nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2007‒08‒27
sixteen papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. On the Long run Determinants of Industry TFP Growth Rates By Ngai, Liwa Rachel; Samaniego, Roberto
  2. Strengthening Productive Capacities in Emerging Economies through Internationalisation: Evidence from the Appliance Industry By Federico Bonaglia; Andrea Goldstein
  3. Competitiveness – Residency Base versus Ownership Base – in Case of Japan By Kazuo Inaba
  4. Regions' Size and Regional Competitiveness in the 4th EU Programming Period, 2007-2013. Regional Units in Greece. By George Mihailidis; Giorgos Georgiadis; Nikos Koutsomarkos
  5. Optimizing Franchisee Sales and Business Performance in Retail Food Sector By Rajagopal
  6. Identification of Exogenous and Endogenous Factors Affecting Competitiveness: An Application to the Spanish Furniture Industry By Juan Ignacio Dalmau-Porta; Marna Del Val Segarra-Opa
  7. Entry Strategies, Welfare Analysis and Firms’ Behaviors By Wang Xun; Luo Ting
  8. Contractual Enforcement and Strategic Incompleteness By DESSI, Roberta
  9. Mergers & Acquisitions and Innovation Performance in the Telecommunications Equipment Industry By Tseveen Gantumur; Andreas Stephan
  10. Entrepreneurship and firm formation across countries By Quesada, Juan Manuel; Guillen, Mauro F.; Amit, Raphael; Klapper, Leora
  11. Industrial Policy and Growth By Helen Shapiro
  12. Product Innovation, Export Entrepreneurship and Regional Characteristics - an analysis of innovation ideas in regions By Andersson, Martin; Johansson, Börje
  13. Understanding Strategies of the Venture Capital Investors in Helping Their Portfolio Firms to Become International By Terttu Luukkonen
  14. Industrial Networks between China and the Countries of the Asia-Pacific Region By Kuwamori, Hiroshi; Okamoto, Nobuhiro
  16. Strategic Interaction amongst Australia’s East Coast Ports By Marcin Pracz; Rod Tyers

  1. By: Ngai, Liwa Rachel; Samaniego, Roberto
    Abstract: We develop a multi-sector general equilibrium model in which productivity growth is driven by the generation of knowledge. In the model, firms allocate resources towards the production of goods and the production of new knowledge, in response to industry-specific factors of demand and technology. In equilibrium, we find that long run differences in research intensity and productivity growth are primarily driven by the parameters of the production function for knowledge -- particularly the extent to which the production of new knowledge benefits from prior knowledge, which we term receptivity. Conditional on receptivity, whether the production of knowledge relies on prior knowledge that is internally generated by the firm or whether it instead "spills over" from its competitors does not appear to be quantitatively important. The results are consistent with a number of empirical findings on the relationship between research intensity and rates of technical change.
    Keywords: Multi-sector growth; R&D Intensity; Technological Opportunity; Total Factor Productivity
    JEL: D24 O31 O41 O47
    Date: 2007–07
  2. By: Federico Bonaglia; Andrea Goldstein
    Abstract: The emergence of a “second wave” of developing-country multinational enterprises (MNEs) in a variety of industries is one of the characterizing features of globalisation. These new MNEs did not delay their internationalisation until they were large, as did most of their predecessors, and often become global as a result of direct firm-to-firm contracting. Many grow large as they internationalise; conversely, they internationalise in order to grow large. This is a striking pattern which, if confirmed, indicates that enterprises from developing countries have pursued distinctive approaches to internationalisation. It is a further interesting hypothesis to investigate to what extent such firms, born as suppliers of established incumbents, have leveraged on their “latecomer” status to accelerate their internationalisation. This paper documents how emerging MNEs may follow quite different patterns to reach, or at least approach, global competitiveness. In particular, it investigates how three latecomer MNEs pursued global growth through accelerated internationalisation combined with strategic and organisational innovation. Haier (China), Mabe (Mexico) and Arçelik (Turkey) emerged as Dragon Multinationals in the large home appliances (so-called “white goods”) industry <BR>L'émergence dans plusieurs secteurs industriels d'une « deuxième vague » d’entreprises multinationales (EMN) issues de pays en développement constitue une des caractéristiques de la mondialisation. Contrairement à leurs prédécesseurs, ces nouvelles EMN n'ont pas attendu d’être une grande structure pour s’internationaliser, bien souvent elle se sont internationalisées à travers une stratégie de négociation directe d’entreprise à entreprise. Beaucoup d’entreprises se développent avant de s’internationaliser. Au contraire, les EMN s’internationalisent pour s’agrandir. Ce schéma interpelle car, si confirmé, il démontre que les entreprises des pays en développement ont eu une approche singulière à l’internationalisation. L’autre hypothèse intéressante consiste à d'étudier dans quelle mesure ces entreprises, à l’origine fournisseurs des entreprises établis dans les pays développés, ont su tirer profit de leur statut de « retardataire » pour accélérer leur internationalisation. Ce rapport explique comment des EMN émergents pourraient être amenées à suivre des schémas tout à fait différents pour intégrer la compétitivité mondiale, ou du moins s’en rapprocher. C’est une analyse qui démontre en particulier comment trois EMN « retardataires » (latecomers) ont mené à bien leur croissance mondiale par le biais d'une internationalisation accélérée, accompagnée d’une innovation stratégique et organisationnelle. Haier (en Chine), Mabe (au Mexique) et Arçelik (en Turquie) ont émergé comme des dragons multinationaux dans l’industrie de produits électro-ménagers (aussi dénommés « marchandises blanches »)...
    Keywords: multinational enterprises
    JEL: F23 M2
    Date: 2007–07
  3. By: Kazuo Inaba
    Abstract: This paper examines the competitiveness of Japanese firms in the manufacturing sector since the middle of 1980s when the Japanese FDI outflow was accelerated. Instead of a standard residency-based balance of trade, we use the idea of ownership-based net foreign sales introduced by DeAnne Julius (1990, 1991). The calculated results show that the Japanese overseas activities have made the firms with foreign affiliates abroad become more competitive through selling their products in the local market of the foreign country. Major exporting sectors such as electric machinery and transport machinery have sustained strong competitiveness. The competitiveness of Japanese firms is also confirmed by upward tendency of profit rate in foreign affiliates abroad. Using Dunning terminology the ownership advantages the Japanese firms acquired abroad would mainly come from their inherent management and production system.
    Keywords: Japanese Direct Foreign Investment, International Competitiveness, Intra-firm Trade, Foreign Trade, Foreign Sales, Ownership Advantages
    Date: 2006–09–05
  4. By: George Mihailidis; Giorgos Georgiadis; Nikos Koutsomarkos
    Abstract: (This paper is the result of a research program that was carried out by the Laboratory for Evaluation of Development Policies and Programs, University of Thessaly, for the Greek Ministry of Economics and National Economy). Does size matter? Is regional competitiveness affected by the regions size? Are regional problems in Greece the same or differentiated among regions? Could an administrative reform create better development preconditions? The designation of the 13 Regions in the 80s in Greece basically stemmed from the need to create development units for programming and managing the development planning. Nonetheless, the designation of regions under the effect of historical factors and political expediency led to uneven area as well as population sizes. Moreover, up to today, Greece has put its major developmental effort in the infrastructures sector, while the new 4th programming period 2007-2013 imposes competitiveness objectives and an integration of the Lisbon Strategy in the Coherence policy that constitute an innovation for the Greek reality. Thus, the question occurs whether the Greek Regions are capable to formulate and implement corresponding strategies and programmes. This paper discusses the performance of the 13 Greek regions against other comparable EU regions and presents indexes reflecting the relative progress of the Greek regions, through critical review of statistical data concerning development level and regional competitiveness. At the same time the paper considers how a restructure of resources, competences, and geographical boundaries will enable: i. Concentration of managerial effort ii. Better control of programme implementation. iii. Better utilization of the limited available personnel . iv. More economical use of equipment and facilities. And finally programme operation monitoring at the regional level through the formation of larger and more powerful regional entities, vis-vis the central Administration. To this purpose administrative decentralization schemes of various EU Countries are reviewed. The paper proposes a restructuring as follows: All the competences concerning decision-making and management of the programming are concentrated to Regional Unions. The Regions retain only proposal functions, as centers of local bodies¢ consensus and local initiatives' mobilization. The paper also elaborates on a generalized administrative scheme for the Unions and the Regions. Summing up the discussion highlights the necessity to form larger and more powerful regional units in Greece, where one¢s strategic disadvantages will be compensated by the advantages of the other and through them many local economies altogether will build a scale capable to integrate their productive structure, to cause the emergence of new functions and to constitute their negotiatory advantage for FDI and activities attraction.
    Date: 2006–08
  5. By: Rajagopal (Tecnológico de Monterrey, Campus Ciudad de México)
    Abstract: This paper aims at identifying attributes of players in franchising process that contribute in delivering satisfaction in purchasing and operating the outlets in Mexico. The discussion also focuses the impact of cultural diversities in franchisee selection, outlet management and achieving high performance. Franchisee relationship has been evaluated in reference to principal determinants attributing to the enhancement of satisfaction and strengthening franchisor-franchisee ties. It has been observed in the study that performance of franchisee outlets is a function of outlet attraction, supply and manufacturing management, quality, price, and promotional strategies as functional factors. Besides, relational variables including personalized customer services, leisure support and customer convenience also influence the performance of outlets.
    Keywords: Franchising, performance measurement, market demand, sales management, retailing, store organization, pricing, promotional strategies, customer value and business growth
    JEL: C51 D23 L81 M31
    Date: 2007–08
  6. By: Juan Ignacio Dalmau-Porta; Marna Del Val Segarra-Opa
    Abstract: In this paper we study what type of exogenous (related to the external structure) and endogenous (related to the firm) aspects affect industry´competitiveness. The framework is used to asses competitiveness of organizations in the Spanish furniture industry. In doing so, we deep in the theoretical concepts related: in one hand, the industrial sinergical concentration and, in the other hand, literature concerned to resources and capabilities. In this way, we apply a conceptual framework developed by the authors in order to identify the critical aspects that can influence competitiveness and, then, describe the results. The applicability of the model is analyzed in the Spanish furniture industry, specifically in the Valencian Community, where is mainly concentred. From the results obtained we are able to conclude that the method is effective in identifying both exogenous and endogenous aspects.
    Date: 2006–08
  7. By: Wang Xun; Luo Ting
    Abstract: Before serving a new market, a multinational enterprise (MNE) has several entry strategies, which include foreign direct investment (FDI), joint venture (JV) and exclusive licensing (EL). Entry cost, market size of the host country, and the discount rate are the main determinants when the MNE chooses its optimal entry strategy. At a certain level of ownership share that the MNE holds, JV will generate the highest social welfare. If firms can choose between competition and collusion, at different levels of the discount rate under FDI and EL, collusive and cheating behavior will happen.
    Keywords: Entry strategies, Multinational enterprise, Welfare, Collusion, Cheating
    JEL: D21 F23 I31 L11 L13
    Date: 2007–06
  8. By: DESSI, Roberta
    JEL: D82 G24 L22 D86
    Date: 2007–06
  9. By: Tseveen Gantumur; Andreas Stephan
    Abstract: In response to global market forces such as deregulation and globalization, technological change and digital convergence, the telecommunications in the 1990s witnessed an enormous worldwide round of Mergers & Acquisitions (M&A). Given both M&A and Innovation a major means of today’s competitive strategy development, this paper examines the innovation determinants of M&A activity and the consequences of M&A transactions on the technological potential and the innovation performance. We examine the telecommunications equipment industry over the period 1988-2002 using a newly constructed data set with firm-level data on M&A and innovation activity as well as financial characteristics. By implementing a counterfactual technique based on a matching propensity score procedure, the analysis not only controls for merger endogeneity and ex-ante observable firms characteristics but also takes account of unobserved heterogeneity. The study provides evidence that M&A realize significantly positive changes to the firm’s post-merger innovation performance. The effects of M&A on innovation performance are in turn driven by both the success in Research and Development (R&D) activity and the deterioration in internal technological capabilities at acquiring firms prior to a merger.
    Keywords: Mergers & Acquisitions, Innovation Performance, Telecommunications Equipment Industry.
    JEL: L63 O30 L10
    Date: 2007–08
  10. By: Quesada, Juan Manuel; Guillen, Mauro F.; Amit, Raphael; Klapper, Leora
    Abstract: The World Bank Group Entrepreneurship Survey measures entrepreneurial activity around the world. The database includes cross-country, time-series data on the number of total and newly registered businesses for 84 countries. This paper finds significant relationships between entrepren eurial activity and indicators of economic and financial development and growth, the quality of the legal and regulatory environment, and governance. The analysis shows the importance of electronic registration procedures to encourage greater business registration. These results can guide effective policymaking and deliver new capabilities for identifying the impact of reforms.
    Keywords: E-Business,Competitiveness and Competition Policy,Business in Development,Business Environment,Banks & Banking Reform
    Date: 2007–08–01
  11. By: Helen Shapiro
    Abstract: The paper highlights how the rationales and instruments of industrial policy have changed since the 1960s. It finds that theories of industrialization have come full circle, as many of the assumptions behind the market failure paradigm have made a comeback. The policy implications of these theories, however, have not been similarly resurrected. It makes an explicit comparison between the strategies of East Asia and Latin America, and reviews the explanations for their divergent performance. It identifies a “back to the future” quality of Latin America’s situation, pointing to the region’s balance of payments constraint and dependence on commodity-like industrial products.
    Keywords: Industrial Policy, Competitiveness, East Asia, Latin America
    JEL: L52 L53 O14 O38 O53 O54 F13
    Date: 2007–08
  12. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper focuses on how characteristics of regions pertaining to local information about product varieties and markets as well as networks for the transmission of information about innovation opportunities influence the arrival of innovation ideas to existing and potential entrepreneurs. We formulate a model where entrepreneurs or innovating firms introduce new products in a quasi-temporal setting. Market conditions are characterized by monopolistic competition between varieties belonging to the same product group, in which there is entry and exit of varieties. Firms innovate in response to the arrival of innovation ideas. To realize these ideas firms have to make an R&D investment and a firm’s decision to export a variety to a new market is associated with a market channel investment. The theoretical model is used as a reference when formulating two regression models, with which we estimate factors that can explain the introduction of new export varieties by firms in different regional milieus. In one model we examine the emergence of new export firms, and in the second model we investigate the appearance of new export varieties. Results are consistent with the assumption that knowledge and information flows have a positive influence on the frequency of arrival of innovation ideas to firms.
    Keywords: innovation ideas; exports; entrepreneurship; location; knowledge spillovers
    JEL: O31 R11 R12
    Date: 2007–08–08
  13. By: Terttu Luukkonen
    Abstract: This paper reports the findings of two empirical studies on the value-added of venture capital with special attention on promoting internationalisation of start-up firms. The first study is based on a survey of Finnish (and a few cross-border) venture capital organisations on the value-adding mechanisms they use with regard to their portfolio firms. The second study is based on interviews with Finnish biotechnology start-ups. Attention is paid specifically to the strategies of three different types of investors in early-stage high growth companies : 1) business angels, which can be regarded as informal venture capitalists, 2) private-sector venture capital firms and 3) public-sector venture capital organisations. Control of agency costs and risks provides a conceptual framework for analysing the strategies of the different investor types. The findings partially corroborate and partially refute the hypotheses made on the basis of theory and the two studies provide somewhat conflicting findings on the role and strategies of the different investor types. According to the venture capital survey, private sector venture capital firms were most actively engaged in ex post monitoring and ‘coaching’ of their portfolio firms in internationalisation, while according to the biotechnology study, business angels turned out to be most actively engaged. The paper discusses potential reasons for these divergent findings.
    JEL: G24 O16
    Date: 2007–08–17
  14. By: Kuwamori, Hiroshi; Okamoto, Nobuhiro
    Abstract: This paper investigates the changes in the structures of industrial networks that have occurred in the Asia-Pacific region in line with the rapid growth of the Chinese economy. Analyses using international input-output tables revealed that during the 1990s, there was a significant increase in the dependence of Asian countries’ manufacturing industries, such as textiles and electronics, on China’s industries, though industries in Japan and the United States remain important as the main suppliers of industries in Asian countries.
    Keywords: Input-output analysis, Backward linkage, Industrial network, Asia, China, Japan, United States, Input-output tables, Manufacturing industries
    JEL: D57 R15
    Date: 2007–06
  15. By: Salvary, Stanley C. W.
    Abstract: Availability of financial capital and location decisions are variables that influence regional manufacturing output. This study maintains that a region’s manufacturing growth depends upon the region’s firm-type dominance. That is, the type of firms that dominate the region’s manufacturing output can be classified as non-local (national or foreign - NF) vs. local and large vs. small. Accordingly, for policy analysis, regions can be classified by firm-type dominance. This distinction is important since, invariably, location decision options and availability of financial capital are more favourable for the larger NF firms than for local firms. In an attempt to assess the impact of firm-type dominance, this study draws upon the dominant industry model which has established that, in any given region, there is a dominant industry (the driving force of the region) to which a region’s manufacturing growth is linked. The information on the impact of firm-type dominance on a region's manufacturing output may enable policy-makers to design workable (or revise existing) manufacturing diversification policies.
    Keywords: state-regions and industry-regions; chemical industry region; regional policy analysis; manufacturing growth; firm-type dominance; availability of financial capital; dominant industry model; manufacturing firms' location decisions; regional economic development; foreign-owned manufacturing plants.
    JEL: R1 R12 R11
    Date: 2007–08–23
  16. By: Marcin Pracz; Rod Tyers
    Abstract: Australia’s principal container ports, located in its state capitals, are owned and operated by state authorities that largely return profits from port operations to state governments. Since they govern the volumes of trade in most merchandise, they command immense influence over the openness and flexibility of the national economy. In this study, we estimate the elasticities of substitution between services of ports in Brisbane, Sydney and Melbourne. We also examine the pricing of port services to estimate the extent of their interaction, from which we derive conjectural variations parameters to assess the actual and potential levels of price collusion. The results confirm that there is considerable potential for destructive oligopoly behaviour and that pricing by the apparently isolated Port of Melbourne has been effectively controlled by price-cap regulation. The services of the ports of Sydney and Brisbane are comparatively substitutable, however. Although their regulation appears to be less restrictive, this substitutability appears to result in some level of competition, which aids in the control of pricing.
    JEL: L92 L51 C51 D21
    Date: 2006–08

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