nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2007‒11‒03
ten papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. The Competitiveness of Turkey with Respect to the Slovak Republic for the 1995-1999 Period By Aysan, Ahmet Faruk; Hacihasanoglu, Yavuz Selim
  2. Banking Competition and Capital Ratios By Martin Cihák; Klaus Schaeck
  3. Institutions, Governance and Economic Growth in the EU: is there a role for the Lisbon Strategy By Francisco Torres; Annette Bongardt
  4. Investments in Modernization, Innovation and Gains in Productivity: Evidence from Firms in the Global Paper Industry By Ghosal, Vivek; Nair-Reichert, Usha
  5. Strategy-Proofness and Single-Crossing By Alejandro Saporiti
  6. Mergers and Rivals' Mark-ups: Evidence from European Paper Manufacturers By Rosen Marinov
  7. Concentration, Competition, Efficiency and Profitability of the Turkish Banking Sector in the Post-Crises Period By Abbasoğlu, Osman Furkan; Aysan, Ahmet Faruk; Gunes, Ali
  8. Small Business Growth: Searching for Stylized Facts By Brian Headd; Bruce Kirchhoff
  9. Endogenous Growth through Selection and Imitation By Alain Gabler; Omar Licandro
  10. A Proposed Strategy for Growth, Employment and Poverty Reduction in Uzbekistan By Terry McKinley; John Weeks

  1. By: Aysan, Ahmet Faruk; Hacihasanoglu, Yavuz Selim
    Abstract: This paper examines Turkey’s international cost competitiveness in manufacturing with respect to the Slovak Republic, and quantitatively investigates the relationship between Turkish cost competitiveness and the exports of manufactured goods at an industry level. The Relative Unit Labor Cost (RULC) measure and dynamic panel data techniques are employed for this analysis. We find that Turkey is not competitive with respect to Slovakia for the 1995-1999 period. The Competitiveness of Slovakia mainly depends on its relatively higher level of labor productivity.
    Keywords: Manufacturing export; competitiveness; relative unit labor cost; wage; productivity
    JEL: F15 F14 F16
    Date: 2007
  2. By: Martin Cihák; Klaus Schaeck
    Abstract: We use data for more than 2,600 European banks to test whether increased competition causes banks to hold higher capital ratios. Employing panel data techniques, and distinguishing between the competitive conduct of small and large banks, we show that banks tend to hold higher capital ratios when operating in a more competitive environment. This result holds when controlling for the degree of concentration in banking systems, inter-industry competition, characteristics of the wider financial system, and the regulatory and institutional environment.
    Keywords: Working Paper , Banks , Capital , Competition , Bank supervision , Industrial structure ,
    Date: 2007–09–17
  3. By: Francisco Torres (Universidade Moderna de Lisboa,Universidade Católica); Annette Bongardt (Universidade Moderna de Lisboa)
    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
  4. By: Ghosal, Vivek; Nair-Reichert, Usha
    Abstract: This paper examines the impact of investments in modernization and innovation on productivity in a sample of firms in the global pulp and paper industry. This industry is important because it has traditionally accounted for significant amounts of employment and capital investment in North America and Europe. In contrast to much of the existing literature which focuses on the impact of R&D and patents on firms’ performance and productivity, we examine data on actual investment transactions in four main areas of operations: (i) mechanical, (ii) chemicals, (iii) monitoring devices and (iv) information technology. We find that firms which made decisions to implement a greater number of investment transactions in modernization achieved higher productivity, and these estimated quantitative effects are greater than the impact of standard innovation variables such as patents and R&D. Investment transactions in the information technology and digital monitoring devices imparted a particularly noticeable boost to productivity. These results are obtained after controlling for other firm-specific variables such as capital-intensity and mergers and acquisitions. Two broad messages emerge from our study. First, firms’ decisions to undertake investments in modernization and various forms of incremental innovations appear to be critical for achieving gains in productivity. While these may typically generate small gains on a year-to-year basis, they can compound to form meaningful differences in performance, productivity and competitive position across firms in the longer-run. Second, for some of the traditional industries like pulp and paper, R&D and patents seem to be particularly poor indicators of innovation and, more generally, how firms go about achieving gains in productivity. While this paper focuses on the pulp and paper industry, our broad framework and methodology is general and can be applied to understanding firms’ strategies related to enhancing performance and productivity in a variety of industries.
    Keywords: Pulp and paper industry; investment; modernization; innovation; productivity; organizational behavior.
    JEL: M10 D20 L60 L20
    Date: 2007–06
  5. By: Alejandro Saporiti (School of Social Sciences, University of Manchester, Arthur Lewis Building, M13 9PL Manchester, United Kingdom)
    Abstract: This paper analyzes collective choices in a society with strategic voters and single-crossing preferences. It shows that, in addition to single-peakedness, single-crossingness is another meaningful domain which guarantees the existence of non-manipulable social choice functions. A social choice function is shown to be anonymous, unanimous and strategy-proof on single-crossing domains if and only if it is an extended median rule with n-1 parameters distributed on the end points of the feasible set of alternatives. Such rules are known as positional dictators, and they include the median choice rule as a particular case. As a by-product, the paper also provides an strategic foundation for the so called "single-crossing version" of the Median Voter Theorem, by showing that the median ideal point can be implemented in dominant strategies through a simple mechanism in which each agent honestly reveals his preferences.
    Keywords: Strategy-proofness; single-crossing; median voter; positional dictators
    JEL: D70 D71
    Date: 2007–10
  6. By: Rosen Marinov (IUHEI, The Graduate Institute of International Studies, Geneva)
    Abstract: This paper investigates the effect of merger-driven market concentration on the mark-ups of non-merging rival firms in Europe's paper manufacturing industry. Using a representative data set of 400 independently-owned companies spanning a ten-year period, we aim to disentangle the impact of full-scale mergers and acquisitions from that due to other concentration-increasing developments. We find a positive and statistically significant relationship between price-cost margins and overall industry consolidation, as captured by the Herfindahl-Hirschman and four-firm indexes. However, takeover-related market share amalgamation has a negative impact, albeit of more modest proportions. The latter result seems to be driven by vertical transactions, suggesting that input-side channels, much as product price competition, may explain non-merging firms' mark-up response.
    Keywords: Mergers and acquisitions; Concentration; Mark-up; Competition policy
    Date: 2007–09–16
  7. By: Abbasoğlu, Osman Furkan; Aysan, Ahmet Faruk; Gunes, Ali
    Abstract: After 2001 crisis, the macroeconomic environment led to important changes in Turkish banking sector which has experienced a process of concentration by involving in merger and acquisition activities and liquidation of some insolvent banks. Using the data from the detailed balance sheets of the banks that operated in the years from 2001 to 2005, we examine the degree of concentration and degree of competition in the market by applying Panzar and Rosse’s approach. We also explore the existence of relationship between efficiency and profitability of the banks taking into account the internationalization of banking. Our results do not suggest the existence of relationship between concentration and competition. There is also no robust relationship between efficiency and profitability.
    Keywords: Concentration; Competition; Efficiency; Profitability of the Turkish Banking Sector
    JEL: G15 G20
    Date: 2007
  8. By: Brian Headd; Bruce Kirchhoff
    Abstract: Using special tabulations from the U.S. Census Bureau, we use aggregate data to follow a cohort of firms over 10 years from their formation and the universe of existing firms to track their growth/decline in employment. We created a table to show the employment change categories for a cohort of new single establishment firms drawn from the 1992 universe of single establishment firms from 1992 to 2002. We also created tables to show the employment change categories for the universe of single establishment firms in the cohort defining declining and growing firms as separate sub-cohorts. Some industry detail is also described. We offer propositions related to firm growth and use data contained in the tables to seek verification.
    Date: 2007
  9. By: Alain Gabler; Omar Licandro
    Abstract: A simple dynamic general equilibrium model is set up in which firms face idiosyncratic productivity shocks. Firms whose productivity has fallen too low exit, and entrants try to imitate the best practice of existing firms, so that the expected productivity of entering firms is a function of current average productivity. Because of the resulting selection and imitation process, aggregate productivity grows endogenously. When calibrated to U.S. data, the model suggests that around one-fifth of productivity growth is due to such a selection and imitation effect.
    Keywords: endogenous growth; selection; imitation; firm entry and exit
    JEL: B52 O3 O41
    Date: 2007
  10. By: Terry McKinley (International Poverty Centre); John Weeks (Professor Emeritus, School of Oriental and African Studies, University of London)
    Abstract: This Country Study provides an outline of a Strategy for Growth, Employment and Poverty Reduction in Uzbekistan. It recommends that the country seek to achieve a six per cent trend rate of economic growth based on increases in domestic public and private investment, instead of relying, as it currently does, on external demand for primary commodities. It also recommends measures to increase the employment intensity of growth and reduce inequality so that the country?s pattern of growth could become broad-based and inclusive. In order to achieve these goals, the study calls for more expansionary fiscal policies, focused on increasing public investment; moderately more accommodating monetary policies, designed to maintain positive but low real rates of return to stimulate private investment; and a managed exchange rate, targeted to boost the country?s international competitiveness and diversify its economy. The study notes that Uzbekistan does not lack savings; what it lacks are the means to mobilize its ample but underutilized private domestic savings. For mobilizing such savings and directing it to productive private investment, the study recommends an industrial policy, which could deploy various measures, such as tax and subsidy instruments, directed commercial credit and public-sector matching funds for private investment. The study recommends that an investment bank, based on joint public-private ownership, should spearhead industrial policy. Directing resources from capital-intensive sectors, formerly favoured by the government?s import-substitution policies, to internationally competitive employment-intensive sectors would be part of such an industrial policy, especially in order to enhance productive employment. The study favours supplementing such measures, which promote growth and employment, with more poverty-focused policies and programmes, such as an enlarged, rural-focused public works scheme, doubling public investment in agriculture and providing small farmers with greater access to land, other productive resources and credit. The study also calls for strengthening the country?s social policies, education and health in particular, and its system of social protection. For health, it emphasizes strengthening primary health care and, for education, it stresses ensuring a full 12-year cycle of secondary education, including professional and vocational education. It also calls for improving the efficiency and equity of the country?s community-based mahalla system of social protection, which it believes has functioned fairly well during the transition period.
    Keywords: Strategy; Growth; Employment; Poverty Reduction; Uzbekistan
    Date: 2007–10

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