nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2008‒06‒27
ten papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Corporate performance, board structure, and their determinants in the banking industry By Renée B. Adams; Hamid Mehran
  2. The Technology Endowments of Spin-off Companies By E. VAN DE VELDE; B. CLARYSSE; M. WRIGHT
  3. Top Management Characteristics of Foreign MNC Affiliates and Affiliate Performance in Japan : Knowledge-Based and Upper Echelon Perspectives By Tomoki Sekiguchi; Ralf Bebenroth; Donghao Li
  4. Globalisation and firm exit: differences between small and large firms By Colantone, I.; Coucke, K.; Sleuwaegen, L.
  5. Regulation, Allocative Efficiency and Productivity in OECD Countries: Industry and Firm-Level Evidence By Jens Arnold; Giuseppe Nicoletti; Stefano Scarpetta
  6. Productivity and the Sourcing Modes of Multinational Firms: Evidence from French Firm-Level Data By Fabrice Defever; Farid Toubal
  7. Vertical Disintegration in Marshallian Industrial Districts By Octávio Figueiredo; Paulo Guimarães; Douglas Woodward
  8. Sectoral Leadership in International Competitiveness By Elsa Vaz
  9. Network Structure and Strategic Investments: An Experimental Analysis By Rosenkranz, Stephanie; Weitzel, Utz
  10. Banking Globalization: International Consolidation and Mergers in Banking By Claudia M. Buch; Gayle L. DeLong

  1. By: Renée B. Adams; Hamid Mehran
    Abstract: The subprime crisis highlights how little we know about the governance of banks. This paper addresses a long-standing gap in the literature by analyzing board governance using a sample of banking firm data that spans forty years. We examine the relationship between board structure (size and composition) and bank performance, as well as some determinants of board structure. We document that mergers and acquisitions activity influences bank board composition, and we provide new evidence that organizational structure is significantly related to bank board size. We argue that these factors may explain why banking firms with larger boards do not underperform their peers in terms of Tobin's Q. Our findings suggest caution in applying regulations motivated by research on the governance of nonfinancial firms to banking firms. Since organizational structure is not specific to banks, our results suggest that it may be an important determinant for the boards of nonfinancial firms with complex organizational structures such as business groups.
    Keywords: Bank management ; Bank mergers ; Corporate governance ; Bank directors ; Competition
    Date: 2008
    Abstract: Innovative start-ups, including spin-offs from universities and companies, play a vital role in the development and growth of emerging, high-technology industries. Research attention has traditionally focused on the links between demographic, educational, psychological and financial influences on start-up activity and growth. The extent to which the characteristics of technology inherited from the parent, important for spin-offs, helps explain post start-up performance has been neglected. We analyse the scope and newness of the endowed technology as a predictor of post-spin-off growth for corporate and university spin-offs. Using a novel, hand-collected dataset, 48 corporate and 73 university spin-offs were identified, comprising the whole population of such spin-offs in Flanders over the period 1991-2002. We find that corporate spin-offs seem to benefit from a narrow scope of technology and a high level of newness of technology, while university spin-offs benefit from a broad scope of technology and a lower level of newness of technology. We conclude that the same choice of technology endowments may have a different impact on the spin-offs’ growth, since spin-offs start with different knowledge inheritance.
    Keywords: technology endowment, corporate spin-offs, university spin-offs
    Date: 2008–04
  3. By: Tomoki Sekiguchi (Graduate School of Economics, Osaka University); Ralf Bebenroth (Research Institute for Economics and Business Administration, Kobe University); Donghao Li (Wakayama University)
    Abstract: Drawing from the knowledge-based view of MNCs and the upper echelon perspective, we examine the relationship between top management characteristics of MNC affiliates and affiliate performance. Using a sample of 643 foreign MNC affiliates operating in Japan, we found that when the length of an affiliate operation was shorter, the affiliate performed better under the expatriate managing director rather than the Japanese manager. We also found that when the size of an affiliate was larger and the length of operation was shorter, the affiliate performed better under the larger rather than smaller proportion of expatriates in top management teams. Implications for research and practice of top management staffing of MNC foreign affiliates are discussed.
    Date: 2008–01
  4. By: Colantone, I.; Coucke, K.; Sleuwaegen, L. (Vlerick Leuven Gent Management School)
    Abstract: The effects of increasing import competition on output displacement and exit of heterogeneousdomestic firms are investigated within the context of an oligopolistic rivalry model.The displacement effect is found to be stronger for large "output flexible" firms, while small"cost flexible" ones are less affected by increasing import pressure. Extending the model to allow for product heterogeneity between domestic and foreign firms, we also find that product differentiation lowers the displacement effect. The theoretical findings are supported at the empirical level by the analysis of firm exit dynamics for 12 manufacturing sectors in 8 European countries, from 1997 to 2003. In particular, we find that the exit of large firms is sensitive to the shock of increasing import penetration from low-wage countries. Small firms in the same industries are instead only affected by marginal trade integration with respect to neighbouring EU countries and other relatively wealthy trading partners. Hence this paper shows, for the first time, that firms of different size might be affected differently by diverse sources of import competition. Implications on firms’ strategic planning and public policy are discussed.
    Keywords: oligopolistic competition, low-wage country import competition, firm exit
    JEL: F12 F14 L11 L25 L60
    Date: 2008–06–18
  5. By: Jens Arnold; Giuseppe Nicoletti; Stefano Scarpetta
    Abstract: This paper relates diverging productivity performances across OECD countries over the past fifteen years to differences in the stringency of regulations in the product market. We first summarize industry-level evidence linking these diverging patterns to delays in service markets reforms in the wake of the ICT shock. The evidence we survey suggests that, especially in continental EU countries, tight regulation of services has slowed down growth in ICT-using sectors, which use intermediate service inputs intensively. Based on harmonised cross-country firm-level data, we then provide new evidence that one of the key channels through which inappropriate service regulations affect productivity growth is by hindering the allocation of resources towards the most dynamic and efficient firms. At the industry level, resources were allocated less efficiently across firms in countries where service regulations are less market-friendly. Firmlevel econometric estimates confirm that anti-competitive service regulations hamper productivity growth in ICT-using sectors, with a particularly pronounced effect on firms that are catching up to the technology frontier and that are close to international best practice. In other words, regulations hurt in particular those firms that have the potential to excel in domestic and international markets. <P>Réglementation, allocation des ressources et productivité dans les pays de l’OCDE : évidence empirique au niveau des secteurs et des entreprises <BR>Cette étude établi un rapport entre trajectoires divergentes de productivité dans les pays OCDE pendant les dernières 15 années, et différences dans la rigidité de la réglementation sur les marchés des biens. La première partie du papier résume les résultats empiriques existants au niveau des industries sur le rapport entre productivité et réglementation dans les secteurs de services, ainsi que son rapport avec le choc technologique dans les technologies de l'information et de la communication (TIC). L’évidence empirique que nous examinons suggère qu’en particulier dans les pays d’Europe continentale la réglementation rigide a ralenti la croissance dans les secteurs «utilisateur des TIC», qui utilisent de manière intensive les services réglementés. Sur la base de données harmonisées au niveau des entreprises, ce papier présente ensuite des résultats nouveaux qui montrent que l’effet de la réglementation sur la croissance de la productivité se transmet principalement à travers des obstacles à l’allocation des ressources vers les entreprises les plus dynamiques et efficientes. L’allocation des ressources au sein de chaque industrie est moins efficiente dans les pays ayant une réglementation plus rigide dans les secteurs des services. Nos estimations économétriques au niveau des entreprises montrent ensuite que la réglementation des services réduit la croissance de la productivité dans les secteurs « utilisateur des TIC », avec un effet particulièrement prononcé sur les entreprises qui sont proches de la frontière technologique et y convergent rapidement. Autrement dit, la réglementation nuit surtout aux entreprises qui ont le plus haut potentiel de succès dans les marchés nationaux et internationaux.
    Keywords: product market regulation, productivity, productivité, allocative efficiency, firm-level data, réglementation dans les marchés des biens, efficience dans l’allocation de ressources, données individuelles d’entreprise
    JEL: D24 E23 K23 L11 L51
    Date: 2008–06–13
  6. By: Fabrice Defever; Farid Toubal
    Abstract: We investigate the role of a firm's total factor productivity in its decision to import from theiraffiliates rather than from independent input suppliers. We propose a slightly modifiedversion of the Antràs and Helpman (2004) model. We assume higher fixed costs underoutsourcing and a firm-specific production function. We use detailed French firm-level datathat provides a geographical breakdown of French firms' import at product level and theirsourcing modes in 1999. We find strong empirical support for the theoretical predictions ofthe model. In particular, high-productivity firms that have a production process intensive insuppliers' inputs source their inputs through independent foreign suppliers.
    Keywords: Productivity, Incomplete Contracts, Intra-firm Trade, Outsourcing
    JEL: F23 F14 L22 L23
    Date: 2007–12
  7. By: Octávio Figueiredo (Universidade do Porto and CEMPRE); Paulo Guimarães (University of South Carolina and CEMPRE); Douglas Woodward (University of South Carolina)
    Abstract: This paper uses a novel measure and detailed plant-level Portuguese data to reexamine the Marshallian hypothesis that specialization and the vertical disintegration of firms should be greater in areas where an industry concentrates. Our measure of firm specialization and vertical disintegration employs a Herfindhal index constructed with occupational shares for all workers within the firm. Controlling for firm size and sector of activity, we find that vertical disintegration is around three percent higher in areas where industries agglomerate. Sensitivity tests reveal that this positive relation is remarkably robust across different specifications.
    Keywords: Vertical Disintegration of Firms; Agglomeration; Localization Economies
    JEL: R12 R39 L25
    Date: 2008–06
  8. By: Elsa Vaz (Universidade de Évora)
    Abstract: The purpose of this paper is to identify the type of labour and the sectors where labour productivity should be improved to raise the international competitiveness of Portugal. A static multi-sectoral general equilibrium model, with multi-national and single-country versions is used. The model allows the identification of the sectors that are leaders in competitiveness improvement. It is expectable that for some countries this role should be played by the traditional exporting-sectors, while for other countries the effort should be concentrated on the suppliers of intermediate goods. The results show that the choice of sector, and type of labour are crucial for the improvement of the international competitiveness of the Portuguese economy. In addition, the criterion used to measure competitiveness also has an important role. While the multifactor productivity is especially increased when the promotion of labour competencies occurs in exporting-sectors and importing-sectors, the population welfare have a greater impact with the generalised improvement of unskilled labour competencies.
    Keywords: General equilibrium models, competitiveness, productivity.
    Date: 2008
  9. By: Rosenkranz, Stephanie; Weitzel, Utz
    Abstract: This paper analyzes the effects of network positions and individual risk attitudes on individuals' strategic decisions in an experiment where actions are strategic substitutes. The game theoretic basis for our experiment is the model of Bramoullé and Kranton (2007). In particular, we are interested in disentangling the influence of global, local and individual factors. We study subjects' strategic investment decisions in four basic network structures. As predicted, we find that global factors, such as the regularity of the network structure, influence behavior. However, we also find evidence that individual play in networks is to some extent boundedly rational, in the sense that coordination is influenced by local and individual factors, such as the number of (direct) neighbors, local clustering and individuals' risk attitudes.
    Keywords: coordination; experiment; risk aversion; Social networks; strategic substitutes
    JEL: C72 C91 D00 D81 D85 H41
    Date: 2008–06
  10. By: Claudia M. Buch; Gayle L. DeLong
    Abstract: This paper surveys recent literature on international mergers and acquisitions in banking. We focus on three main questions. First, what are the determinants of cross-border mergers of commercial banks? Second, do cross-border mergers affect the efficiency of banks? Third, what are the risk effects of international bank mergers? We begin with a brief summary of the stylized facts, and we conclude with implications for policymakers.
    Keywords: mergers and acquisition, international banking, survey
    JEL: F23 G21
    Date: 2008–01

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