nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2008‒09‒05
eleven papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Firms and Profits in the Retail Industry: Blue Ocean versus Competitive Strategy By André van Stel; Roy Thurik; Andrew Burke
  2. Overcoming Resource-Constraints through Internationalization? An Empirical Analysis of European SMEs By Jolanda Hessels
  3. Strategic Environmental Policy and the Accumulation of Knowledge By Thomas Ziesemer; Peter Michaelis
  4. Product Market Synergies and Competition in Mergers and Acquisitions By Gerard Hoberg; Gordon M. Phillips
  5. Comparing Models of Strategic Thinking in Van Huyck, Battalio, and Beil’s Coordination Games By Miguel A Costa-Gomes; Vincent P Crawford; Nagore Iriberri
  6. Emergent Innovation and Sustainable Knowledge Co-creation. A Socio-Epistemological Approach to “Innovation from within” By Peschl, Markus F.; Fundneider, Thomas
  7. Is the R&D Behaviour of Fast Growing SMEs Different? Evidence from CIS III Data for 16 Countries By Werner Hölzl
  8. Collusion and Strategic Favoritism in Organizations By Zhijun
  9. Dynamics of social trust and human capital in the learning process: The case of the Japan garment cluster in the period 1968-2005 By yamamura, eiji
  10. Firm entry and labor market dynamics By Enchuan Shao; Pedro Silos
  11. Entrepreneurship in the Netherlands; High growth enterprises; Running fast but still keeping conrol By EIM

  1. By: André van Stel; Roy Thurik; Andrew Burke
    Abstract: The recent work of Kim and Mauborgne (2005a) has sought to turn strategic management on its head. They note that the field has been dominated by Porter’s (1980, 1985) competitive strategy and it has placed too much emphasis on the importance of competition and rivalry. By contrast they argue in favour of an alternative strategic approach – blue ocean strategy – where firms focus on value innovation, creating consumer demand and exploiting untapped markets. So far empirical analysis in this debate has been focused on case study evidence and hence has been limited in its ability to generalise. The massive appeal of the blue ocean strategy is in stark contrast with the paucity of research testing the viability and relevance of this alternative strategic approach. In this paper we use a comprehensive data set on the Dutch retail industry in order to bring some statistical evidence to the debate. We investigate the prevalence of blue ocean versus competitive strategy in this industry over the period 1982-2000. Our results show that blue ocean strategy and competitive strategy coexist within the same competitive theoretical framework. The results highlight that the dominance of either form of strategy is not categorical but rather determined by the market conditions in which the firms operate.
    Date: 2008–06–09
  2. By: Jolanda Hessels
    Abstract: Previous research has indicated that firms can use internationalization as a strategy to access or build up resources. Such a strategy may be of particular interest or even necessary (for example to survive or grow) for firms that lack specific resources. Based on resource dependency theory and the model for entrepreneurial internationalization this paper investigates whether resource scarcities in terms of labor, finance and technology increase the likelihood for small and medium-sized enterprises (SMEs) to aim to access or accumulate these specific resources through internationalization. A number of hypotheses are tested using firm-level data from the ENSR Enterprise Survey 2003 for 7,673 SMEs located in 18 European countries. The results indicate that perceived resource constraints in terms of labor and finance spur SMEs to undertake international activities with the aim to access or accumulate labor, respectively finance. It is also found that among internationally active SMEs perceived constraints in terms of labor, finance and new technology increase the probability of SMEs using their international activities as a means for accessing or acquiring these scarce resources.
    Date: 2008–06–18
  3. By: Thomas Ziesemer (University of Augsburg, Department of Economics); Peter Michaelis (University of Augsburg, Department of Economics)
    Abstract: Recent political discussions about the possible advantages of first-mover behaviour in terms of environmental policy again called attention to the well-established controversy about the effects of environmental regulation on international competitiveness. Conventional theory claims that the trade-off between regulation and competitiveness will be negative while the revisionist view, also known as the Porter Hypothesis, argues for the opposite. Several previous attempts that analysed this quarrel by means of strategic trade game settings indeed support the former claim and conclude that, to increase a firm’s competitiveness, ecological dumping is the most likely outcome in a Cournot duopoly configuration. However, these results were derived from one period games in which so-called innovation offsets are unlikely to occur. The present paper considers a two-period model that includes an intertemporally growing firm-level knowledge capital. In doing so the accumulation of knowledge is modelled in a unilateral and a bilateral variant. It is shown that for both scenarios in period 1 the domestic government will set a higher emission tax rate compared to its foreign counterpart. Furthermore, we identify conditions for which the domestic tax rate will be set above the Pigouvian level in period 1 in both model variants.
    Keywords: first-mover behaviour, Porter Hypothesis, strategic environmental policy, environmental regulation, international competitiveness
    JEL: F18 Q55 Q58
    Date: 2008–08
  4. By: Gerard Hoberg; Gordon M. Phillips
    Abstract: We examine how product differentiation influences mergers and acquisitions and the ability of firms to exploit product market synergies. Using novel text-based analysis of firm 10K product descriptions, we find three key results. (1) Firms are more likely to enter restructuring transactions when the language describing their assets is similar to all other firms, consistent with their assets being more redeployable. (2) Targets earn lower announcement returns when similar alternative target firms exist. (3) Acquiring firms in competitive product markets experience increased profitability, higher sales growth, and increased changes in their product descriptions when they buy target firms that are similar to them and different from rival firms. Our findings are consistent with similar merging firms exploiting synergies to create new products and increase their product differentiation relative to ex-ante rivals.
    JEL: G3 G34
    Date: 2008–08
  5. By: Miguel A Costa-Gomes; Vincent P Crawford; Nagore Iriberri
    Date: 2008–08–29
  6. By: Peschl, Markus F.; Fundneider, Thomas
    Abstract: Innovation has become one of the most important issues in modern knowledge society. As opposed to radical innovation this paper introduces the concept of Emergent Innovation: this approach tries to balance and integrate the demand both for radically new knowledge and at the same time for an organic development from within the organization. From a more general perspective one can boil down this problem to the question of how to cope with the new and with profound change (in knowledge). This question will be dealt with in the first part of the paper. As an implication the alternative approach of Emergent Innovation will be presented in the second part: this approach looks at innovation as a socio-epistemological process of “learning from the future” in order to create (radically) new knowledge in a sustainable and “organic” manner. Implications for knowledge society will be discussed.
    Keywords: Knowledge society; (radical vs. incremental) innovation; emergent innovation; knowledge creation; change
    JEL: Q55 O32 D83 O31 O3
    Date: 2008–09
  7. By: Werner Hölzl (WIFO)
    Abstract: This paper studies the R&D behaviour of fast growing SMEs using CIS III data for 16 countries. We group the countries into three groups that roughly have the same position in technological development. The first finding is that R&D is more important to high growth SMEs in countries that are closer to the technological frontier. The second finding is that high growth SMEs are more innovative than non-high-growth SMEs only for countries close to the technological frontier. This suggests that gazelles derive much of their drive from the exploitation of comparative advantages. From a policy perspective this suggests that there are important limits to centralise policies that aim at fostering high growth SMEs.
    Keywords: R&D, high growth firms, Europe, CIS
    Date: 2008–08–21
  8. By: Zhijun (ESRC Centre for Competition Policy, University of East Anglia)
    Abstract: Fighting collusion has long been a challenge in organizations, whilst favoritism in organizations has long been attacked as one of the most important sources of workplace conflicts. This paper links the phenomena of collusion and favoritism together which seem to be irrelevant. We show that favoritism cannot benefit organizations where collusion is not a serious concern; meanwhile favoritism is not effective in dealing with well-organized collusion; however, strategic use of favoritism can bring conflicts among collusive subordinates and undermine the efficiency of collusion, therefore it is effective in fighting collusion.
    Keywords: collusion, favoritism, tournaments
    JEL: C72 D82
    Date: 2008–08
  9. By: yamamura, eiji
    Abstract: This paper examined how and the extent to which human capital and social trust are associated with the learning process of a manager in making operations decisions through experience. To this end, using a data set originally and purposively constructed by the author, I investigate the development and transformation of the garment industry cluster region of Kojima, Japan. The major findings through statistical estimations are as follows. (1) In the cluster development stage, the social trust of an enterprise and its manager’s experiences in firm operations could be regarded as forming a complimentary association. (2) In the stage following cluster development, however, a manager’s human capital as accumulated through schooling and personal experience becomes complimentary instead of social trust.
    Keywords: Social trust; Human capital; Bayesian learning
    JEL: O10 L20
    Date: 2008–05–17
  10. By: Enchuan Shao; Pedro Silos
    Abstract: We present a model of aggregate fluctuations in which monopolistic firms face sunk costs to enter the production process and labor markets are characterized by search and matching frictions. Entrants post vacancies and are matched to idle workers. Our specification of sunk costs gives rise to a countercyclical net present value of a vacancy; it is always zero in models where entry is free. The model displays a strong degree of amplification and propagation. The time-varying value of a vacancy has implications for the surplus division between firms and workers over business cycle. In the data, we proxy this division using the ratio of corporate profits to output and workers' compensation to output. We document the cyclical behavior of profit's and labor's shares: Profit's share leads the cycle and is procyclical and more volatile than output. Labor's share inversely leads the cycle and is weakly countercyclical and smoother than output. Our model is consistent with the cross-correlations of both shares and the higher volatility of the share of profits. Regarding propagation and amplification, the model matches the persistence of vacancy creation and two-thirds of the observed volatility of market tightness relative to output.
    Date: 2008
  11. By: EIM
    Abstract: This ninth edition of Entrepreneurship in the Netherlands deals with high growth and the quality of entrepreneurship. In the 'Action Plan Entrepreneurs - Entrepreneurship policy in the Netherlands?', the Ministry of Economic Affairs describes its aim as not just to create more entrepreneurs, but also to improve the quality of entrepreneurship. Creating a successful enterprise requires a careful and well-researched approach combined with a detailed knowledge of the market. Many entrepreneurs in the Netherlands are still not fully exploiting the capacities of their businesses. This is often due to lack of preparation and insufficient knowledge.In addition, the action plan stipulates that fast-growing companies are an important target group for Dutch entrepreneurship policy. The Netherlands is lagging behind the rest of Europe in terms of the share of such companies as a proportion of the business population. Therefore the Ministry tries to ensure that the Netherlands? share will match, by 2010, the average in the benchmark countries (i.e. the US, UK, Denmark, Belgium and Germany).
    Date: 2007–02–06

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