internacional. Si este último es el caso, cabría la pregunta: ¿Cuáles pueden haber sido las circunstancias que motivaron a los nuevos propietarios para no efectuar cambios sustanciales en la estrategia empresarial de las empresas recién adquiridas? A esta pregunta se podría responder que los métodos seguidos por el gobierno en el proceso de la privatización, en especial en la selección del comprador, de un lado, y de otro lado, el nivel de concentración de la estructura de mercado resultante después de la privatización, podrían explicar la diferencia en el comportamiento de los nuevos empresarios, con relación a la experiencia internacional. Si el proceso de negociación de las empresas no fue suficientemente transparente, o si la estructura de mercado resultante no es suficientemente competitiva, podrían no existir suficientes estímulos para que los nuevos dueños se comportaran de forma más eficiente.
    Date: 2005–06–30
  7. By: Christine Greenhalgh (Oxford Intellectual Property Research Centre, St Peter's College, Oxford University); Mark Rogers (Harris Manchester College, Oxford University)
    Abstract: This paper uses a new data set of the trade mark activity of UK manufacturing and service sector firms (1996-2000) to investigate the market value of trade marks. Data on both trade (and service) marks sought via the UK Patent Office (UKTM) and the European Community Office for Harmonisation of the Internal Market (CTM) are available. Firms use trade marks to signal to consumers that the product is of a certain origin, implying consistent quality and reducing consumer search costs, thus increasing customer loyalty. The value of trade marks may vary across firms and industries, depending on such factors as whether or not patents can be filed and the market structure. Equally the costs of trade marks vary between UKTM and CTM applications, being higher for the latter. We analyse Tobin's q, the ratio of stock market value to the book value of tangible assets. We explore the impact of undertaking any trade mark activity and also the effects of increasing trade mark intensity among those who do. The results indicate that stock market values are positively associated with R&D and trade mark activity by firms. We find larger differences between firms with and without trade marks for services than for manufacturing. We also find bigger differences in Tobin's q when the services firm is applying for Community marks, rather than just applying for UK marks. Increasing the intensity of trade marks matters for both manufacturing and services, although at a decreasing marginal rate for manufacturing and only for the years excluding 2000 for services. The rapid fall in the UK stock market in 2000 appeared to negate the benefits of trade marks for innovative services firms.
    Date: 2006–02

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