nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2006‒11‒25
fifteen papers chosen by
Bernardo Batiz-Lazo
Bristol Business School

  1. Auction theory, sequential local service privatization, and the effects of geographical scale economies on effective competition By Antonio Miralles
  2. The empirics of spatial competition: Evidence from European regions By Nestor Duch Brown
  3. Consumer search and firm growth By Erzo G.J. Luttmer
  4. Methods for Assessing Technology Transfer - An Overview By Görling, Stefan
  5. Measuring Competitiveness By J. Peter Neary
  6. Endogenous Heterogeneity in Strategic Models: Symmetry-breaking via Strategic Substitutes and Nonconcavities By Rabah Amir; Filomena Garcia; Malgorzata Knauff
  7. Innovation and the Determinants of Firm Survival By Hielke Buddelmeyer; Paul H. Jensen; Elizabeth Webster
  8. Identifying Determinants of Germany’s International Price Competitiveness: A Structural VAR Approach By Martin Meurers
  9. Sustainability of Clusters and Regions at Austria’s Accession Edge By Edward M. Bergman
  10. Banks’ Internationalization Strategies: The Role of Bank Capital Regulation By Diemo Dietrich; Uwe Vollmer
  11. Connections and Competences in the Governance of the Value Chain. How Industrial Countries Maintain their Competitive Advantage. By Paolo Crestanello; Giuseppe Tattara
  12. Deceleration of industrial growth and rural industrialization strategy for Indian Punjab. By Singh, Lakhwinder
  13. Cluster Complexes: A Framework for Understanding the Internationalisation of Innovation Systems By Wixted, Brian
  14. The policy process and business political environmental management strategies in developing nations. By Jorge Rivera; Mark Starik; Jennifer Oetzel; Peter de Leon
  15. Governance choice for strategic corporate social responsibility: Evidence from Central America. By Jorge Rivera; Bryan W. Husted; David B. Allen

  1. By: Antonio Miralles (Universitat de Barcelona)
    Abstract: A sequential weakly efficient two-auction game with entry costs, interdependence between objects, two potential bidders and IPV assumption is presented here in order to give some theoretical predictions on the effects of geographical scale economies on local service privatization performance. It is shown that the first object seller takes profit of this interdependence. The interdependence externality rises effective competition for the first object, expressed as the probability of having more than one final bidder. Besides, if there is more than one final bidder in the first auction, seller extracts the entire bidders expected future surplus differential between having won the first auction and having lost. Consequences for second object seller are less clear, reflecting the contradictory nature of the two main effects of object interdependence. On the one hand, first auction winner becomes stronger, so that expected payments rise in a competitive environment. On the other hand, first auction loser becomes relatively weaker, hence (probably) reducing effective competition for the second object. Additionally, some contributions to static auction theory with entry cost and asymmetric bidders are presented in the appendix.
    Keywords: local service, privatization
    Date: 2005
  2. By: Nestor Duch Brown (Universitat de Barcelona)
    Abstract: The New Economic Geography literature allows detailed analysis of the factors that determine the location decisions of firms in integrated markets. However, the competitive process is modelled in a rather rudimentary way, and the empirical evidence has usually been obtained from reduced-form econometric specifications. This study describes a structural model that takes into account strategic interactions between firms. We investigate the relationship between the degree of perceived competition not only from local firms but from firms in other regions and geographic concentration. The preliminary results indicate that, in aggregate terms, local firms present stronger competition than firms in other regions. Moreover, it is confirmed that greater geographical concentration of production reduces market power, due to the intensification of local competition; however, its impact on production costs is unclear.
    Keywords: agglomeration, conjectural variations, spatial competition
    JEL: F15 L11 L22 L23 L60 R15 R32
    Date: 2006
  3. By: Erzo G.J. Luttmer
    Abstract: This paper presents a simple model of search and matching between consumers and firms. The firm size distribution has a Pareto-like right tail if the population of consumers grows at a positive rate and the mean rate at which incumbent firms gain customers is also positive. This happens in equilibrium when entry is sufficiently costly. As entry costs grow without bound, the size distribution approaches Zipf’s law. The slow rate at which the right tail of the size distribution decays and the 10% annual gross entry rate of new firms observed in the data suggest that more than a third of all consumers must switch from one firm to another during a given year. A substantially lower consumer switching rate can be inferred only if part of the observed firm entry rate is attributed to factors outside the model. The realized growth rates of large firms in the model are too smooth.
    Date: 2006
  4. By: Görling, Stefan
    Abstract: As triple-helix like research funding is growing in popularity, the need for evaluating the success of such programs is growing. During the last 30 years, a number of attempts have been made to assess whether certain technology funding has been successful or not. The purpose of this paper is to present an overview of these attempts as well as suggest that we must look beyond simple valuemeters as patent creation rate in order to fully understand the process of technology transfer.
    Keywords: technology transfer, assessment, patent, innovation management
    Date: 2006–11–15
  5. By: J. Peter Neary
    Abstract: This paper reviews alternative approaches to measuring an economy's cost competitiveness and proposes some new measures inspired by the economic theory of index numbers. The indices provide a theoretical benchmark for estimated real effective exchange rates, but differ from standard measures in that they are based on marginal rather than average sectoral shares in GDP or employment. The use of the new indices is illustrated by some simple calculations that highlight the potential exposure of the Irish economy to fluctuations in the euro-sterling exchange rate.
    Keywords: Competitiveness , economic theory of index numbers , European Monetary Union (EMU) , real effective exchange rates (REERs) ,
    Date: 2006–09–27
  6. By: Rabah Amir; Filomena Garcia; Malgorzata Knauff
    Abstract: This paper is an attempt to develop a unified approach to endogenous heterogeneity by constructing general class of two-player symmetric games that always possess only asymmetric pure-strategy Nash equilibria. These classes of games are characterized in some abstract sense by two general properties: payo? non-concavities and some form of strategic substitutability. We provide a detailed discussion of the relationship of this work with Matsuyama’s symmetry breaking framework and with business strategy literature. Our framework generalizes a number of models dealing with two-stage games, with long term investment decisions in the first stage and product market competition in the second stage. We present the main examples that motivate this study to illustrate the generality of our approach.
    Keywords: firm heterogeneity; submodular games; business strategy; innovation strategies.
    JEL: C72 C62 L11
  7. By: Hielke Buddelmeyer (University of Melbourne and IZA Bonn); Paul H. Jensen (University of Melbourne); Elizabeth Webster (University of Melbourne)
    Abstract: While many firms compete through the development of new technologies and products, it is well known that new-to-the-world innovation is inherently risky and therefore may increase the probability of firm death. However, many existing studies consistently find a negative association between innovative activity and firm death. We argue that this may occur because authors fail to distinguish between innovation investments and innovation capital. Using an unbalanced panel of over 290,000 Australian companies, we estimate a piecewiseconstant exponential hazard rate model to examine the relationship between innovation and survival and find that current innovation investments increase the probability of death while innovation capital lowers it.
    Keywords: firm survival, innovation
    JEL: O31 O32 C41
    Date: 2006–10
  8. By: Martin Meurers
    Abstract: The paper employs a structural vector auto-regression (SVAR) along the lines of Blanchard and Quah (1989) and Clarida and Gali (1994) to identify the sources of changes in German international price competitiveness over the past 30 years. This leads to a separation of the driving forces of the real exchange rate into real demand, supply, and nominal shocks. Based on this decomposition, it is analysed whether real exchange rate changes have helped to stabilise output in the post re-unification period and whether such changes have facilitated the ongoing structural adjustment process of the German economy. The results indicate that real demand and nominal shocks have been the main drivers of the real exchange rate in the past, whereas output fluctuations have been almost entirely due to supply shocks. In particular, it turns out that improvements of Germany’s price competitiveness in the second half of the 1990s have been primarily the result of a relative domestic demand restraint and hardly that of supply side expansions. <P>Recherche des déterminants de la compétitivité-prix internationale de l’Allemagne à partir d’un modèle vectoriel autorégressif (VAR) structurel <BR>Dans la lignée de Blanchard et Quah (1989) et de Clarida et Gali (1994), les auteurs s’appuient sur un modèle vectoriel autorégressif structurel (SVAR) pour déterminer l’origine des variations de la compétitivité-prix internationale de l’Allemagne ces 30 dernières années. Cette méthode permet de décomposer les forces agissant sur le taux de change réel en chocs sur la demande réelle, en chocs sur l’offre et en chocs nominaux. À partir de cette décomposition, on se demande si les variations du taux de change réel ont contribué à stabiliser la production durant la période postérieure à l’unification et si elles ont facilité l’ajustement structurel en cours de l’économie allemande. Les résultats montrent que les chocs sur la demande réelle et les chocs nominaux sont les principaux facteurs qui ont influé sur le taux de change réel dans le passé, alors que les fluctuations de la production sont dues presque entièrement aux chocs sur l’offre.
    Keywords: real exchange rates, taux de change réel, SVAR, système vectoriel auto-régressif structurel, historical decomposition, décomposition historique, German international competitiveness, compétitivité internationale de l'Allemagne
    JEL: C32 F31 F41
    Date: 2006–11–08
  9. By: Edward M. Bergman
    Date: 2006
  10. By: Diemo Dietrich; Uwe Vollmer
    Abstract: This paper studies how capital requirements influence a bank’s mode of entry into foreign financial markets. We develop a model of an internationally operating bank that creates and allocates liquidity across countries and argue that the advantage of multinational banking over offering cross-border financial services depends on the benefit and the cost of intimacy with local markets. The benefit is that it allows to create more liquidity. The cost is that it causes inefficiencies in internal capital markets, on which a multinational bank relies to allocate liquidity across countries. Capital requirements affect this trade-off by influencing the degree of inefficiency in internal capital markets.
    Keywords: incomplete financial contracting; cross-border financial services; multinational banking; liquidity allocation; capital regulation.
    JEL: F21 F23 G21
    Date: 2006–11
  11. By: Paolo Crestanello (Poster e Crei, Vicenza); Giuseppe Tattara (Department of Economics, University Of Venice Ca’ Foscari)
    Abstract: The aim of our paper is to analyse the governance of value chains operating in the traditional sectors of clothing and footwear, focusing particularly on production de-localization from the Italian region of Veneto to the nearby country of Rumania After describing and ‘quantifying’ the internationalization process between Veneto and Rumania we turn to discuss the possible consequences of this process, both for the region of origin and the recipient area. We highlight, through the concepts of linkages and competences how the production internationalization process may determine a progressive weakening of the network of linkages that characterize the home region, and discuss the main obstacles to a successful transfer of know-how and technologies to the host system. From this discussion emerges the vision of some policy measures to amplify possible positive effects and counter negative consequences of the fragmentation of production, both in the home and in the host country.
    Keywords: Internationalisation, Industrial districts, Delocalisation, Organization of Production
    JEL: F23 L22 L23 L67
    Date: 2006
  12. By: Singh, Lakhwinder
    Abstract: Sustained industrial growth has been widely acknowledged as an engine of economic transformation. Less developed countries, however, remained predominantly agrarian due to lack of dynamism in the industrial economy and the low level of industrialization. Economic policy reform programme was initiated since July 1991 to generate essential dynamism in the industrial sector for successful transformation of the agrarian economy of India. In this paper an attempt is made to examine the industrial growth experience of Punjab economy during the period 1980-81 to 2001-2002, that is a decade before and a decade after the initiation of economic reforms. The empirical evidence clearly show a downturn in industrial growth in the post-reform period compared to that of the pre-reform period. Factors that have contributed to the deceleration of industrial growth in Punjab were lower investment-GSDP ratio, lower plan expenditure and lower quality of human capital and infrastructure. Identified factors that have led to the deceleration of industrial growth in Punjab were making the state scarce in economic activities and lack of private corporate investment in Punjab both of domestic and foreign. Alternative strategy has been suggested which not only has the capacity to arrest the process of deceleration of industrial growth in the state but also has a capacity to transform agrarian economy to industrialized one along with raising the level of rural income and welfare.
    Keywords: Indian Punjab; rural industrialisation strategy; deceleration of growth; Economic reforms public policy
    JEL: O18 O14 O1
    Date: 2006–11–13
  13. By: Wixted, Brian
    Abstract: The literature on clustering that has developed over the last two decades or so has given us a wealth of information on the formation and competitiveness of places in the global economy. Similarly, the systems literature on innovation has been valuable in moving the debate around technology from a focus on the entrepreneur to one than encompasses institutions, government, suppliers, customers and universities. However, there remains an important limit to this research; the borders of political jurisdictions, usually nation states, typically delineate the studies. It is argued in this paper that during an era when the international architecture of production relationships is changing, this view of systems is hindering its further development. This paper briefly examines what we have learnt of innovation systems, including clustering and also explores the limitations of this work. From this foundation it is proposed in this paper that a framework which understands clusters as nodes within extra-territorial networks is a promising approach for internationalising the systems of innovation perspective. The advantage of the approach presented here is that it can simultaneously capture regional specialisations and be disaggregated enough to apply on a technology / sectoral basis. Another principle advantage is that such a framework goes someway towards an understanding of interregional and international trade that is consistent with what other studies have shown of the development of innovation within particular geographic locations. The paper draws from extensive data analysis of industrial interdependencies that cross national borders to support the case for cluster complexes that transcend regional and national borders.
    Keywords: innovation systems; clusters; internationalisation
    JEL: R12 O30
    Date: 2006–10
  14. By: Jorge Rivera (The George Washington University School of Business); Mark Starik (The George Washington University School of Business); Jennifer Oetzel (American University); Peter de Leon (University of Colorado-Denver)
    Date: 2006–01
  15. By: Jorge Rivera (The George Washington University School of Business); Bryan W. Husted (Tecnológico de Monterrey and Instituto de Empresa); David B. Allen (Instituto de Empresa)

This nep-cse issue is ©2006 by Bernardo Batiz-Lazo. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.