nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2007‒09‒02
ten papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Exploring the Boundary between Entrepreneurship and Corporate Venturing: From Assisted Spin-outs to Entrepreneurial Spin-offs By E. VAN DE VELDE; B. CLARYSSE; M. WRIGHT; G. RAYP; J. BRUNEEL
  2. Prior knowledge and entrepreneurial innovative success By Uwe Cantner; Maximilian Goethner; Andreas Meder
  3. Strategic R&D with Knowledge Spillovers and Endogenous Time to Complete By Lukach, R.; Kort, P.M.; Plasmans, J.E.J.
  4. How (Not) to Measure Competition By Boone, J.; Ours, J.C. van; Wiel, H.P. van der
  5. A Theory of Strategic Diffusion By Andrea Galeotti; Sanjeev Goyal
  6. The Advantage of Experienced Start-Up Founders in Venture Capital Acquisition: Evidence from Serial Entrepreneurs By Junfu Zhang
  7. Do Investors Really Value Corporate Governance? Evidence from the Hong Kong Market By Yan-leung Cheung; J. Thomas Connelly; Piman Limpaphayom; Lynda Zhou
  8. Network Externalities and Comparative Advantage By Kikuchi, Toru
  9. The Role of Multinational Firms in International Trade: The Case of Japan By Kozo Kiyota; Shujiro Urata
  10. The Properties of Sectoral Growth: Evidence from Four Large European Economies By Castaldi, Carolina; Sapio, Sandro

    Abstract: Corporate entrepreneurship and corporate spin-offs have gained importance over the last decades. Corporate spin-offs play an increasingly important role in the development and growth of emerging, high-technology industries, thereby contributing to economic growth. While previous studies on corporate spin-offs have taken the established firm as a point of departure, a central issue concerns the locus of entrepreneurs. We adopt a bottom-up approach by considering those spin-offs that are created by employees, based upon an opportunity spotted while working for the parent company. Based upon the knowledge-based theory of the firm and the literature on opportunity identification, we develop a typology of corporate spin-offs. We identified three types of corporate spin-offs: Assisted spin-outs, Restructuring-driven spin-outs and Entrepreneurial Spin-offs. These types of corporate spin-offs differ from each other in terms of nature and formality of knowledge transfer; detection and implementation of opportunity identification; and performance. Based upon an in-depth analysis of 41 corporate spin-offs in Flanders, we found that Entrepreneurial Spin-offs outperform both Assisted and Restructuring-driven spin-outs on all four performance indicators. Our findings imply that parent companies often miss possibilities to capture value from opportunities that were originally developed in the parent company.
    Date: 2007–06
  2. By: Uwe Cantner (School of Business and Economics, Friedrich-Schiller University Jena, Germany); Maximilian Goethner (School of Business and Economics, Friedrich-Schiller University Jena, Germany); Andreas Meder (School of Business and Economics, Friedrich-Schiller University Jena, Germany)
    Abstract: This paper is concerned with the relationship between innovative success of entrepreneurs and their prior knowledge at the stage of firm formation. We distinguish between different kinds of experience an entrepreneur can possess and find evidence that the innovative success subsequent to firm formation is enhanced by entrepreneur's prior technological knowledge but not by prior market and organizational knowledge. Moreover we find that prior technological knowledge gathered through embeddedness within a research community has an additionally positive influence on post start-up innovative success. This is a first hint towards the importance of collective innovation activities.
    Keywords: Entrepreneurship, Networks, Prior knowledge
    JEL: L25 O31 Z13
    Date: 2007–08–27
  3. By: Lukach, R.; Kort, P.M.; Plasmans, J.E.J. (Tilburg University, Center for Economic Research)
    Abstract: It is shown that asymmetry in R&D efficiency between firms is an important factor determining feasibility of the preemption and attrition scenarios in competitive R&D with time to build. Scenarios of attrition and preemption games are most likely to occur when competitors have similar R&D efficiencies. In case of largely asymmetric firms the games of attrition and preemption are very unlikely, thus the R&D duration choices of firms are determined by the actual trade-off between the benefits of earlier innovation and the costs of faster R&D project completion.
    Keywords: R&D Investment;Competition;Preemption;Attrition.
    JEL: C72 D21 O31
    Date: 2007
  4. By: Boone, J.; Ours, J.C. van; Wiel, H.P. van der (Tilburg University, Center for Economic Research)
    Abstract: We introduce a new measure of competition: the elasticity of a firm?s profits with respect to its cost level. A higher value of this profit elasticity (PE) signals more intense competi- tion. Using firm-level data we compare PE with the most popular competition measures such as the price cost margin (PCM). We show that PE and PCM are highly correlated on average. However, PCM tends to misrepresent the development of competition over time in markets with few firms and high concentration, i.e. in markets with high policy relevance. So, just when it is needed the most PCM fails whereas PE does not. From this we conclude that PE is a more reliable measure of competition.
    Keywords: competition;profit elasticity;measures of competition;concentration;price cost margin;profits
    JEL: D43 L13
    Date: 2007
  5. By: Andrea Galeotti; Sanjeev Goyal
    Abstract: The important role of friends, neighbors and colleagues in shaping individual choices has been brought out in a number of studies over the years. The presence of significant 'local' influence in shaping individual behavior suggests that firms, governments and developmental agencies should explicitly incorporate it in the design of their marketing and developmental strategies. This paper develops a framework for the study of optimal strategies in the presence of social interaction. We focus on the case of a single player who exerts costly effort to get a set of individuals – engaged in social interaction – to choose a certain action. Our formulation allows for different types of social interaction and also allows for the player to have incomplete information concerning the connections among individuals. We first show that incorporating information on social interaction can have large effects on the profits of a player. Then, we establish that an increase in the level and dispersion of social interaction can raise or lower the optimal strategy and profits of the player, depending on the content of the interaction. Finally, we study the value of social network information for the player and find that it depends on the dispersion in social connections. The economic interest of these results is illustrated via a discussion of two economic applications: advertising in the presence of word of mouth communication and seeding a network.
    Date: 2007–08–29
  6. By: Junfu Zhang (Clark University and IZA)
    Abstract: Existing literature suggests that entrepreneurs with prior firm-founding experience have more skills and social connections than novice entrepreneurs. Such skills and social connections could give experienced founders some advantage in the process of raising venture capital. This paper uses a large database of venture-backed companies and their founders to examine experienced founders' access to venture capital. Compared to novice entrepreneurs, entrepreneurs with venture-backed founding experience tend to raise more venture capital at an early round of financing and tend to complete the early round much more quickly. In contrast, experienced founders whose earlier firms were not venture-backed do not show a similar advantage over novice entrepreneurs, suggesting the importance of connections with venture capitalists in the early stage of venture capital financing. However, when the analysis also takes into account later rounds of financing, all entrepreneurs with prior founding experience appear to raise more venture capital. This implies that skills acquired from any previous founding experience can make an entrepreneur perform better and in turn attract more venture capital.
    Keywords: firm-founding experience, serial entrepreneur, venture capital
    JEL: M13 G24
    Date: 2007–07
  7. By: Yan-leung Cheung (City University of Hong Kong); J. Thomas Connelly (Chulalongkorn University); Piman Limpaphayom (Sasin Graduate Institute of Business Administration of Chulalongkorn University); Lynda Zhou (City University of Hong Kong)
    Abstract: This study develops a model to assess the corporate governance practices of listed companies in Hong Kong. We find that corporate governance is an important factor in explaining the market value of companies listed in Hong Kong. Based on the Revised OECD Principles of Corporate Governance (OECD, 2004) and the Recommended Best Practices (HKEx, 1999), we construct a corporate governance index (CGI) for 168 listed companies. The evidence shows that the companies¡¦ market value (marketto- book ratio, MTBV) is positive and significantly associated with their CGI. The effect is robust to the inclusion of control variables such as performance indicators. Our results imply that companies with better corporate governance are associated with higher market value in Hong Kong. A significant and positive relationship is further found between the transparency index and market value. Our results also suggest that investors are more concerned with corporate governance practices of China-related companies than they are for Hong Kong companies. In summary, this study provides strong evidence that good corporate governance practices are associated with higher firm value in Hong Kong.
    Keywords: Corporate governance, firm profitability, Hong Kong
    Date: 2005–12
  8. By: Kikuchi, Toru
    Abstract: In this article I examine how the network externalities of communications activities and trading opportunities interact to determine the structure of comparative advantage. These interactions are examined by constructing a two-country, three-sector model of trade involving a country-specific communications network sector. The role of the connectivity of network providers, which allows users of a network to communicate with users of another network, is also explored.
    Keywords: Network Externalities; Comparative Advantage
    JEL: F12
    Date: 2007
  9. By: Kozo Kiyota (Gerald R. Ford School of Public Policy, University of Michigan); Shujiro Urata (Graduate School of Asia-Pacific Studies, Waseda University)
    Abstract: This paper examines the role of multinational firms in international trade using firm-level panel data for Japanese firms between 1994 and 2000. Our results indicate that multinational firms dominate Japanese trade. In 2000, only 12.4 percent of Japanese firms were multinationals but they accounted for 93.6 and 81.2 percent of Japanese exports and imports, respectively. We found that multinational firms emerged from being exporters/importers. These results imply that firms do not make the choice of either exporting or undertaking FDI, contrary to the findings of previous studies. Rather, exporters make a decision on whether or not to undertake FDI.
    Keywords: Multinational Firms, Foreign Direct Investment, International Trade, Intra-firm Trade
    JEL: F10 F20 D21
    Date: 2007
  10. By: Castaldi, Carolina; Sapio, Sandro (Groningen University)
    Date: 2006

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