nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2008‒04‒29
eight papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Strategic aspects of bundling By Marion PODESTA
  2. The transition from imitation to innovation: An enquiry into China’s evolving institutions and firm capabilities By Wendy Dobson; A.E. Safarian
  3. Internationalization and Firm Performance: The S-Curve Hypothesis under the Eurozone context By Vilas-Boas, Ricardo; Suárez-González, Isabel
  4. Energy security with a high external dependence: the strategies of Japan and South Korea By Bustelo, Pablo
  5. Determinants of Competitiveness of the Indian Auto Industry By Badri Narayanan G; Pankaj Vashisht
  6. Lumpy Capacity Investment and Disinvestment Dynamics By Besanko, David; Doraszelski, Ulrich; Lu, Lauren Xiaoyuan; Satterthwaite, Mark
  7. Foreign Direct Investment, Competition and Industry Performance. By Jürgen Bitzer; Holger Görg
  8. The role of the supply chain executive in supply chain integration: a behavioral approach By ELENA REVILLA; LUIS GOMEZ - MEJIA

  1. By: Marion PODESTA
    Abstract: The increase of bundle supply has become widespread in several sectors (for instance in telecommunications and energy fields). This paper review relates strategic aspects of bundling. The main purpose of this paper is to analyze profitability of bundling strategies according to the degree of competition and the characteristics of goods. Moreover, bundling can be used as price discrimination tool, screening device or entry barriers. In monopoly case bundling strategy is efficient to sort consumers in different categories in order to capture a maximum of surplus. However, when competition increases, the profitability on bundling strategies depends on correlation of consumers reservations values.
    Keywords: Product bundling, foreclosure, price discrimination
    JEL: D21 D43 L13
    Date: 2008
  2. By: Wendy Dobson (Institute for International Business, Rotman School of Management); A.E. Safarian (Rotman School of Management)
    Abstract: How is the Chinese economy making the transition from imitation to innovation as the source of sustained long term growth? We address this question using the evolutionary approach to growth in which institutions support technical advance and enterprises develop capabilities to learn and innovate. Growth is seen as a series of disequilibria in which obstacles to innovation such as outdated institutions and weak incentive systems can cause growth to slow. We review existing literatures on institutions and firm behavior in China and compare these findings with those of our survey of Chinese firms in 2006. Industry and firm studies in the literature show how productivity is rising because of firm entry and exit rather than the adoption of new technologies. A striking feature both of the studies in the literature and our survey is the increasing competitive pressures on firms that encourage learning. Our survey of privately owned small and medium enterprises in five high tech industries in Zhejiang province found a market-based innovation system and evidence of much process and some product innovations. These enterprises respond to growing product competition and demanding customers with intensive internal learning, investment in R&D and a variety of international and research linkages.
    JEL: O23 H20
    Date: 2008–03
  3. By: Vilas-Boas, Ricardo (Departamento de Administración y Economía de la Empresa, Facultad de Economía y Empresa, Universidad de Salamanca); Suárez-González, Isabel (Departamento de Administración y Economía de la Empresa, Facultad de Economía y Empresa, Universidad de Salamanca)
    Abstract: In this article, we analyse the gains in performance of international diversified firms applied to the Eurozone, taking into account the impact of the interactive effect of both product and international diversification on this performance. We test all the conflicting relations explored in the literature of international diversification (linear, quadratic and cubic), and found that the S-curve is a more complete approach, since it considers different stages of different firms, regarding the international diversification-performance relation. Another important contributions of this article are: i) the fact we take into consideration not only account based measures of performance, but also market based measures; ii) different from previous studies, our sample is multi country and European; iii) we take into account not only manufacturing or service firms exclusively, but both together.
    Keywords: International Diversification, Multinational, Internationalization, Globalization.
    JEL: F23
    Date: 2007–12
  4. By: Bustelo, Pablo
    Abstract: Besides China, Northeast Asia includes other important energy consumers: Japan and South Korea. These OECD-member economies are highly dependent on imports (which account for more than 80% of domestic consumption in both cases), especially of oil and natural gas, and their energy security has been subjected to considerable threats in recent years. This paper briefly reviews the energy situation and prospects of both countries. It also presents an analysis of Tokyo’s and Seoul’s strategic responses to the (perceived o real) worsening of their energy security, in which the strenghts and weaknesses of each approach are highlighted. Finally, the paper lists some of the lessons that other highly energy import-dependent economies might extract from the experience of Japan and South Korea.
    Keywords: Japan; South Korea; energy system; energy dependence; energy security; energy policy and strategy; international rivalry and cooperation
    JEL: Q48 O53 Q40
    Date: 2008–04–14
  5. By: Badri Narayanan G (Indian Council for Research on International Economic Relations); Pankaj Vashisht (Indian Council for Research on International Economic Relations)
    Abstract: This paper analyses the determinants of competitiveness of auto industry in India, based on a field survey and a quantitative analysis of secondary data. It highlights that all segments of Indian auto sector are growing at a fairly high rates and their productivity as well as export intensity is on the rise. Domestic sales are rising, but they have declined in certain sub-segments of vehicles. However, the R&D expenditure has been scarce. Effective rate of protection of automobile assembly is far higher than that of auto-components manufacturing. Unorganised sector, which is quite significant in auto-component manufacturing, has grown more rapidly in the urban areas than in the rural areas. The econometric analysis suggests various measures that could be taken by the government, particularly, the credit facilitation for SMEs. A field survey comprising auto manufacturers in India underlines various constraints faced by the sector, such as the shortage of skilled manpower along with poor infrastructure, fluctuating steel prices and unavailability of land at reasonable price. This suggests that the government could facilitate the industry in becoming more competitive by taking steps such as structural fiscal reforms, cut in import duties of raw materials and capital goods, promotion of R&D and FDI, training facilities, research-backed negotiations of FTAs, roadmap for harmonising emission norms across the country and infrastructure improvement. Industry, on the other hand, should improve its R&D capabilities and market research.
    Keywords: Indian Auto Industry, Competitiveness, Efficiency and Indian Auto Policy
    JEL: L62 F14 O25 D24
    Date: 2008–01
  6. By: Besanko, David; Doraszelski, Ulrich; Lu, Lauren Xiaoyuan; Satterthwaite, Mark
    Abstract: Capacity addition and withdrawal decisions are among the most important strategic decisions made by firms in oligopolistic industries. In this paper, we develop and analyze a fully dynamic model of an oligopolistic industry with lumpy capacity and lumpy investment/disinvestment. We use our model to answer two questions. First, what economic factors facilitate preemption races? Second, what economic factors facilitate capacity coordination? We show that low product differentiation, low investment sunkness, and high depreciation promote preemption races. We also show that low product differentiation and low investment sunkness promote capacity coordination. Although depreciation removes capacity, it may impede capacity coordination. Finally, we show that, at least over some range of parameter values, firms' expectation plays a key role in determining whether or not industry dynamics are characterized by preemption races and capacity coordination. Taken together, our results suggest that preemption races and excess capacity in the short run often go hand-in-hand with capacity coordination in the long run.
    Keywords: industry dynamics; investment; lumpiness; oligopoly
    JEL: C73 D92 L13
    Date: 2008–04
  7. By: Jürgen Bitzer; Holger Görg
    Abstract: Abstract: This paper investigates the productivity effects of inward and outward foreign direct investment using industry and country level data for 17 OECD countries over the period 1973 to 2001. Controlling for national and international knowledge spillovers we argue that effects of FDI work through direct compositional effects as well as changing competition in the host country. Our results show that there are, on average, productivity benefits from inward FDI, although we can identify a number of countries which, on aggregate, do not appear to benefit in terms of productivity. On the other hand, a country’s stock of outward FDI is, on average, negatively related to productivity. However, again there is substantial heterogeneity in the effect across OECD countries
    Keywords: Foreign direct investment, inward FDI, outward FDI, productivity, competition
    JEL: F23
    Date: 2008–04
  8. By: ELENA REVILLA (Instituto de Empresa); LUIS GOMEZ - MEJIA (Instituto de Empresa)
    Abstract: Applying a behavioural approach of agency theory, this paper aimed to identify the most appropriate employment and compensation system (ECS) for supply chain executives in order to foster supply chain integration. We attempted to develop a novel approach of how encourages supply chain integration from the perspective of managerial incentives, an enabler that has not been analyzed in the literature. The paper presents the analysis of three sources of risk bearing - compensation risk, employment risk and environmental risk - which can adversely influence supply chain executives´ risk-taking behaviour, rendering them less willing to promote supply chain integration.
    Keywords: Firm performance, Supply chain management, Risk
    Date: 2008–04

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