nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2008‒11‒04
sixteen papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Firms as Bundles of Discrete Resources - Towards an Explanation of the Exponential Distribution of Firm Growth Rates By Alex Coad
  2. Tourism and Regional Competitiveness: the Case of the Portuguese Douro Valley By Argentino Pessoa
  3. Sectoral Innovation Systems, Corporate Strategies, and Competitiveness of the German Economy in a Globalised World By Michael Rothgang
  4. Measuring business dynamics among incumbent firms in The Netherlands By André van Stel; Mickey Folkeringa; Kashifa Suddle; Sita Tan
  6. Bigger is better: Market size, demand elasticity and innovation By Klaus Desmet; Stephen L. Parente
  7. Business competitiveness in Muslim World: role of governance and higher education By Mehar, Ayub
  8. Is there a Vicious circle in Muslim World? Trade competitiveness and investment strategies By Mehar, Ayub
  9. Intermediation, reciprocity and compatibility in regional innovation systems - an interregional comparison By Uwe Cantner; Andreas Meder; Tina Wolf
  10. A Water Accounting System for Strategic Water Management By Graham M Turner; Timothy M Baynes; Bertram C. McInnis
  11. Does social capital reinforce technological inputs in the creation of knowledge? Evidence from the Spanish regions. By Ernest Miguélez; Rosina Moreno; Manuel Artís
  12. The Internationalization of Japanese Firms: New Findings Based on Firm-Level Data By WAKASUGI Ryuhei; TODO Yasuyuki; SATO Hitoshi; NISHIOKA Shuichiro; MATSUURA Toshiyuki; ITO Banri; TANAKA Ayumu
  13. An Examination of Entry and Competitive Performance in Rural Banking Markets By Robert M. Feinberg; Kara M. Reynolds
  14. An Evolutionary Approach to Regional Systems of Innovation By Jan Gunnarsson; Torsten Wallin
  15. Forecasting VaR and Expected shortfall using dynamical Systems : a risk Management Strategy, By Dominique Guegan; Cyril Caillault
  16. Tourism - Part of Sustainable Local Development By Avramescu , Tiberiu Cristian; Popescu, Ramona Florina

  1. By: Alex Coad (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, Max Planck Institute of Economics - Evolutionary Economics Group)
    Abstract: A robust feature of the corporate growth process is the Laplace, or symmetric exponential, distribution of firm growth rates. In this paper, we sketch out a class of simple theoretical models capable of explaining this empirical regularity. We do not attempt to generalize on where growth opportunities comme from, but rather we focus on how firms build upon growth opportunites. We borrow ideas from the self-organizing criticality literature to explain how the interdependent nature of discrete resources may lead to the triggering off of a series of additions to a firm's resources. In a first formal model we consider the case of employment growth in a hierarchy, and observe that growth rates follow an exponential distribution. In a second model we include plant and capital as resources and we are able to reproduce a number of stylized facts about firm growth.
    Keywords: Firm growth rates, exponential distribution, hierarchy, growth autocorrelation.
    Date: 2008–10
  2. By: Argentino Pessoa (Faculdade de Economia, Universidade do Porto)
    Abstract: Using a framework that articulates the most important factors of competitiveness to evaluate the regional economic strategies, and applying this framework to the Portuguese NUT III Douro, we show that this region is relatively weak in terms of internal linkages, subject to ageing and out-migration and lacking in innovation and entrepreneurship, apart from being isolated from mass markets. With these characteristics, to define only the priority to tourism is clearly insufficient for convergence. So, after assessing the results of such strategy, the paper ends with a conclusion that is extensive to other regions: the lagging regions, which are trying to converge with the more developed ones based on tourism, cannot only rely on a combination of environmental resources and marketing, but have to attend to other factors of competitiveness as well.
    Keywords: Douro Valley, environmental resources, regional competitiveness, tourism
    JEL: Q25 Q28 R19 R58
    Date: 2008–10
  3. By: Michael Rothgang
    Abstract: The EU Barcelona target assumes a close causal relationship between corporate R&D, the competitiveness of business firms and the economic performance of industrial countries. Testing this hypothesis, this paper contrasts innovation and production activities in four research-intensive manufacturing sectors (chemicals and pharmaceuticals, motor vehicles, machinery, and electrical engineering). Starting point are observed long-term changes in worldwide value added of the manufacturing sector.The empirical analysis is based on a unique survey of R&D-intensive business firms in Germany and 50 personal interviews in large industrial companies. The results show that there is no simple connection between R&D and competitiveness. Moreover, the likely consequences of promoting R&D differ substantially between industries.
    Keywords: Sectoral innovation systems, corporate R&D Strategies, chemicals and pharmaceuticals, machinery, electrical engineering,motor vehicles, bazaar effect
    JEL: L6 O23 R32
    Date: 2008–08
  4. By: André van Stel; Mickey Folkeringa; Kashifa Suddle; Sita Tan
    Abstract: Business dynamics in an industry is generally seen as an important indicator of the industry's level of competitiveness and economic performance. Two types of business dynamics may be distinguished: business dynamics reflecting competition by new-firm entries and business dynamics reflecting competition among incumbent firms. A growing literature pays attention to the important role of the former type of business dynamics (the starting up of new firms) for achieving economic growth. However, the latter type of business dynamics tends to be overlooked in this type of literature. In part this is due to the large requirements, both in terms of data and in terms of methodology, of measuring competition among incumbent firms. A sophisticated indicator for measuring the extent of business dynamics among incumbent firms in an industry is the mobility index. In the current paper we compute mobility indices for 16 industries -covering the whole private sector except for the primary sectors of economy- in the Netherlands over the period 2000-2006, and compare the values of the mobility indices across the sectors.
    Date: 2008–10–27
  5. By: Maria João Sousa (Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto)); Susana Costa e Silva (Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto))
    Abstract: Internationalization has been widely studied throughout the years. Broadly, it has been predicted as irrevocable and having increasing impact on firm-related strategy. Within entry modes, consortium, has not received as much attention as others. Hence, it seems important to understand how this specific entry mode allows the entrance of firms in the international markets. This study intends to answer the question of “how” to internationalize, anticipating the consortium as the most feasible way for construction firms to enter certain markets. The reasons that determine its choice concern the specificness of the projects, markets and of the firm. In the first part of the study, we review the existent literature on consortia as an entry mode and as a tool of internationalization used by construction firms. Through this review we build a framework that reveals the motivations that lead to this choice. In the second part, we present the case study of Mota-Engil, as a potential source of valuable information which may contribute to the understanding of the phenomenon under study. This case study corroborates the motivations found to create consortia. The paper closes with its contributions, limitations and suggestions for future researches.
    Keywords: consortia, internationalization, cooperation, construction
    Date: 2008–10
  6. By: Klaus Desmet (Universidad Carlos III); Stephen L. Parente (University of Illinois)
    Abstract: This paper proposes a novel mechanism whereby larger markets increase competition and facilitate process innovation. Larger markets, in the sense of more people or more open trade, support a larger variety of goods, resulting in a more crowded product space. This raises the price elasticity of demand and lowers mark-ups. Firms, therefore, become larger to break even. This facilitates process innovation as larger firms can amortize R&D costs over more goods. We demonstrate this mechanism in a standard model of process and product innovation. In doing so, we question some important results in the new trade and endogenous growth literatures.
    Keywords: trade; population; price elasticity; competition; innovation; firm-size; scale effects; Dixit-Stiglitz; Hotelling
    JEL: F12 L11 O31
    Date: 2008–10–27
  7. By: Mehar, Ayub
    Abstract: The main objective of this study is to compare Muslim countries with the rest of world in terms of the effectiveness and efficiency of the factors of competitiveness. Another objective of this paper is to determine the factors of competitiveness of the nations. The study has also assessed the impacts of improvement in political and corporate governances of the institutions, technological advancement and higher education on the business competitiveness. The World Competitiveness Index constructed by the World Economic Forum and World Banks statistics on aggregate savings and investment were used to estimate the regression parameters. It was hypothesized that Muslim world is significantly different from the rest of world in terms of the effectiveness and efficiency of the factors of competitiveness. The role of innovations and knowledge creating activities in determining of business competitiveness was not found statistically significant in Muslim world; it was highly significant in case of the rest of world. It was concluded that investment and technology readiness affects the competitiveness in Muslim countries in different ways. It was recommended that Muslim countries should improve their governance of the corporate and political institutions and the higher education to achieve the efficiency and higher targets of competitiveness.
    Keywords: Competitiveness; Innovations; Higher Education; Efficiency; Governance
    JEL: F59 O16 I23 O31
    Date: 2008
  8. By: Mehar, Ayub
    Abstract: The study tests the existence of a vicious circle of the lack of investable funds, weaker technological advancement and business competitiveness in Muslim countries. Its second objective is to quantify the magnitude of variations in competitiveness between the Muslim world and the rest of world. A model was established to quantify the linkages between the financial resources, technological advancement, business sophistication and competitiveness. The results are based on 111 countries, 30 out of which belong to Muslim world. The governance of the political and corporate institutions, higher education and technology readiness are classified as significant factors of the business competitiveness. It was concluded that governance, technological readiness and higher education are the important and major factors of business competitiveness, while investment was not identified as major determinant of the competitiveness. The study rejects the hypothesis of existence of the vicious cycle in Muslim world. It concludes that Muslim world can achieve the higher target of business competitiveness and ultimately the sustainable economic development by improvement in the higher education and institutional governance.
    Keywords: Muslim world; Competitiveness; Globalization; Governance; Vicious circle;
    JEL: O16 I23 O31
    Date: 2008
  9. By: Uwe Cantner (Department of Economics, Friedrich-Schiller-University); Andreas Meder (Department of Economics, Friedrich-Schiller-University); Tina Wolf (Department of Economics, Friedrich-Schiller-University)
    Abstract: This paper investigates the possible presence of three problems in regional innovation systems (RIS): intermediation, reciprocity and compatibility. Based on ï¬rm data gathered for three different regions, Northern Hesse, Jena and Sophia Antipolis, we can show that a low propensity to cooperate in a RIS is related to poorly performing intermediaries and a low complementarity with the regional knowledge base. The issue of trust in cooperating tends to have no effect on the propensity to cooperate. However, it is a main determinant of failed cooperation projects.
    Keywords: regional innovation systems, reciprocity, intermediation, complementarity, cooperation
    JEL: D81 O18 P25
    Date: 2008–10–28
  10. By: Graham M Turner; Timothy M Baynes; Bertram C. McInnis (CSIRO Sustainable Ecosystems, Australia)
    Abstract: This paper describes a water accounting system (WAS) that has been developed as an innovative new tool for strategic long-term water management. The WAS incorporates both disaggregated water use and availability, provides a comprehensive and consistent historical database, and can integrate climate and hydrological model outputs for the exploration of scenarios. It has been established and tested for the state of Victoria in Australia, and can be extended to cover other or all regions of Australia. The WAS is implemented using stock-and-flow dynamics, currently employing major river basins as the spatial units and a yearly time step. While this system shares features with system dynamics, learning is enhanced and strategic management of water resources is improved by application of a Design Approach and the structure of the WAS. We compare the WAS with other relevant accounting systems and outline its benefits, particularly the potential for resolving tensions between water supply and demand. Integrated management is facilitated by combination with other stocks and flows frameworks that provide data on key drivers such as demography, land-use and electricity production.
    Keywords: water accounts, stocks and flows, water budgets, decision support systems, strategic management
    JEL: C61 Q25
    Date: 2008–10
  11. By: Ernest Miguélez (Faculty of Economics, University of Barcelona); Rosina Moreno (Faculty of Economics, University of Barcelona); Manuel Artís (Faculty of Economics, University of Barcelona)
    Abstract: In this paper we seek to verify the hypothesis that trust and cooperation between individuals, and between them and public institutions, can encourage technological innovation and the adoption of knowledge. Additionally, we test the extent to which the interaction of social capital with human capital and R&D expenditures improve their effect on a region’s ability to innovate. Our empirical evidence is taken from the Spanish regions and employs a knowledge production function and longitudinal count data models. Our results suggest that social capital correlates positively with innovation. Further, our analysis reveals a powerful interaction between human and social capital in the production of knowledge, whilst the complementarity with R&D efforts would seem less clear.
    Keywords: social capital, human capital, innovation, complementarities.
    Date: 2008–10
  12. By: WAKASUGI Ryuhei; TODO Yasuyuki; SATO Hitoshi; NISHIOKA Shuichiro; MATSUURA Toshiyuki; ITO Banri; TANAKA Ayumu
    Abstract: Using firm-level data for the Japanese manufacturing sector, we examine characteristics of internationalized firms, i.e., firms engaging in export and/or foreign direct investment (FDI), and compare these characteristics with those for selected European countries. We find that internationalized firms are a few and that their productivity is higher than that of non-internationalized firms, confirming the findings of existing studies on Japan and other countries. In addition, we find that productivity differences between non- internationalized firms, exporters, and FDI firms are substantially smaller in Japan than in the European countries. This evidence suggests that productivity differences alone cannot determine export or FDI behavior of Japanese firms.
    Date: 2008–10
  13. By: Robert M. Feinberg; Kara M. Reynolds
    Abstract: This paper explores the change in the level of competition in rural banking markets since the deregulation that occurred following passage of the Riegle Neal Act of 1994. Using an empirical model that utilizes both the number of banks and the value of deposits in a cross-section of rural markets, we decompose the impact of the entry of new banks into resulting changes in per capita demand and the costs/profits of local banks in both 1994 and 2004. We conclude that the banking market is more competitive today despite the fact that the number of banks may have declined; on average fewer banks are now needed to make rural banking markets competitive than were needed in 1994.
    Keywords: Entry, Banking
    JEL: L11
    Date: 2008–05
  14. By: Jan Gunnarsson (Department of Economics, University of Copenhagen); Torsten Wallin
    Abstract: This article examines how the birth and the development of regional systems of innovation are connected with economic selection and points to implications for regional-level policies. The research questions are explored using an evolutionary model, which emphasises geographical spaces and production of intermediate goods. In particular we are concerned with how cooperative behaviour of technology producers is affected by the need to protect technological secrecies and of being financially constrained by forms demanding innovative input. Based on the theoretical model, we provide an analysis using computer simulations. The primary fidings are, firstly, that the model generates predictions suited for empirical research on how economic selection influences cooperative behaviour of innovative actors. Secondly, we demonstrate how a region's entrepreneurial activity and growth can be controlled in a decentralised way by regions.
    Keywords: social capital; social identity; civil society; open methods of coordination
    JEL: L24 O33 R38
    Date: 2008–06
  15. By: Dominique Guegan (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Cyril Caillault (FORTIS Investments - Fortis investments)
    Abstract: Using non-parametric (copulas) and parametric models, we show that the bivariate distribution of an Asian portfolio is not stable along all the period under study. We suggest several dynamic models to compute two market risk measures, the Value at Risk and the Expected Shortfall: the RiskMetric methodology, the Multivariate GARCH models, the Multivariate Markov-Switching models, the empirical histogram and the dynamic copulas. We discuss the choice of the best method with respect to the policy management of bank supervisors. The copula approach seems to be a good compromise between all these models. It permits taking financial crises into account and obtaining a low capital requirement during the most important crises.
    Keywords: Value at Risk - Expected Shortfall - Copula - RiskMetrics - Risk management -GARCH models - Switching models.
    Date: 2008–03–06
  16. By: Avramescu , Tiberiu Cristian; Popescu, Ramona Florina
    Abstract: Local development could be described as an attempt of global territorial development including economic, social, ultural, political aspects, encouraging the endogenous development -involving all human and financial means which contribute to it and assuring their convergence. It is a process based on the involvement of all interested actors (persons elected at local level, socio-professional groups, associative groups, initiators of projects on a certain territory) but also of the local population. Tourism is one of the most important branches in Romanian economy, having at its disposal a huge development potential. This field can represent a development chance for many areas. The diversity of tourism activities as well as the presence of some of them in the structure of other branches of economy offers tourism the character of an interference branch, having complex, ample connections with the other economic branches, connections that must be taken into account when local development strategies are drawn up. Local authorities are increasingly involved in the development and running of several aspects connected to tourism. This fact is based on the decentralizing tendency found in many countries, which refers to granting more responsibilities to local authorities. They know best what is important for the areas they manage and will do their best to achieve the local development objectives. At the same time, this reflects the stress laid on the involvement of communities in planning tourism and in the developing process of their areas. Tourism has many positive effects and contributes to the economic development of the areas that contain tourism sights directly and indirectly. The currency contribution of tourism, its contribution to forming the community’s income, the generation of business and employment opportunities are only a few of the aspects that show the part played by tourism in the overall economic development of an area. Tourism contributes to the sustainable local development. Tourism development must take place both in rural and urban environments.
    Keywords: local development; sustainable tourism; local communities
    JEL: L82 O18 H11
    Date: 2008–07–04

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