nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2008‒03‒15
eleven papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Strategy Workshops and Strategic Change By MacIntosh, Robert; MacLean, Donald; Seidl, David
  2. Innovation Cooperation and Innovation Activity of Slovenian Enterprises By Andreja Jaklic; Joze P. Damijan; Matija Rojec
  3. China’s New Development Strategy: Environment and Energy Security By Khan, Haider
  4. Ex-vessel Pricing and IFQs: A Strategic Approach By Fell, Harrison
  5. Comparative Analysis of IT Management and Productivity between Japanese and U.S. Firms By MOTOHASHI Kazuyuki
  6. National innovation system, competitiveness and economic growth By Marco Flávio da Cunha Resende; Daniela Almeida Raposo Torres
  7. Product variety and price strategy in the ski manufacturing industry By Nicoletta Corrocher; Marco Guerzoni
  8. Performance and financing of the corporate sector: the role of foreign direct investment By Adam Geršl
  9. Institutions and Multinational Ownership Strategy By Ari Van Assche; Galina A. Schwartz
  10. Ecological Economics of Water in China: Towards A Strategy for Sustainable Development By Khan, Haider; Liu, Yibei
  11. Outsourcing and Technological Innovations: A Firm-Level Analysis By Bartel, Ann P.; Lach, Saul; Sicherman, Nachum

  1. By: MacIntosh, Robert; MacLean, Donald; Seidl, David
    Abstract: Despite the attention that strategic change as a topic of research has received, there remain considerable difficulties in conceptualizing the actual sources of strategic change. Strategy workshops represent one obvious and explicit research site since organizations often use such events as a means of effecting or initiating strategic change. This paper examines empirical data from ninety-nine strategy workshops in ten separate organizations to address the research question: Do strategy workshops produce strategic change? The paper concludes that workshops can produce change but that one-off workshops are much less effective than a series of workshops. The data presented indicates that the elapsed duration of the entire series of workshops, the frequency of workshops, the scope and autonomy of the unit concerned, and the seniority of participants have an impact on the success or failure of the venture.
    Keywords: Co-production of Knowledge; Engaged Scholarship; Strategic Change; Strategy as Practice; Strategy Workshops
    Date: 2008–01–03
  2. By: Andreja Jaklic; Joze P. Damijan; Matija Rojec
    Abstract: Innovation cooperation has been recognised as an important determinant of enterprises’ innovation activity, productivity, and growth, and has recently become the subject of intensive research. We explore the importance of innovation cooperation for the innovation activity of Slovenian enterprises, what kind of innovation cooperation is the most “productive” for innovation activities, and whether the location and foreign ownership of innovation cooperation matters. Probit estimations confirmed external innovation cooperation as one of the most important incentives for innovation activity, after R&D spending. However, a significant influence was only confirmed for domestic and not for international innovation cooperation in general. The efficiency varies also by type of partners; while inter-firm innovation cooperation significantly increases the probability of innovation, this was not found regarding cooperation with universities and R&D institutes. The impact of innovation cooperation differs by distance; the contribution of EU partners to innovation activity was the highest (higher then that of domestic partners), while partners from other locations may even decrease the probability of innovation.
    Keywords: innovation cooperation, innovation activity, foreign ownership, innovation partner, R&D, Slovenia
    JEL: D2 L2 O3
    Date: 2008
  3. By: Khan, Haider
    Abstract: This paper analyzes China's development strategy by focusing on both global and regional approaches to solving problems of energy security and ecological imbalance by addressing specifically the problems of China’s energy security. PRC’s growing energy dependence has become a major concern for both economic and national security policymakers in that country. The ambitious goal of modernization of the economy along the lines of the other newly industrialized economies(NIEs) of Asia has succeeded only too well, and it is difficult to reorient economic priorities. If examined rigorously, such an economic strategic assumption can be seen to entail the goal of creating further technological capabilities. In particular, China seems to be firmly committed to the creation of a largely self-sustaining innovation system as part of a knowledge-based economy of the future . Such innovation systems, called positive feedback loop innovation systems or POLIS have been created by advanced countries, and NIEs such as South Korea and Taiwan are proceeding to create these as well. But this will add to its energy burden and further dependence on the US as the power which controls the key sea lanes. Only a strategic reorientation to building a self-sustaining POLIS and appropriate regional cooperation institutions can lead to the way out of the current dilemma for China. Fortunately, such a model of POLIS which is distributionally and ecologically sensitive can be built for China and applied strategically to lead towards a sustainable development trajectory. However, time is of the essence. Given the path dependence of development unless strategic disengagement from the existing path followed by a strategic engagement with the alternative strategy is begun within the next five years, it may well be too late. The stakes are indeed very high. A more detailed strategy paper based on the key ideas from the alternative strategy outlined here with concrete quantitative scenarios and feasibility studies along the lines of models sketched in the appendix ( and other, more detailed models) will go some distance towards giving the appropriate analytical foundations for the policy makers. The preliminary results confirm the predictions regarding fossil fuel-based energy shortage and lead towards a serious consideration of alternative energy sources. Achieving the twin goals of energy security and ecological balance are challenging but not impossible for China. Serious policy research can be used effectively if there is the political will to do so. The goal of regional cooperation is also achievable if patient negotiations in good faith can start in earnest. In particular, cooperation with other Asian economies, particularly Japan, Indonesia, Viet Nam and India will be crucial.This paper has sketched out the complexities of cooperation and conflict between China and Japan. Future work will address the problems of Regional cooperation for China in the East, South and South Asian context as well as in the context of Africa and Latin America.
    Keywords: China; Development Strategy; Energy; Environment; POLIS; Innovation System; Regional Cooperation
    JEL: Q32 D62 C68 O53 O13
    Date: 2008
  4. By: Fell, Harrison (Resources for the Future)
    Abstract: In this paper, intraseasonal fishing is modeled as a differential game between fishermen in a total allowable catch–regulated fishery with and without individual fishing quotas (IFQs). Heterogeneous harvest values are included by incorporating time-specific harvest costs and a stock effect into fishermen’s profit functions. I also allow for strategic interaction among fishermen via ex-vessel price dynamics. The equilibrium harvest strategies of the differential games are solved numerically through the use of a genetic algorithm. I demonstrate how different harvesting sector environments lead to varying degrees of ex-vessel price increases when IFQs are implemented. The primary result shows that possible margins for competition among fishermen, beyond competition for a greater share of the total allowable catch, can still exist under IFQ management and may be substantial enough to be able to prevent sizeable rent transfers from the processing sector to the harvesting sector.
    Keywords: individual fishing quotas, property rights, differential games, genetic algorithm
    JEL: Q22 C73 C61
    Date: 2008–02–01
  5. By: MOTOHASHI Kazuyuki
    Abstract: This compares the use of IT at the firm level and its management practices between Japanese and U.S. firms, based on an analysis using data from the "International Comparative Survey of Firms' IT Strategies." According to our principal component analysis for characterizing the firm-level pattern of enterprise computing, three factors are identified: (1) overall IT-use intensity, (2) the degree of using information systems, and (3) the degree of using mission critical systems for the back office. In general, Japanese firms display high overall IT-use intensity, while the degree of informational system use is low. It is also found that the degree of informational systems and of using mission critical systems for the back office, instead of overall IT intensity is correlated with the total factor productivity (TFP) level of a firm, regardless of its nationality.
    Date: 2008–03
  6. By: Marco Flávio da Cunha Resende (Cedeplar-UFMG); Daniela Almeida Raposo Torres (Cedeplar-UFMG)
    Abstract: Differences in income-elasticities of imports and exports among countries bring about distinct degrees of external constraints to growth. This argument has been pointed out by Prebisch and by authors in the Kaldorian tradition. Prebisch’s explanations for this phenomenon relate to the differences in international insertion between agrarian / peripheral and industrial / central economies. Kaldorian authors, in turn, refer to Prebisch only to explain why such elasticities differ between products and between countries. However, even after undergoing industrialization processes, several economies still face external constraints to growth. The aim of this paper is to explain differences in trade elasticities among industrial economies. Therefore, it intends to demonstrate, by using the Neo-Schumpeterian literature, the causal relations between the development of a National Innovation System, the differences in income-elasticities of imports and exports, the degree of competitiveness and the degree of external vulnerability of an economy.
    Keywords: national innovation system, competitiveness, external vulnerability
    JEL: O43 O40
    Date: 2008–02
  7. By: Nicoletta Corrocher (Cespri, Bocconi University and Department of Economics, NFH, University of Tromso); Marco Guerzoni (GSBC-EIC, Friedrich Schiller Universität, Jena, Germany)
    Abstract: The present paper aims at examining the role of variety in the ski manufacturing industry and its relevance in firms' price setting strategies. In particular, it intends to investigate and empirically test two hypotheses concerning the relation between variety and prices. The first concerns the relationship between product quality/complexity and prices. The second refers to the existence of two kinds of varieties having opposite effects on price formation: market-related variety and production-related variety. We are able to empirically disentangle these two effects, by using variety in service characteristics as a proxy for market-related variety and variety in technical characteristics for production-related variety. Our empirical investigation confirms that prices are positively affected by product complexity and quality and positively affected by variety at the level of service characteristics. This means that a high degree of product variety allows firms to charge a premium price on consumers, who are able to find the product that best meet their needs and are therefore willing to pay a higher price. On the contrary, variety at the level of technical characteristics negatively impact on prices, because in a context where a dominant design emerges and new varieties are not radically different, gains in economies of scale and scope outweigh the cost of the increased flexibility in the equipment required to produce variety. The resulting decrease in marginal costs negatively impinges upon prices.
    Keywords: variety, product and service characteristics, ski manufacturing sector
    JEL: L15 L23 O31
    Date: 2008–03–03
  8. By: Adam Geršl (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic; Czech National Bank)
    Abstract: Foreign direct investment has been one of the main drivers of economic developments over the past few years in Central and Eastern Europe (CEE). Within the ongoing globalization and international division of labor, a large number of foreign companies have established production units in CEE countries to benefit from low labor costs and other advantages. This study looks both in theoretical and empirical terms at whether large foreign presence has also affected domestic firms. Foreign firms might both intentionally and unintentionally influence the productivity, financing and export performance of local firms within the same industry or across industries along the production chain via sub-supplier and client linkages. Economic theory does not suggest unambiguous answer to a question whether the influence is positive or negative. For answering the question, both firm-level and industry-level data on performance, financing and exports and interactions of firms within production chain in the Czech Republic are analyzed.
    Keywords: foreign direct investment; productivity; corporate finance; export performance
    JEL: F21 D24 L60 G32 F40
    Date: 2008–03
  9. By: Ari Van Assche; Galina A. Schwartz
    Abstract: This paper examines the impact of institutions on a multinational firm’s ownership strategy. We develop an international joint venture (IJV) model in which a multinational firm and its local partner both can undertake costly ex post actions to increase their revenue share specified by the ex ante IJV contract. The model captures the effects of two institutional features on the optimal IJV ownership structure: contract enforceability and cronyism. We introduce the IJV model into an industry equilibrium framework to analyze the impact of institutions on a multinational firm’s choice between forming an IJV or setting up a wholly-owned subsidiary. <P>Ce papier examine l'impact des institutions sur la stratégie de propriété d’une entreprise multinationale. Nous développons un modèle de coentreprise internationale dans lequel une entreprise étrangère et son partenaire local peuvent ex post entreprendre des actions coûteuses pour augmenter leur part de revenus indiquée dans le contrat de coentreprise. Le modèle analyse les impacts de deux caractéristiques institutionnelles sur la structure de propriété optimale : le renforcement du contrat et le copinage. Nous introduisons le modèle de coentreprise dans un modèle d'équilibre général pour analyser l'impact des institutions sur le mode d’entrée des entreprises multinationales.
    Keywords: liability of foreignness, international joint venture, contract enforceability, cronyism, coentreprise internationale, renforcement du contrat, copinage
    JEL: F23 F12
    Date: 2008–03–01
  10. By: Khan, Haider; Liu, Yibei
    Abstract: The main purpose of this paper is to analyze one important part of the emerging environmental problems in China--- water pollution. The importance of water for any nation is obvious. In case of China it acquires particular salience because of China’s industrial needs as well as human needs. Particularly significant is the rapid deterioration of the water quality and development of water shortages. Unless effective policy interventions are made quickly, this can develop into a major ecological disaster. We present arguments for taking the water resources problem in China seriously. The continuing and rapid deterioration of water quality poses grave health and other types of environmental threats. If these threats are not addressed in a timely manner, the situation will deteriorate even faster. The Chinese 11th five year plan acknowledges many of these problems. The analysis in this paper is consistent with the stated objective of addressing ecological issues via a new development strategy. We consider the institutional and policy-making issues carefully. The complexities of the water resource administration system in China are challenging. Coordination among WMR, SEPA, MOC, MOA, SFA, MoC, MOH and many other branches of the government will tax even the most sophisticated administrative apparatus. Clearly some simplification and streamlining is called for. At the same time, decentralization--- with proper incentives and monitoring mechanisms--- that gives more resources at the local level to fund defensive measures can improve performance on the ground. In the age of globalization, at least a significant part of China’s environmental problems stem from FDI-led production for export markets. Many enterprises have lax environmental management practices. This, of course, applies to many domestic SOEs as well. In all these cases, both market incentives such as effluent fees and better regulations with proper enforcement are needed. Regional and International cooperation and sharing of responsibilities are necessary parts of an overall policy package.
    Keywords: Ecological Economics; Water Pollution; Economic Growth; Development Strategy; China; Coase Theorem; Externalities
    JEL: O25 O13 O32 O33 O21
    Date: 2008
  11. By: Bartel, Ann P. (Columbia University); Lach, Saul (Hebrew University, Jerusalem); Sicherman, Nachum (Columbia University)
    Abstract: This paper presents a dynamic model that analyzes how firms’ expectations with regards to technological change influence the demand for outsourcing. We show that outsourcing becomes more beneficial to the firm when technology is changing rapidly. As the pace of innovations in production technology increases, the firm has less time to amortize the sunk costs associated with purchasing the new technologies. This makes producing in-house with the latest technologies relatively more expensive than outsourcing. The model therefore provides an explanation for the recent increases in outsourcing that have taken place in an environment of increased expectations for technological change. We test the predictions of the model using a panel dataset on Spanish firms for the period 1990 through 2002. The empirical results support the main prediction of the model, namely, that all other things equal, the demand for outsourcing increases with the probability of technological change.
    Keywords: technological change, outsourcing
    JEL: O33 L24 L11 J21
    Date: 2008–02

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