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

  1. Resource management for Sustainable Development of Island Economies By Majah-Leah Ravago; James Roumasset; Kimberly Burnett
  2. Investment decisions in liberalized electricity markets: A framework of peak load pricing with strategic firms By ZOETTL, Gregor
  3. Technology Commercialization Strategy in a Dynamic Context: Complementary Assets, Hybrid Contracts, and Experiential Learning By Simon Wakeman
  4. The Identification of Regional Industrial Clusters Using Qualitative Input-Output Analysis By Mirko Titze; Matthias Brachert; Alexander Kubis
  5. Estimating the dynamics of R&D-based growth models By YATSENKO, Yuri; BOUCEKKINE, Raouf; HRITONENKO, Natali
  6. Competitiveness of the knitwear industry in Bangladesh : a study of industrial development amid global competition By Bakht, Zaid; Salimullah, Md.; Yamagata, Tatsufumi; Yunus, Mohammad
  7. Does the absence of competition in the market foster competition for the market? A dynamic approach to aftermarkets By LAUSSEL, Didier; RESENDE, Joana
  8. Forecasting VaR and Expected shortfall using dynamical Systems : a risk Management Strategy, By Dominique Guegan; Cyril Caillault
  9. The balanced scorecard as a knowledge management tool: a French experience in a semi-public insurance company By Gregory Wegmann
  10. Assessing the Role of Technology Adoption in China's Growth Performance. By Nadja Wirz

  1. By: Majah-Leah Ravago (Department of Economics, University of Hawaii at Manoa); James Roumasset (Department of Economics, University of Hawaii at Manoa; University of Hawaii Economic Research Organization); Kimberly Burnett (University of Hawaii Economic Research Organization)
    Abstract: What is the role of resource management in sustaining competitiveness for island economies such as the Republic of the Philippines and Hawaii? We review the history of thought on sustainable resource management and sustainable development and then turn to the threats to sustainability from the resource curse and the parallel curse of paradise. We show how the resource curse undermines the pursuit of sustainability and describe innovations in governance that can transform the curse into a blessing.
    Keywords: Resource curse, sustainable development, Dutch disease
    JEL: Q01 Q33 Q58
    Date: 2008–10–22
  2. By: ZOETTL, Gregor
    Abstract: In this article we analyze firms investment incentives in liberalized electricity markets. Since electricity is economically non storable, it is optimal for firms to invest in a differentiated portfolio of technologies in order to serve strongly fluctuating demand. Prior to the Liberalization of electricity markets, for regulated monopolists, optimal investment and pricing strategies haven been analyzed in the peak load pricing literature (compare Crew and Kleindorder (1986)). In restructured electricity markets regulated monopolistic generators have often been replaced by competing and potentially strategic firms. This article aims to respond to the changed reality and model investment decisions of strategic firms in those markets. We derive equilibrium investment for strategic firms and compare to the benchmark cases of perfect competition and monopoly outcomes. We find that strategic firms have an incentive to overinvest in base-load technologies but choose total capacities too low from a welfare point of view. By fitting the framework to a specific electricity market (Germany) we are able to empirically analyze Investment choices of strategic firms, and quantify the potential for market power and its impact on generation portfolios in restructured electricity markets in the long run.
    Keywords: Investment decisions, technology choice, restructured electricity markets, peak load pricing, strategic firms.
    Date: 2008–07
  3. By: Simon Wakeman (ESMT European School of Management and Technology)
    Abstract: This paper analyzes the strategic choices of a technology firm seeking to profit from innovation when the established product firms are better positioned to commercialize that innovation. While the predominant framework frames this as a choice between contracting and integration, this paper shows that in a context where the technology firm innovates repeatedly and has the opportunity to learn from its experience in the commercialization process, it may be optimal for the technology firm to pursue a hybrid between these two: contracting with a firm that possesses the complementary assets but retaining rights to participate in the commercialization process. The analysis is motivated by the experience of biotech firms, which in recent years have increasingly sought to retain the rights to participate in the marketing and sales stages of alliances with pharmaceutical firms (known as “co-promotion”). The paper develops a game-theoretic model of a technology firm choosing its strategy in this context, and uses the model to derive the conditions under which the firms will agree to a co-promotion (rather than a pure licensing) arrangement. It uses the model to explain the pattern of arrangements observed in biotech alliances, using a dataset of 565 alliances signed between U.S. biotech and pharmaceutical firms from 1992-2006. The results show that a firm is significantly more likely to enter a co-promotion arrangement when its technological expertise is focused on the product field of the alliance and when it is in a stronger financial position.
    Date: 2008–10–24
  4. By: Mirko Titze; Matthias Brachert; Alexander Kubis
    Abstract: The ‘cluster theory’ has become one of the main concepts promoting regional competitiveness, innovation, and growth. As most studies focus on measures of concentration of one industrial branch in order to identify regional clusters, the appropriate analysis of specific vertical relations within a value-adding chain is developing in this discussion. This paper tries to identify interrelated sectors via national input-output tables with the help of Minimal Flow Analysis by Schnabl (1994). The regionalization of these national industry templates is carried out with the allocation of branch-specific production values on regional employment. As a result, the paper shows concentrations of vertical clusters in only 27 of 439 German NUTS-3 regions.
    Date: 2008–11
  5. By: YATSENKO, Yuri; BOUCEKKINE, Raouf (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); HRITONENKO, Natali
    Abstract: Several R&D-based models of endogenous economic growth are investigated under the Solow-like assumption of fixed allocation of resources across activities. We identify model parameters that lead to explosive dynamics and analyze various economic techniques to avoid it. The techniques include adding stricter constraints on model trajectories and limiting factors in technology equation. In particular, we demonstrate that our vintage version of the well known R&D-based model of economic growth (Jones, 1995) exhibits the same balanced dynamics as the original model.
    Keywords: vintage capital models, endogenous technological change, R&D investment, explosive dynamics, nonlinear Volterra integral equations.
    JEL: E20 O40 C60
    Date: 2008–09
  6. By: Bakht, Zaid; Salimullah, Md.; Yamagata, Tatsufumi; Yunus, Mohammad
    Abstract: This paper assesses the technical efficiency and profitability of the knitwear industry in Bangladesh taking into account the sector’s role in poverty reduction. While stochastic frontier analysis was invoked to assess technical efficiency, three alternative measures, namely the rate of return, total factor productivity and the Solow residual, were used to gauge the extent and determinants of the profitability of the industry based on firm-level data collected in 2001. The estimation results indicate the high profitability of the knitwear firms. In Bangladesh, the dynamic development of the industry has entailed great diversity in efficiency in comparison with the garment industries of other developing countries. While there is a significant scale effect in profitability and productivity, no supporting evidence was found for the positive impact on competitiveness of industrial upgrading in terms of usage of expensive machinery and vertical integration and industrial agglomeration.
    Keywords: Bangladesh, Knitwear, Poverty reduction, Productivity, Profitability, Stochastic frontier analysis, Apparel industry, Textile industry
    JEL: D24 J31 L67 O14 O53
    Date: 2008–10
  7. By: LAUSSEL, Didier; RESENDE, Joana (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))
    Abstract: In this paper, we investigate dynamic price competition when firms strategically interact in two distinct but interrelated markets: a primary market and an aftermarket, where indirect network effects arise. We set up a differential game of two-dimensional price competition and we conclude that the absence of price competition in the aftermarket (competition in the market) fosters dynamic price competition in the primary market (competition for the market). We also investigate the impact of network sizes on firms' prices in the primary market concluding that, in equilibrium, larger firms have incentives to compete more fiercely for new "uncolonized" consumers.
    Keywords: dynamic competition, differential games, Linear Markov Perfect Equilibrium, aftermarkets, network effects.
    JEL: C61 L11 L13
    Date: 2008–05
  8. 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
  9. By: Gregory Wegmann (Université de Bourgogne)
    Abstract: In this paper we present the Balanced Scorecard, a Strategic Control tool, which is quite famous all around the world and in the European countries. Its principle objective is to articulate planning decisions with control ones thanks to non-financial indicators. The Strategic Control and the Agency Theories constitute the foundation of this tool. But in Northern Europe, some specific Balanced Scorecard have been designed in the framework of the Knowledge Management Theory. To work, the Balanced Scorecard needs a sophisticated information system support.Using two theoretical backgrounds, the Strategic Control approach and the Knowledge Management Theory, we analyse the relevance of the Balanced Scorecard. More particularly, we present the French situation. First, we show that the French managers believe that the Balanced Scorecard is a relevant management instrument to drive the firm’s objectives. Second, we describe the Balanced Scorecard of a semi-public French insurance company.
    Keywords: Balanced Scorecard;Strategic Control;Non-financial Indicators;Knowledge Management;French Experience
    JEL: M40
    Date: 2008–09
  10. By: Nadja Wirz (University of St. Gallen, Switzerland)
    Abstract: China has experienced a period of tremendous economic growth in recent years. In an attempt to explain this development, several existing growth-accounting studies reveal that impressively high rates of productivity growth have been at the heart of China's performance. This study investigates to what extent these productivity increases can be explained by technology-adoption theory. In less developed countries, the key element behind technological progress is technology adoption, the process of copying technological knowledge invented throughout the world. To uncover a measure of China's technological advances, the paper constructs a hybrid of some prominent technology-adoption models and calibrates it to reasonable parameter values. The calibrated version of the model is then combined with Chinese economic data. For the period 1978-2005, the analysis finds that the Chinese performance can be explained to a surprisingly large extent by the suggested technology-adoption framework. It can account for roughly 80% of China's productivity gains.
    Keywords: technological progress; technology adoption; TFP; China
    JEL: O11 O30 O40 O52
    Date: 2008–10

This nep-cse issue is ©2008 by Joao Jose de Matos Ferreira. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.