|
on Economics of Strategic Management |
|
Issue of 2007‒02‒24
fifteen papers chosen by Joao Jose de Matos Ferreira University of the Biera Interior |
| By: | Bowen, H.P.; Wiersema, M. |
| Abstract: | Corporate strategic decisions regarding the international and product market scope of a firm’s activities are the essence of corporate strategy, and how these choices in turn affect performance is the subject of a large body of research in the fields of international business and strategic management. When making these strategic decisions, managers are likely to take into account that these decisions are interrelated since they will require allocating a firm’s fixed bundle of resources. Yet, the international business and strategy literatures have mostly treated these two scope decisions as independent strategies, and have also largely ignored the interrelated nature of these strategic scope decisions vis-à-vis their expected impact on performance. As a result, little is known about the nature of the relationship between these strategic choices - whether they are substitute or complementary strategies - or how they jointly impact firm performance. To address this important gap in our understanding of corporate strategy, this paper examines the joint and simultaneous nature of the relationships among these strategic scope decisions and firm performance in a unified framework. Our analysis serves to integrate prior international business and strategy research, and our model and empirical methods address a number of shortcomings of prior empirical studies. Our results indicate that the relationship between a firm’s international and product market strategies and its performance is nonlinear, with performance first rising but then falling as the firm’s international or product diversification rises, implying that the performance impact of these strategies is path dependent. Our results also provide the first evidence that, within the firm, international and product diversification are substitute strategies for performance. |
| Keywords: | Corporate Strategy, International Diversification, Product Diversification |
| Date: | 2007–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:vlg:vlgwps:2007-6&r=cse |
| By: | Eleonora Di Maria (University of Padova); Stefano Micelli (University of Venice) |
| Abstract: | Italian industrial districts are no longer self-contained systems of small firms, where firms' competitiveness is the result of physical proximity and links with global economy are limited to export sales. A new generation of firms is taking the lead, reshaping the form of districts through their innovative strategies focused on R&D, design and ICT. Most of these firms are leaders within their markets and organize their value chains by coupling district knowledge and competencies with opportunities offered by globalization processes. The rise of these open networks contributes to the transformation of industrial districts and the real drivers of the district firm's competitiveness. Based on a survey of 650 Italian SMEs from 41 Italian districts, the paper describes the characteristics of this new firm model, compared to the traditional district one. The paper also discusses implications for districts in terms of innovation dynamics and governance. |
| Keywords: | district firms, open networks, global value chain, innovation, governance |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0038&r=cse |
| By: | Marcus Wagner |
| Abstract: | This paper analyses the nature and details of the impact which the integration of social and environmental considerations with business strategy has on different dimensions of competitiveness and innovation activity on the firm level. Its objective is to answer the question as to whether a positive link exists between integration and the effects of environmental and social performance on competitiveness and innovation activity. After presenting a theoretical framework based on extant work, the paper introduces the research methods and variables. Subsequently results are presented for four different dimensions of competitiveness, namely market-related, image-related, efficiency-related and risk-related advantage as well as for innovatory activity in terms of product and process innovation. These raise the possibility that the process of integration is more important for bringing about a positive link than a resulting integration type. Based on the results, implications are discussed and we shall draw the conclusions from the findings. |
| Keywords: | stakeholder, environmental management, integration, strategy, quality, social performance, environmental performance, competitiveness, innovation |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2007-08&r=cse |
| By: | Jeffery S. McMullen; Lawrence A. Plummer; Zoltan J. Acs |
| Keywords: | entrepreneurial opportunity, creation, knowledge, discovery, strategy |
| JEL: | L26 M13 D5 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:esi:egpdis:2007-10&r=cse |
| By: | Muge Ozman |
| Abstract: | The aim of this paper is to investigate the effect of technological opportunities and knowledge tacitness on inter-firm network formation, under two different industry regimes. In the first regime environment is stable and the aim of firms is to exploit knowledge. In this case, they attribute more value to repeated interactions with geographically close firms. In the second regime, there is environmental turbulence, which increases the value of access to novel information from distant partners for exploration. The question addressed is, under these regimes how do technological opportunities and knowledge tacitness influence structure of networks? The main contribution of the paper different from previous work is that it explicitly models the effect of history between two firms on networks that form. A simulation model is carried out where firms select partners and learn from them, which further shapes their selection process. The results reveal that in both regimes richer technological opportunities and higher tacitness generates local and global star firms depending on the parameter range. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2007-07&r=cse |
| By: | Crespi, Gustavo; Criscuolo, Chiara; Haskel, Jonathan |
| Abstract: | We examine the relationships between productivity growth, IT investment and organisational change (DO) using UK firm data. Consistent with the small number of other micro studies we find (a) IT appears to have high returns in a growth accounting sense when DO is omitted; when DO is included the IT returns are greatly reduced, (b) IT and DO interact in their effect on productivity growth, (c) non-IT investment and DO do not interact in their effect on productivity growth. Some new findings are (a) DO is affected by competition; (b) US-owned firms are much more likely to introduce DO relative to foreign owned firms who are more likely still relative to UK firms; (c) our predicted measured TFP growth slowdown for firms who are not doing DO and/or are in the early stages of IT investment compare well with the macro numbers documenting a UK measured TFP growth slowdown. |
| Keywords: | information technology; organisational change; productivity growth |
| JEL: | D24 E22 L22 O31 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6105&r=cse |
| By: | Norbäck, Pehr-Johan; Persson, Lars |
| Abstract: | This paper studies how the surplus generated by the globalization process is divided between MNEs and owners of domestic assets. We construct an oligopoly model where the equilibrium acquisition pattern, the acquisition price and firms' greenfield investments are endogenously determined. Acquisition entry is shown to be more likely when the complementarity between domestic and foreign assets is high. However, we show that such acquisitions might have a low profitability, since the bidding competition over the domestic assets is then so fierce that the firms involved would be better off not starting a bidding war. Risks associated with different entry modes are also examined. |
| Keywords: | FDI; greenfield investments; investment liberalization.; mergers and acquisitions |
| JEL: | F23 G34 L13 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6102&r=cse |
| By: | Luis J. Álvarez (Banco de España); Ignacio Hernando (Banco de España) |
| Abstract: | This paper explores the role of a number of factors in explaining the heterogeneity in the degree of price stickiness across industries, on the basis of the information provided by surveys on pricing behavior conducted in nine euro area countries. The main focus is placed on the influence of competition on the degree of price flexibility. Our results suggest that the price setting strategies of the most competitive firms give them a greater capacity to react to shocks and make, in practice, for greater flexibility in their prices. The direct influence of market competition on price flexibility is corroborated by a cross-country cross-industry econometric analysis based on the information provided by surveys. This analysis also shows that the cost structure and demand conditions help to explain the degree of price flexibility. Finally, it suggests that countries in which product market regulation is more relevant are characterized by less price flexibility. |
| Keywords: | price setting, competition, survey data |
| JEL: | D40 E31 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0629&r=cse |
| By: | Verweire, K.; Ferguson, T.; Debruyne, M. |
| Abstract: | Competitive strategy is at the heart of the field of strategic management. But despite years of academic research, there is a lot of debate about what constitutes competitive strategy and how effective competitive strategies lead to superior performance. In this article, we argue that strategy is about making clear choices (“focus”) and about being different (“differentiation”) on four strategic dimensions, including: Whom do we serve?, What do we provide?, What is our value proposition?, and How do we realize all this? Although recent work has pointed to these conclusions, this paper goes one step further by providing more concrete ideas as to what focus and differentiation really mean for each of the various dimensions and why they matter. As such, we provide managers a framework that can be used to test the extent to which their strategies have the potential to be effective. |
| Date: | 2007–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:vlg:vlgwps:2007-5&r=cse |
| By: | David Bryce; Sidney Winter |
| Abstract: | Firm growth and expansion is widely believed to be guided by the desire to leverage existing resources. But which resources? The answer depends largely on context.the peculiarities of industries, firms, technologies, production, customers, and a host of other dimensions. This fact makes pointing to any particular set of resources as the source of expansion decisions potentially problematic and makes more difficult tests of theories such as the resource-based view of the firm. This paper tackles the problem by developing a general inter-industry relatedness index that can be usefully applied across industry and firm contexts. The index harnesses the relatedness information embedded in the multi-product organization and diversification decisions of every firm in the US manufacturing economy. The index is general in that it implicitly varies the underlying resources upon which expansion proceeds with the industries in question and provides a percentile relatedness rank for every possible pair of fourdigit SIC manufacturing industries. The general index is tested for predictive validity and found to perform as expected. Applications of the index in strategy research are suggested. |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:06-31&r=cse |
| By: | Frantzeskakis, Kyriakos; Ueda, Masako |
| Abstract: | Any factor that makes acquisition more appealing should increase the number of acquisition that occur. This idea has been captured in standard static models in the literature. However, an increase in the number of acquisitions today means fewer firms exist to perform acquisitions in the future. This dynamic, which we explore, is not well understood. We study a model of mergers motivated by efficient reallocation of projects. A firm may conceive a project that it may not be able to develop successfully. It can be acquired by an established firm that has already proved its ability to develop such projects successfully. We find that, when acquisition costs are low established firms acquire young firms (but not other established firms) in the steady state. More strikingly, if the likelihood of project success decreases for young firms, we find that a higher fraction of young firms attempt to develop their projects rather than to be acquired. This contrasts the previous literature's findings on acquisitions. The explanation for this result is that an increased likelihood of firms' failures causes a shortage of established firms that can then acquire new young firms. Finally, if acquisition costs are moderate we find that established firms acquire other established firms, but not young firms. |
| Keywords: | firm's life cycle; mergers as reallocation |
| JEL: | D83 D92 G34 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6079&r=cse |
| By: | Stennek, Johan; Tangerås, Thomas P. |
| Abstract: | This paper questions whether competition can replace sector-specific regulation of mobile telecommunications. We show that the monopolistic outcome prevails independently of market concentration when access prices are determined in bilateral negotiations. A light-handed regulatory policy can induce effective competition. Call prices are close to the marginal cost if the networks are sufficiently close substitutes. Neither demand nor cost information is required. A unique and symmetric call price equilibrium exists under symmetric access prices, provided that call demand is sufficiently inelastic. Existence encompasses the case of many networks and high network substitutability. |
| Keywords: | access price competition; entry; network competition; network substitutability; regulation; two-way access |
| JEL: | L51 L96 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6073&r=cse |
| By: | Elina Seppä |
| Abstract: | The objective of this study is to study whether the R&D expenditures in Finnish firms generate better innovation output than in Belgian and German firms following the studies of Mohnen et al. (2006) and Mohnen and Dagenais (2001) and using CIS 3 data on manufacturing firms in 1998?2000. First, we use generalised tobit model to scrutinise what factors impact the firm?s propensity to innovate and the amount of innovation output, the share of sales in innovative products. Second, we construct an innovation indicator based on the estimates of pooled regression and compare the expected innovation output to the observed innovation output in sample countries and industries. We find that innovativeness is overall largest in Germany whereas the results of Belgium and Finland are nearly equal. The most surprising country differences are found in the effects of public funding, which do not have any significant impact on innovation output in Finland, have a negative impact in Belgium and positive in Germany. |
| Keywords: | Innovation, R&D, CIS, innovativeness, productivity, innovation and technology policy |
| Date: | 2007–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:fer:dpaper:414&r=cse |
| By: | Annette Bongardt (Universidade Moderna); Francisco Torres (IEE, Universidade Católica Portuguesa) |
| Abstract: | In order to ensure that the internal market delivers (growth, jobs) in the face of a changing market and technological environment (internal market liberalisation, globalisation, the knowledge-based economy) and to take advantage of the opportunities that it presents, the European Union (EU) needs to create an adequate institutional framework that promotes its efficiency potential and adaptive capacity. In the reality of European mixed economies, its capacity to solve the structural problems that impair productivity and economic growth in Europe hinges very much on governance, in particular when reforms to realise international synergies and complementarities or policy-learning with a view to common goals involve not only the EU but as well the Member State level. The Lisbon Agenda can be considered an exercise of policy coordination that needs to ensure that Member States’ over-regulated economies comply both with liberalisation in the Single Market and with an adequate European-wide institutional environment for sustainable growth without coordination mismatches, protectionism and market segmentation. This ultimately raises the question, central to this paper, of the adequate governance level and of the regulatory model to adopt (systems competition and/or European regulation). |
| Keywords: | Economic Integration; Governance; European Union; Single Market; Lisbon Agenda; Open method of coordination; Liberalisation; Regulatory model; Growth and competitiveness. |
| JEL: | F15 P48 F50 H73 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:ave:wpaper:452007&r=cse |
| By: | Lundin, Nannan (Örebro University); Sjöholm, Fredrik (Research Institute of Industrial Economics); Ping, He (National Bureau of Statistics of China); Qian, Jinchang (National Bureau of Statistics of China) |
| Abstract: | Science & Technology (S&T) is high on the Chinese policy agenda but there are large uncertainties on the actual S&T development. For instance, previous studies tend to focus only on large and medium-sized enterprises (LMEs). The situation in Chinese small firms is far less explored. This paper aims to examine the role of S&T-based small firms. More precisely, we examine how much S&T that has been accounted for by small firms and how their S&T intensity differs across industries and ownership groups. We also analyze how various firm characteristics differ over size categories and S&T status. This study is based on newly processed micro level data provided by the National Bureau of Statistics with information on a large number of S&T indicators for small-, medium-, and large-sized manufacturing firms in China in 2000 and 2004. Our results suggest that small firms in Chinese S&T resemble their role in many other countries. They account for a comparably small share of total S&T and most small firms are not engaged in any S&T. However, those small firms that do engage in S&T tend to be more S&T intensive and have a higher output in terms of patents than larger Chinese S&T firms. |
| Keywords: | Technology; SMEs; China; S&T; R&D |
| JEL: | O30 O31 O53 |
| Date: | 2007–02–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0695&r=cse |