nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2007‒05‒04
nine papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Intra-alliance performance, control rights, and today's split of tomorrow's value By Adegbesan, Tunji; Higgins, Matthew J.
  2. Appropriating value from external technology: Absorptive capacity dimensions and innovation strategy By Ricart, Joan E.; Adegbesan, Tunji
  3. Offshoring as a Survival Strategy in Globalizing Industries: New Evidence from Belgian Manufacturing By Coucke, K.; Sleuwaegen, L.
  4. Unlocking Value: Equity Carve outs as Strategic Real Options By Perotti, Enrico C; Rossetto, Silvia
  5. Efficiency and Ownership Structure – The Case of Poland By Modén, Karl-Markus; Norbäck, Pehr-Johan; Persson, Lars
  6. Are external technology sourcing strategies substitutes or complements? The case of embodied versus disembodied technology acquisition By Cassiman, Bruno; Veugelers, Reinhilde
  7. Strategic Advertisement with Externalities: A New Dynamic Approach By R. Joosten
  8. Rediscovering the Solow Model: An Energy Network Approach By Carl-Johan Dalgaard; Holger Strulik
  9. Public Infrastructures, Public Consumption, and Welfare in a New-Open-Economy-Macro Model By Giovanni Ganelli; Juha Tervala

  1. By: Adegbesan, Tunji (IESE Business School); Higgins, Matthew J. (Georgia Institute of Technology)
    Abstract: Although the differential benefits reaped by individual partners are a major determinant of the performance impact of strategic alliances, previous analysis has faced methodological challenges. In response we propose a measure for relative value appropriation and an explicit theoretical framework for predicting its variation in terms of relative bargaining position. With a sample of 180 biotechnology R&D alliances, we are thus able to explain variation in value appropriation across partner types as well as individual partners of each type.
    Keywords: Alliance performance; strategic alliances; value appropriation; bargaining position; factor markets;
    Date: 2007–01–10
  2. By: Ricart, Joan E. (IESE Business School); Adegbesan, Tunji (IESE Business School)
    Abstract: Innovation from external sources has continued to grow in importance in recent years, in defiance of conventional wisdom advocating internal sourcing of core technologies. One important reason for the previous emphasis on internal sourcing of core technologies relates to concerns of horizontal and vertical appropriability. Thus, the question arises of whether and how firms can reconcile horizontal and vertical appropriability with the rise of the external sourcing of new technologies. Must firms sacrifice value appropriation on the altar of value creation? To answer these questions, we delve beneath individual technological innovations to examine the technical and market capabilities underlying them. Specifically, we show how the amount of value a firm stands to appropriate relative to competitors and relative to technology suppliers depends on the fit between its innovation strategy and its previous investments in distinct dimensions of absorptive capacity. At the same time, we also show how first-order capabilities and dynamic capabilities interact to determine firm performance. Thus, we shed light on how and when the move to 'open' innovation will affect the amount of value innovating firms stand to appropriate.
    Keywords: Innovation strategy; external sourcing; technology innovation; value appropriation;
    Date: 2007–01–17
  3. By: Coucke, K.; Sleuwaegen, L.
    Abstract: This paper analyzes the impact of globalization on the exit behavior of manufacturing firms in one of the world’s most open economies: Belgium. We find that imports from low-wage countries exert a strong competitive effect that lowers a firm’s chances of survival. This competitive effect is found to arise mainly in industries where intra-industry trade, an indicator of product differentiation, is relatively low. As an offensive strategy to cope with the rising competitive pressure from imports, we find that firms exploiting opportunities afforded by globalization, in particular the off-shoring of activities, are able to improve their chances of survival. Making a distinction between domestic firms and subsidiaries of multinational firms, we also find that domestic firms face a higher risk of exit when multinational firms compete in their relevant input and output markets. Finally, we show that subsidiaries of multinational firms are better adapted to cope with globalization forces, and we find them to be less sensitive to domestic market conditions in the host country.
    Keywords: Exit, Off-shoring, Sourcing, Globalization
    JEL: F1 F23 L2
    Date: 2007–04–23
  4. By: Perotti, Enrico C; Rossetto, Silvia
    Abstract: Equity carve outs, the partial listing of a corporate subsidiary, appear to be transitory arrangements, usually dissolved within a few years by either a complete sale or a buy back. Why do firms perform expensive listings just to reverse them thereafter? We interpret carve outs as strategic options to attract information from the market over the relative value of a productive unit as an independent entity and thus to improve the decision process on whether to sell out or to retain control. The separate listing is costly, as it reduces coordination of production, but generates valuable information from the market over the optimal allocation of ownership. We compute the optimal timing for the final sale or buy back decisions, the value of the strategic options embedded in the carve out and the optimal shares retained. The model explains the temporary nature of carve outs, and suggests an explanation for many empirical findings. In particular, it explains why carve outs are more common in sectors with high uncertainty and in more informative markets.
    Keywords: Buy back; Equity carve out; Real options; Spin Off; Vertical integration
    JEL: G13 G32 G34
    Date: 2007–04
  5. By: Modén, Karl-Markus (Södertörn University College); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN))
    Abstract: We examine the effects of foreign entry on productive efficiency during the Polish investment liberalization. The performance of foreign acquisitions is compared to foreign firms entering the market through greenfield entry, as well as domestic acquisitions of privatized firms, domestic greenfields and remaining state-owned (non-privatized) firms during the period 1995-2000. We find that foreign privatized firms have realized larger productivity gains than all types of domestic firms and that this is not due to higher price-cost margins, which is consistent with the idea that foreign firms bring in firm-specific knowledge. Foreign greenfields have the highest average labour productivity, while foreign privatizations show the largest productivity increase.
    Keywords: Privatizations; M As; FDI; Foreign Ownership; Productivity
    JEL: F23 J31
    Date: 2007–04–13
  6. By: Cassiman, Bruno (IESE Business School); Veugelers, Reinhilde (Katholieke Universiteit Leuven)
    Abstract: This paper analyzes the choice between different external technology sourcing activities of a firm. On the one hand, the firm can acquire new technology which is embodied in personnel. On the other hand, the firm can obtain new technology disembodied through a licensing agreement or by outsourcing the technology development from an R&D contractor. Building on Cassiman and Veugelers (2006), we test whether embodied and disembodied technology acquisitions are complementary activities or rather behave as substitute technology acquisition alternatives. We find that while internal and external technology acquisition are complementary innovation activities, the actual choice of external technology sourcing between embodied or disembodied modes is substitutive for smaller firms. The evidence for larger firms suggests that different external technology sourcing activities are complementary, but in this case the results are suggestive although not strongly significant.
    Keywords: Embodied & disembodied technology acquisition; complementarity; substitutability;
    Date: 2007–01–23
  7. By: R. Joosten
    Abstract: We model and analyze strategic interaction over time in a duopolis-tic market. Each period the firms independently and simultaneously choose whether to advertise or not. Advertising increases the own immediate sales, but may also cause an externality, e.g., increase or decrease the immediate sales of the other firm ceteris paribus. There exists also an effect of past advertisement efforts on current sales. The 'market potential' of each firm is determined by its own but also by its opponent's past efforts. A higher effort of either firm leads to an increase of the market potential, however the impact of the own past efforts is always stronger than the impact of the opponent's past efforts. How much of the market potential materializes as immediate sales, then depends on the current advertisement decisions. We determine feasible rewards and (subgame perfect) equilibria for the limiting average reward criterion using methods inspired by the repeated-games literature. Uniqueness of equilibrium is by no means guaranteed, but Pareto efficiency may serve very well as a refinement criterion for wide ranges of the advertisement costs.
    Keywords: advertising, externalities, average rewards, equilibria Length 21 pages
    JEL: C72 C73 L13 M31 M37
    Date: 2007–04
  8. By: Carl-Johan Dalgaard (Department of Economics, University of Copenhagen); Holger Strulik (University of Hannover)
    Abstract: The present paper provides a new theory of capital accumulation and growth. While the law of motion for capital per worker is structurally identical to that of the neoclassical growth model (Solow, 1956), the underlying foundation is very different. In contrast to the Solow model, the purposed theory is based on thermodynamical principles and associations reflecting the geometrical properties of energy transporting networks. The theory predicts that in the absence of technological progress growth is ultimately limited by the capacity of networks to supply sufficient energy to support continual increases in the per capita stock of capital. We also examine the theory empirically, and find that cross country data supports its key predictions.
    Keywords: economic growth; energy; networks
    JEL: O11 I12 J13
    Date: 2007–04
  9. By: Giovanni Ganelli; Juha Tervala
    Abstract: This paper focuses on the trade-off faced by governments in deciding the allocation of public expenditures between productivity-enhancing public infrastructures and utility-enhancing public consumption. From the modeling point of view, the paper augments a standard New Open Economy Macroeconomics (NOEM) model by introducing productive public infrastructures. The results show that a temporary increase in the domestic stock of public capital financed by a reduction in public consumption reduces domestic welfare in the short run because the temporary gains from higher productivity do not compensate domestic residents for the utility loss due to lower public consumption. If the policy shift is permanent domestic utility is likely to increase, while foreign residents suffer short-run welfare losses but benefit from welfare gains in the long run. This analysis implies that a permanent domestic reallocation of public spending might result in a virtuous global technological cycle.
    Keywords: Public spending composition , welfare , imperfect competition , nominal rigidities , Infrastructure , Government expenditures , Consumption , Economic models ,
    Date: 2007–03–22

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