nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2008‒04‒15
eight papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Innovation and the geographical and functional dimensions of outsourcing: An empirical investigation based on Italian firm level data By Lucia Cusmano; Maria Luisa Mancasi; Andrea Morrison
  2. Dynamism and complexity as antecedents of the knowledge strategy in product development By ELENA REVILLA
  3. Mergers and Acquisitions in the Indian Pharmaceutical Industry: Nature, Structure and Performance By Beena, S
  4. Companies’ market penetration and activity patterns in european market By Neamtu, Liviu; Neamtu, Adina Claudia
  5. Innocents Abroad: The Hazards of International Joint Ventures with Pyramidal Group Firms By Susan Perkins; Randall Morck; Bernard Yeung
  6. What Drives the Productive Efficiency of a Firm? - the importance of industry, location, R&D, and size By Badunenko, Oleg; Fritsch, Michael; Stephan, Andreas
  7. Innovation and Firms' Productivity Growth in Slovenia: Sensitivity of Results to Sectoral Heterogeneity and to Estimation Method By Joze P. Damijan; Crt Kostevc; Matija Rojec
  8. Building dynamic capabilities in product development: the role of knowledge management By ELENA REVILLA

  1. By: Lucia Cusmano; Maria Luisa Mancasi; Andrea Morrison
    Abstract: The paper investigates the diversified patterns of outsourcing in the Lombardy region and relates them to the probability of introducing product and process innovation. Based on a large firm-level survey, we show that outsourcing processes are strongly regionally embedded and that offshoring is still a limited phenomenon. Outsourcing strategies are shown to have a positive impact on firms’ innovation. In particular, the outsourcing of service activities contributes the most to innovation, thus suggesting that firms successfully pursue core strengthening strategies. Our econometric estimates show that both geographical and organizational proximity matter. Indeed, the positive association of services with innovation is strongly related to their regional dimension, which points toward the importance of local user-producer relationships. When outsourcing crosses national borders, keeping the outsourced activities at least loosely connected to the firm appears critical, as offshoring to non affiliated firms has a clear negative impact on innovation.
    Keywords: Product Innovation, Process Innovation, Outsourcing, Offshoring
    JEL: D21 F23 L22 L23 O31 O32 O33
    Date: 2008–03
  2. By: ELENA REVILLA (Instituto de Empresa)
    Abstract: Focusing on product development, this study extends the understanding of the environment-strategy framework and investigates the relative effect of two classical environmental variables, dynamism and complexity, on the knowledge strategy. Adopting a knowledge-based view, and assuming that the strategy´s locus is knowledge creation -exploration- and knowledge application -exploitation-, the study suggests that the development of a knowledge strategy is a managerial strategic choice that is related to the environment. The results of a survey on product development managers indicate that product development efforts operating in highly dynamic environments mostly pursue exploratory strategies.
    Date: 2008–03
  3. By: Beena, S
    Abstract: This paper tries to address the extent, nature and impact of the recent surge in consolidation strategies especially in the form of mergers and acquisitions followed by the firms in the Indian pharmaceutical industry. The study found that many of the firms are implementing these strategies in the new context of globalisation mainly to overcome the acute competition arising out of the pro-market reforms and to strengthen their market portfolio. The study reaches the conclusion that the consolidation strategies followed by the firms enabled them to cut down the wasteful expenses to a greater extent and which resulted in better performance of the merging firms compared to the non-merging firms in this industry.
    Keywords: mergers; acquisitions; consolidation; pharmaceutical industry; performance
    JEL: L6 G34 L80
    Date: 2006–06–28
  4. By: Neamtu, Liviu; Neamtu, Adina Claudia
    Abstract: The strategy type at the company level has an impact upon the selection and implementation of the strategy at the business level. The international strategy at the company level is different from the international strategy at the business level through the diversification extension degree (both under the products aspect and under the geographic area aspect). The need to adopt an international strategy at the company level appears when the products or services level increases in the sense of incorporating products that belong to several activity branches and that address to multiple markets. In this case, the company’s strategy is conducted by the managers from its headquarters and not by the area managers or business managers.
    Keywords: international strategy company’s international objectives internationalization forms markets operation methods
    JEL: L0 F4 M3 D2 F0 A1 M5 D4 L1 M0 L2 M1 F5 F3 F2 M2
    Date: 2007–04
  5. By: Susan Perkins; Randall Morck; Bernard Yeung
    Abstract: The fundamental unit of production in microeconomics is the firm, and this mirrors reality in the United States and United Kingdom. But elsewhere, business groups can be the more important unit, for business strategy is often formulated at the business group level, not the firm level. In many countries, this is legally enshrined in corporate governance codes that assign officers and directors a duty to act for their business group, not their firm or its shareholders. Even where a duty to individual firms' shareholders exists, business groups often have pyramidal structures of intercorporate blockholdings that entrench controlling shareholders, usually wealthy families, who run their groups to maximize their utility. This can impose exacerbated agency problems. In either case, foreign joint venture partners who expect domestic firms to maximize shareholder value can be sorely disappointed. We explain agency behavior in business groups and how controlling insiders can divert resources between firms they control, including joint ventures, to enrich themselves; and highlight differences between this behavior and agency problems in freestanding firms. We then examine the telecoms industry in Brazil, a country in which most large businesses belong to pyramidal business groups controlled by wealthy families. We find that joint ventures between Brazilian telecoms firms and partners from countries where business groups are rarer have significantly elevated failure rates; while joint ventures with foreign partners from countries where pyramidal groups are more common are more likely to succeed. We then present clinical examples illustrating the mechanisms that drive such divergent performance in joint venture partnerships. While our results are based on a single industry in a single country, we believe they highlight a previously unexamined important issue in international business strategy.
    JEL: G3 G34 L96 O54
    Date: 2008–04
  6. By: Badunenko, Oleg (DIW Berlin); Fritsch, Michael (Friedrich Schiller University Jena, Max Planck Institute of Economics Jena and DIW); Stephan, Andreas (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper investigates the factors that explain the level and dynamics of manufacturing firm productive efficiency. In our empirical analysis, we use a unique sample of about 39,000 firms in 256 industries from the German Cost Structure Census over the years 1992-2005. We estimate the efficiencies of the firms and relate them to firm-specific and environmental factors. We find that (1) about half the model’s explanatory power is due to industry effects, (2) firm size accounts for another 20 percent, and (3) location of headquarters explains approximately 15 percent. Interestingly, most other firm characteristics, such as R&D intensity, outsourcing activities, or the number of owners, have extremely little explanatory power. Surprisingly, our findings suggest that higher R&D intensity is associated with being less efficient, though higher R&D spending increases a firm’s efficiency over time.
    Keywords: Frontier analysis; determinants of efficiency; firm performance; industry effects; regional effects; firm size
    JEL: D24 L10 L25
    Date: 2008–04–02
  7. By: Joze P. Damijan; Crt Kostevc; Matija Rojec
    Abstract: The paper examines implications of endogenous growth theory on the relationship between firm productivity, innovation as well as productivity growth by combining information on firm-level innovation (CIS) with accounting data for a large sample of Slovenian firms in the period 1996-2002. We employ several different estimation methods in order to control for the endogeneity of innovation (Crépon-Duguet- Mairesse - CDM - approach) and idiosyncratic firm characteristics (matching and average treatment effects). We find a significant and robust link between productivity levels and firm propensity to innovate, while the results on the link between innovation activity and productivity growth are not robust to different econometric approaches. OLS estimates seem to provide some empirical support to the thesis of positive impact of innovation on productivity growth. More detailed empirical tests, however, reveal that these results are mainly driven by the exceptional performance of a specific group of services firms located in the fourth quintile with respect to size, productivity and R&D propensity measure. Estimates based on the matching techniques do not reveal any significant positive effects of innovation on productivity growth, regardless of the sectors, firm size and type of innovation.
    Keywords: Research and development, innovation, knowledge spillovers, productivity growth
    JEL: D24 F14 F21
    Date: 2008
  8. By: ELENA REVILLA (Instituto de Empresa)
    Abstract: This paper contributes to the clarification of the connections between knowledge management and dynamic capabilities in the context of product development to see how they explain product development competences. Building on the knowledge management and dynamic capabilities literatures, the paper argues that the social side of knowledge management has a role to play as enabler of dynamic capabilities in the context of product development. Further, dynamic capabilities shape product development competences. Empirical evidence is provided by performing survey research with data collected from 80 product development projects developed in Spain.
    Keywords: Capabilities , Knowledge management, Organizational knowledge
    Date: 2008–03

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