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on Economics of Strategic Management |
| By: | Miroslav Misina; David Tessier; Shubhasis Dey |
| Abstract: | Stress testing, at its most general level, is an investigation of the performance of an entity under abnormal operating conditions. The authors focus on one set of entities--the Canadian banking sector--and investigate losses in the loans portfolio of this sector as a function of changing circumstances in the different industries in which these loans reside. These circumstances are characterized by means of one summary measure--sectoral probabilities of default--and this measure is modelled as a function of macroeconomic variables. Using this model, the authors assess the interrelationship between the macroeconomic environment and sectoral defaults, and perform a series of stress tests under different scenarios that are thought to be most pertinent to Canada. The tools underlying the authors' analysis are general and can be applied to other countries, as well as to other macroeconomic scenarios. |
| Keywords: | Financial stability, Financial institutions |
| JEL: | C15 G21 G33 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:06-47&r=cse |
| By: | Michael Noel; Mark Schankerman |
| Abstract: | Strategic patenting is widely believed to raise the costs of innovating, especially in industriescharacterised by cumulative innovation. This paper studies the effects of strategic patentingon R&D, patenting and market value in the computer software industry. We focus on two keyaspects: patent portfolio size which affects bargaining power in patent disputes, and thefragmentation of patent rights (.patent thickets.) which increases the transaction costs ofenforcement. We develop a model that incorporates both effects, together with R&Dspillovers. Using panel data for the period 1980-99, we find evidence that both strategicpatenting and R&D spillovers strongly affect innovation and market value of software firms. |
| Keywords: | patents, anti-commons, patent thickets, R&D spillovers, market value |
| JEL: | L43 L86 O31 O32 O33 O34 O38 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0740&r=cse |
| By: | Francesco Caselli; Nicola Gennaioli |
| Abstract: | The most striking difference in corporate-governance arrangements between rich and poorcountries is that the latter rely much more heavily on the dynastic family firm, whereownership and control are passed on from one generation to the other. We argue that if theheir to the family firm has no talent for managerial decision making, dynastic management isa failure of meritocracy that reduces a firm's Total Factor Productivity. We present a simplemodel that studies the macreconomic causes and consequences of dynastic management. Inour model, the incidence of dynastic management depends, among other factors, on theimperfections of contractual enforcement. A plausible calibration suggests that, via dynasticmanagement, poor contract enforcement may be a substantial contributor to observed crosscountrydifferences in aggregate Total Factor Productivity. |
| Keywords: | Meritocracy, Family firms, Financial Development, TFP |
| JEL: | E1 E2 G1 G3 O1 O4 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0741&r=cse |
| By: | Tobias Kretschmer; Katrin Muehlfeld |
| Abstract: | Firms faced with the decision of whether to standardize or not prior to introducing a newnetwork technology face a tradeoff: Compatibility improves the technology's chances ofconsumer acceptance, but it also means having to share the resulting profits with othersponsors of the standard. In this paper, we show that even prior to market introduction of anew technology, the timing of decisions is important and that firms have to weigh up thecooperative and competitive elements of pre-market choices. We also show that the option toprecommit to a technology before it is fully developed (as has been the case with theCompact Disc) can be profitable for network technologies. |
| Keywords: | Standardization, compact disc, preemption, war-of- attrition |
| JEL: | L63 O32 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0742&r=cse |
| By: | Richard Belfield; David Marsden |
| Abstract: | The introduction of performance-related pay with Performance Management in the state school sector of England and Wales represents a considerable change in the school management system. After 2000, all teachers were subject to annual goal setting performance reviews. Experienced teachers were offered an extended pay scale based on performance instead of seniority, and to gain access to the new upper pay scale, teachers had to go through a 'threshold assessment' based on their professional skills and performance. This paper reports the results of a panel survey of classroom and head teachers which started in 2000 just before implementation of the new system, and then after one and after four years of operation. We find that both classroom and head teacher views have changed considerably over time, from initial general skepticism and opposition towards a more positive view, especially among head teachers by 2004. We argue that the adoption of an integrative bargaining approach to performance reviews explains why a growing minority of schools have achieved improved goal setting, and improved pupil attainments as they have implemented performancemanagement. Pay for performance has been one of the measures of organizational support that headteachers could bring to induce changes in teachers' classroom priorities. We argue that the teachers' case shows that a wider range of performance incentives than previously thought can be offered to employees in such occupations, provided that goal setting and performance measurement are approached as a form of negotiation instead of top-down. |
| Keywords: | Education, teachers, performance related pay, public sector, compensation, industrial relations |
| JEL: | I2 J33 J45 M52 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0747&r=cse |
| By: | Mirko Draca; Raffaella Sadun; John Van Reenen |
| Abstract: | We survey the micro and macro literature on the impact of Information and CommunicationTechnologies (ICTs) on productivity. The "Solow Paradox" of the absence of an impact ofICT on productivity no longer holds, if it ever did. Both growth accounting and econometricevidence suggest an important role for ICTs in accounting for productivity. In fact, theempirical estimates suggest a much larger impact of ICT on productivity than would beexpected from the standard neoclassical model that we focus on. We discuss the variousexplanations for these results, including the popular notion of complementary organizationalcapital. Finally, we offer suggestions for where the literature needs to go. |
| Keywords: | ICT, productivity, organisation |
| JEL: | E22 E23 F1 O11 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0749&r=cse |
| By: | Evangelia Vourvachaki |
| Abstract: | This paper investigates the impact of Information and Communication Technologies (ICT) ongrowth in an economy, consisting of three sectors, ICT-producing, ICT-using and non-ICT-using.The benefits from ICT come from the falling prices of the ICT-using sector's good,which is used for the production of intermediate goods. Their falling prices provideincentives for investment for sectors using them, so the non-ICT using sector experiencessustained growth driven by capital accumulation. Rates of growth across the three sectorsdiffer, but the aggregate economy is on a balanced growth path with constant labour sharesacross sectors. US evidence confirms the model's predictions. |
| Keywords: | multi-sector economy, endogenous growth, balanced growth path, Informationand Communication Technologies |
| JEL: | O40 O41 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0750&r=cse |
| By: | Gilles Duranton; Henry G. Overman |
| Abstract: | We use a point-pattern methodology to explore the detailed location patterns of UKmanufacturing industries. In particular, we consider the location of entrants and exitersvs. continuing establishments, domestic- vs. foreign-owned, large vs. small, and affiliatedvs. independent. We also examine co-localisation between vertically linked industries.Our analysis provides a set of new stylised facts and confirmation for others. |
| Keywords: | Localisation, Location patterns, clusters, K-density, spatial statistics |
| JEL: | C19 R12 L70 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0756&r=cse |
| By: | Rachel Ngai; Roberto M. Samaniego |
| Abstract: | We develop a multi-sector general equilibrium model in which productivity growth is drivenby the production of sector-specific knowledge. In the model, we find that long rundifferences in total factor productivity growth across sectors are independent of theparameters of the knowledge production function except for one, which we term the fertilityof knowledge. Differences in R&D intensity are also independent of most other parameters.The fertility of knowledge in the capital sector is central to the growth properties of the modeleconomy. |
| Keywords: | Endogenous technical change, multisector growth, fertility of knowledge, totalfactor productivity, R&D intensity, investment-specific technical change |
| JEL: | D24 D92 O31 O41 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0762&r=cse |
| By: | Marin, Dalia; Verdier, Thierry |
| Abstract: | Corporate organization varies within a country and across countries with country size. The paper starts by establishing some facts about corporate organization based on unique data of 660 Austrian and German corporations. The larger country (Germany) has larger firms with flatter more decentral corporate hierarchies compared to the smaller country (Austria). Firms in the larger country change their organization less fast than firms in the smaller country. Over time firms have been introducing less hierarchical organizations by delegating power to lower levels of the corporation. We develop a theory which explains these facts and which links these features to the trade environment that countries and firms face. We introduce firms with internal hierarchies in a Krugman (1980) model of trade. We show that international trade and the toughness of competition in international markets induce a power struggle in firms which eventually leads to decentralized corporate hierarchies. We offer econometric evidence which is consistent with the models predictions. |
| Keywords: | international trade with endogenous firm organizations; trade and corporate organization in similar countries; power struggle in the firm; corporate organization in Austria and Germany; empirical test of the theory of the firm |
| JEL: | F12 F14 L22 D23 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:1346&r=cse |
| By: | Helga De Doncker (National Bank of Belgium, Microeconomic Information Department) |
| Abstract: | The Belgian pharmaceutical sector has been accorded a leading role in the attainment of the R&D investment targets which the EU Member States set themselves as part of the Lisbon strategy. To gain a better insight into that sector’s research activities, the NBB conducted an ad hoc survey in 2005, covering pharmaceutical companies active in Belgium in the field of research, production and distribution of drugs for human use. The analysis of the information obtained from that survey makes up the main body of this working paper. The survey results do not only confirm the importance of the research activities conducted by Belgian establishments, but also indicate the frequent cooperation with other research centres and the crucial importance of expertise as a factor influencing the location of such activities in Belgium. The breakdown of the survey results by kind of establishment on the basis of the type of activities conducted in Belgium reveals further clear differences of emphasis in the nature of the R&D activities pursued in Belgium and divergences in the scale of the resources used. The paper also comprises a number of annexes giving additional information on the sector. More particularly, they deal with added value and employment, the indirect effects and profitability of the pharmaceutical companies, and background information on reference reimbursement of drugs. |
| Keywords: | pharmaceutical industry, R&D, reference reimbursement |
| JEL: | I18 L65 O3 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:docwpp:200612-1&r=cse |