nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2007‒12‒08
nine papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Internal and external factors on firms? transfer pricing decisions: Insights from organization studies By Dan Li; Manuel Portugal Ferreira
  2. The role emotion in strategic issue interpretation: The case of diversity By Patricia Garcia-Prieto; Véronique Tran; Susan Schneider
  3. Do we buy more or less when we want to learn? The knowledge strategies and structural forms of US cross-border acquisitions By Manuel Portugal Ferreira; Stephen Tallman; Dan Li
  4. Determinants of MNE subsidiaries decision to set uo own R&D laboratories: Theory and Evidence By Constantina Kottaridi; Marina Papanastassiou; Christos Pitelis
  5. Cote d ' Ivoire : competitiveness, Cocoa, and the real exchange rate By Noer, John; Espina, Carlos; Bogetic, Zeljko
  6. Determinants of the Acquisition of Smaller Firms by Larger Incumbents in High-Tech Industries: Are they related to Innovation and Technology Sourcing? By Marcus Wagner
  7. Dissecting Offshore Outsourcing and R&D: A Survey of Japanese Manufacturing Firms By ITO Banri; TOMIURA Eiichi; WAKASUGI Ryuhei
  8. Explaining and forecasting euro area exports - which competitiveness indicator performs best? By Michele Ca’ Zorzi; Bernd Schnatz
  9. The Multinational Corporation and the global sourcing of knowledge: Remodeling absorptive capacity By Constantina Kottaridi; Marina Papanastassiou; Christos Pitelis; Dimitrios Thomakos

  1. By: Dan Li (Kelley School of Business - Indiana University); Manuel Portugal Ferreira (Instituto Politécnico de Leiria)
    Abstract: Well understood in economics, accounting, finance, and legal research, transfer pricing has rarely been comprehensively explored in organization management literature. This paper explores some theoretical explanations of transfer pricing within multidivisional firms drawing insights from various organizational theories - primarily institutional theory, transaction cost economics, and social networks - to develop a conceptual model of transfer pricing. This model focuses on the nature of multidivisional firms' internal transfers, internal and external technological environments, and internal and external social environments. We highlight the importance of transfer pricing as a key strategic dimension to understand intra-firm flows and their associated costs.
    Keywords: theory, value, transfer pricing, intra-firm flows, multidivisional firm
    JEL: F3 H2 M1 M2 M4
    Date: 2007–11
  2. By: Patricia Garcia-Prieto (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels.); Véronique Tran (ESCP EAP, Paris, France); Susan Schneider (University of Geneva, Suisse.)
    Abstract: Strategic issues have the potential to impact organizational performance. These issues are subject to cognitive interpretation by decision-makers and implementers. Some strategic issues are considered to be “hot” because of their potential to evoke strong emotions. In this paper, we argue that the cognitive antecedents involved in strategic issue interpretation are similar to those involved in the determination of emotion. We use “diversity” as an example of strategic issue. We propose that individuals’ salient social identities will shape cognitive antecedents in turn eliciting specific emotions and associated behavioral tendencies. Theoretical and managerial implications are discussed.
    Date: 2007–12
  3. By: Manuel Portugal Ferreira (Instituto Politécnico de Leiria); Stephen Tallman (Richmond University); Dan Li (Kelley School of Business - Indiana University)
    Abstract: Cross-border acquisitions may be a primary mode for accessing novel knowledge and the building up of knowledge capabilities. However, the successful exploration of novel business and/or location knowledge may require specific structural forms for the incorporation and internal transfer to occur. In this paper we examine the relationship between the knowledge strategy and the structural form of the acquisition, specifically the degree of equity acquired. Our analyses of 439 US cross-border acquisitions revealed a curvilinear effect of location-related knowledge exploration but a linear effect of business-related knowledge exploration on the structural form of cross-border acquisition. We conclude that the knowledge strategy, and perhaps the type of knowledge being sought, is related in complex manners to the structural form adopted.
    Keywords: cross-border acquisitions, knowledge strategy, equity ownership, structural forms, learning
    JEL: M0 M1
    Date: 2007
  4. By: Constantina Kottaridi; Marina Papanastassiou; Christos Pitelis
    Abstract: We explore the determinants of MNE subsidiaries decisions to set-up own R&D laboratories drawing on evidence from UK regions. In this context, we also test for the interaction between firm’s internal and external environments. We also integrate extant IB and strategic management literatures and incorporate recent debates in New Economic Geography (NEG) in specifying the ‘external environment’. We find support for the role of firm’s ‘productive opportunity’ and predictions of the NEG on the basis of an analysis of primary data. We discuss implications for managerial practice and government regional policies.
    Keywords: MNE subsidiaries, R&D laboratory, internal and external environment, productive opportunity
    Date: 2007
  5. By: Noer, John; Espina, Carlos; Bogetic, Zeljko
    Abstract: This paper explores competitiveness of Cote d ' Ivoire ' s economy over a long period of 1960-2003 and its link with cocoa prices. The main conclusions are as follows. First, using four measures of real effective exchange rate (REER) for the 1960-2002 period, we track the evolution of REER and conclude, inter alia, that until 2003, REER remained well below its 1994 level. Second, we find that based on our measure of the multilateral REER with dynamic weights, which covers most recorded trade, France no longer dominates Cote d ' Ivoire ' s trade. Instead, Cote d ' Ivoire has diversified its set of trading partners. Unfortunately, it has also specialized in one export product, raw cocoa. This paper aims to contribute to the question to what extent do cocoa prices affect Cote d ' Ivoire ' s competitiveness in world trade? Third, the answer to this question is that cocoa prices are an important determinant of Cote d ' Ivoire ' s competitiveness. Similar to the case of a classic " Dutch Disease, " increases in the real world price of a " natural resource " (i.e., cocoa) tend to result in the appreciation of the CFA franc and a loss in competitiveness. Econometric tests further confirm that 1994 was a " break-point " not only for growth and productivity (as documented in the two related papers) but also for trade competitiveness. Recent productivity per worker trends versus wages also seem to indicate slow growth in 1996-2000, without major improvement in competitiveness.
    Keywords: Economic Theory & Research,Currencies and Exchange Rates,Emerging Markets,Markets and Market Access,Macroeconomic Management
    Date: 2007–11–01
  6. By: Marcus Wagner
    Abstract: Innovation activities in high tech industries provide considerable challenges for technology and innovation management. In particular, firms frequently face significant technological challenges since these industries has a long history of radical innovations which are taking place through distinct industry cycles of higher and lower demand. The paper investigates these issues for three high-tech industries, namely semiconductor manufacturing, biotechnology and electronic design automation which is a specific sub-segment of the semiconductor industry. It analyses the association of firm characteristics with different aspects of acquisition behaviour. Particular focus is put on innovation-related firm characteristics. The paper finds that the determinants for acquisitions are mostly related to firm size, financial conditions and geographical origin of the firm. Only for biotechnology, a substitutive relationship is identified between acquisitions and own research activities.
    Keywords: acquisition, innovation, semiconductor, design, automation, biotechnology
    JEL: L10 L86 M20
    Date: 2007–11
  7. By: ITO Banri; TOMIURA Eiichi; WAKASUGI Ryuhei
    Abstract: This paper summarizes main descriptive results from the survey on a wide range of offshore outsourcing and R&D. This survey covers more than five thousand large-sized firms across all manufacturing industries in Japan. The principal findings are as follows. Merely 21% of the firms are outsourcing offshore. Nearly two-thirds of the cases, firms are outsourcing production-related tasks to East Asia. More than one-third of the cases, especially often in R&D and customer supports, tasks are outsourced to own offshore affiliates within the boundary of multinational firm. Offshore R&D is often integrated with corporate headquarters and is motivated for supporting the production and sales in the local market. The survey also covers firm's evaluation of the intellectual property rights protection in 56 countries.
    Date: 2007–11
  8. By: Michele Ca’ Zorzi (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Bernd Schnatz (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.)
    Abstract: From a conceptual point of view there is little consensus of what should be the “ideal indicator” of international cost and price competitiveness as each of the standard measures typically employed has its own merits and drawbacks. This calls for addressing the question from an empirical angle, searching for the indicator that best explains and helps forecast export developments. This paper constitutes a first attempt to systematically compare the properties of the alternative cost and price competitiveness measures of the euro area. Although they diverge sometimes, we find little evidence that there is one indicator consistently outperforming the other in terms of explaining and forecasting euro area exports. This suggests that the measures based on consumer and producer prices, which offer some advantages in terms of quality and timeliness, are good approximations of euro area price and cost competitiveness. JEL Classification: F17, F31, F41.
    Keywords: Real exchange rate, trade, exports, price competitiveness, euro area, forecast.
    Date: 2007–11
  9. By: Constantina Kottaridi; Marina Papanastassiou; Christos Pitelis; Dimitrios Thomakos
    Abstract: We build on extant theory of the MNC, MNC subsidiaries, absorptive capacity and Penrose’s concept of ‘productive opportunity’ to develop a framework on the MNC and absorptive capacity (AC) that allows us to explore the role of subsidiaries in the global sourcing of knowledge. We develop and test hypotheses using primary questionnaire-collected data. Our results support the idea that subsidiaries’ realized AC can be improved by the realized and potential AC of the MNC group and the subsidiary and in turn may improve the performance of the subsidiaries and the group as a whole.
    Keywords: Multinational Corporation, absorptive capacity, subsidiaries, knowledge
    Date: 2007

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