nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2008‒11‒25
twenty papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. The Innovative Performance of Alliance Block Members: Evidence from the Microelectronics Industry By Duysters, Geert; Lemmens, Charmianne; Letterie, Wilko; Vanhaverbeke, Wim
  2. Firms as bundles of discrete resources - towards an explanation of the exponential distribution of firm growth rates. By Alex Coad
  3. Formal and informal external linkages and firms' innovative strategies: A cross-country comparison By Isabel Maria Bodas Freitas; Tommy Clausen; Roberto Fontana; Bart Verspagen
  4. Network Economies in Indian Telecom By Chepuri Shri Krishna, Tikiya Vibhor
  5. Organizational capabilities and industry dynamics: a computational model. By Marco Corsino; Roberto Gabriele; Enrico Zaninotto
  6. Investment decisions in liberalized electricity markets: A framework of peak load pricing with strategic firms By ZOETTL, Gregor
  7. The Impact of Technological and Non-Technological Innovations on Firm Growth By Jyrki Ali-Yrkkö; Olli Martikainen
  8. Estimating the dynamics of R&D-based growth models By YATSENKO, Yuri; BOUCEKKINE, Raouf; HRITONENKO, Natali
  9. Measuring competitiveness in the EU market: a comparison between food industry and agriculture By Carraresi, L.; Banterle, A.
  10. Administrative burdens and dairy industry competitiveness By Bremmers, Harry; Poppe, Krijn J.; Wijnands, Jo; van der Meulen, Bernd
  12. Problems of Strategic Management Formation in Russian Agrarian Sector By Bannikova, N.; Schuele, H.; Khachatryan, A.; Khachatryan, N.
  13. Knowledge Transfer in the Irish Food Innovation System: Industry and Researcher Perspectives By Kelly, D.; Henchion, M.; O'Reilly, P.
  14. Factors Affecting the Competitiveness of the Greek Wine Enterprises and Cooperatives By Konstantinidis, C.; Sergaki, P.; Mattas, K.; Kontogeorgos, A.
  15. Market Structure and Competition in Food Retail: Some Evidences from Brazil By Monterio, G.F.A.; Farina, E.M.M.Q.; Nunes, R.
  16. Tactical and Strategic Sales Management for Intelligent Agents Guided By Economic Regimes By Ketter, W.; Collins, J.; Gini, M.; Gupta, A.; Schrater, P.
  17. Competitive Advantages and Disadvantages in Romania€ٳ Agri-Food Trade -Trends and Challenges By Rusali, M.; Gavrilescu, C.
  18. Impact and competitiveness of EU biofuel market €ӠFirst view of the prices of biofuel market in relation to the global players By Liu, Xing
  19. Searching for innovations ? the technological determinants of acquisitions in the pharmaceutical industry. By Gautier Duflos; Etienne Pfister

  1. By: Duysters, Geert (UNU-MERIT); Lemmens, Charmianne (UNU-MERIT); Letterie, Wilko (Maastricht University); Vanhaverbeke, Wim (Hasselt University)
    Abstract: The primary goal of this paper is to improve our understanding of the complex relationship between the positioning of companies in alliance networks and their innovative performance. In particular, we expect that a firm’s innovative performance depends partly on its position in specific network settings (block membership or nonblock membership), with additional effects caused by the technology positioning strategies firms pursue in terms of technological specialization in alliance blocks. Alliance groups derive their competitive advantage from their superior and particular technologies, which they develop and exploit together in the alliance blocks. 4 Incorporating this moderating effect of the degree of technological specialization in alliance blocks (exploitation or exploration) seems to give more insight in the contextual issues in this stream of literature.
    Keywords: strategic technology alliances, alliance block membership strategy, microelectronics industry, innovative performance, technology strategies
    JEL: L14 L63 O31 O32
    Date: 2008
  2. By: Alex Coad (Centre d'Economie de la Sorbonne et Max Planck Institute of Economics)
    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.
    JEL: L1 C1
    Date: 2008–10
  3. By: Isabel Maria Bodas Freitas (Grenoble Ecole de Management); Tommy Clausen (Centre for Technology, Innovation and Culture, University of Oslo); Roberto Fontana (Department of Economics, University of Pavia); Bart Verspagen (Centre for Technology, Innovation and Culture, University of Oslo)
    Abstract: Firms increasingly rely upon external actors for their innovation process. Interaction with these actors may occur formally (i.e. through a collaboration agreement) or informally (i.e. external actors acts as sources of knowledge). This paper analyses the reasons why firms consider it to be important to develop formal and informal external linkages in the innovation process by looking at the role played by firms’ innovative strategies and by taking into account that a complementarity or substitutive relationship might exist between formal and informal linkages. Data come from the Third Community Innovation Survey (CIS 3), where we have access to firm level micro-data from Norway, Sweden, the Netherlands and the UK.
    Keywords: External knowledge sources, Innovation strategy, Formal cooperation, Multinomial Probit.
    JEL: O31 O33 O38
    Date: 2008–11
  4. By: Chepuri Shri Krishna, Tikiya Vibhor
    Keywords: Network Economies, Telecom, India, Performance, Scale, Scope, Consumer Surplus, Utilities, Firm-Strategies
    Date: 2007–12–28
  5. By: Marco Corsino; Roberto Gabriele; Enrico Zaninotto (DISA, Faculty of Economics, Trento University)
    Abstract: In this paper we propose a model of bounded rational organizations that addresses the role of organizational capabilities in shaping firm size, growth rates and profitability. Our approach aims at reconciling the logic behind stochastic models of firm growth with the notion of organizational capabilities as drivers of economic performance. We extend the stochastic framework by incorporating behavioural assumptions on: (a) the interactions between the firm and the business environment; and (b) the mechanism by which firms sense and seize business opportunities. In our perspective, the degree of concurrence between the substance and organization of the firm and the context in which it operates will directly influence its profitability and indirectly (through costly mutations of the organizational structure) drive its growth. Despite its simple nature the model is able to capture well known regularities about industry dynamics. It generates firm size distributions that are skewed and heterogeneous across different scenarios. Moreover, our results suggest that the higher the selective power of the firm's organizational capabilities, the more the steady state distribution deviates from a log normal. Besides, the distribution of growth rates has a tent-shaped form which is consistent with the pattern described in empirical studies. The distribution of opportunities per firm is also skewed suggesting that a very few entities account for a large fraction of business opportunities arising throughout the simulation period. Finally, the interaction between the external environment and the internal structure of the firms also influences the heterogeneity in the value of the opportunities they capture.
    Keywords: organizational capabilities; firm size distribution; growth rates; simulation model
    Date: 2008–11
  6. 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
  7. By: Jyrki Ali-Yrkkö; Olli Martikainen
    Abstract: ABSTRACT : This study investigates the relationship between innovations and firm growth, based on the data of Finnish firms operating in the software industry. We find that in terms of turnover and employment, firms with only technological innovations do not grow more rapidly than other firms. However, firm growth is positively associated with the combination of technological and non-technological innovations.
    Keywords: innovation, technological, non-technological, R&D, firm, development, employment, growth, Finland
    JEL: O3 O33 L2
    Date: 2008–11–13
  8. 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
  9. By: Carraresi, L.; Banterle, A.
    Abstract: Facing the growing competition in the European food market, the purpose of this paper is to assess European country competitiveness at the sector level in the intra-EU market over the last fifteen years, comparing the evolution of the food industry, where firms have had to reshape strategies to maintain market position, and agricultural sector, where changes in Common agricultural policy have forced farms to face market trends. The analysis of competitiveness was carried out by assessing trade indices (EMS, RCA, RXA, RMA, NEI). Cluster analysis was also run to classify groups of countries with similar features in terms of competitive performance over the 1991-2006 period. The country that profited most from market integration in both sectors, reaching a high level of competitiveness was Spain, followed by Germany and Italy which gained competitiveness especially in the food industry. The United Kingdom had the worst performance, with a big decrease in indices, followed by France and Netherlands, still among the first but with lower indices.
    Keywords: Competitiveness, agri-food sector, EU, RCA, International Relations/Trade,
    Date: 2008
  10. By: Bremmers, Harry; Poppe, Krijn J.; Wijnands, Jo; van der Meulen, Bernd
    Abstract: The goal of this paper is to assess the effect of regulatory burdens in the European dairy industry on its competitiveness. A theoretical foundation is provided by transaction cost economics and total quality management insights. The effects of legislation on administrative requirements and competitiveness are supposed to be mediated by impacts on innovativeness, company strategy, food safety system availability, as well as the available information & communication capabilities. We will connect to previous research (Wijnands et al., 2007) and the findings therein. Four sub-questions are addressed: € what is the relationship between administrative burdens, innovation and competitiveness? € what is the relationship between administrative burdens, food safety & quality system deployment and competitiveness? € what is the relationship between administrative burdens, food labelling requirements and competitiveness? € what is the relationship between administrative burdens, supply chain transparency and competitiveness? In addition to the theoretical framework presented earlier in Bremmers et al., 2008, this paper contains the first results of a survey in the European dairy industry. They are combined with the proceeds from a literature search. The results show that (Q1) especially product innovation is negatively impacted by administrative burdens. Food safety and quality systems (Q2) serve to provide a level playing field in Europe. They would be installed also if no legal requirements would enforce them, because clients ask for it, so that administrative burdens could easily be attributed to business strategy rather than legal obligations. To reduce administrative burdens, we advice to integrate food safety and quality requirements is necessary. It would reduce monitoring and reporting costs, both for private as well as public parties. Food labeling (Q3) (a €حade in Europe€٠origin marking) could work contraproductive with respect to the competitive position of dairy firms and will have an increase of administrative burdens as a net-effect. And last but not least (Q4), increased chain transparency (mentioning the name of intermediary producers on the end-product package) will accelerate administrative burdens, but will only be beneficial for SMEs with a differentiated product. Commodity-producers in the dairy industry which only follow a cost strategy will gradually merge and/or disappear.
    Keywords: dairy industry, competitiveness, administrative burdens, food safety, labelling, Livestock Production/Industries,
    Date: 2008
  11. By: D€Ùlessio, Massimiliano; Maietta, Ornella Wanda
    Abstract: Objective of the paper is to verify which are the determinants of innovations in the Italian food industry and which role R&D networking, through the cooperative nature of firm, plays among these determinants. The data used are the 9th (2001-2003) wave of Capitalia surveys based on a representative sample of manufacturing firms with information on firm characteristics, employee education levels, innovation and R&D investments. The approach is a bivariate probit analysis where the two dependent variables are the presence of firm R&D and of innovations and the independent variables are firm characteristics. The results of the analysis show that, among the determinants of firm R&D intra moenia and of firm innovations in the Italian food industry for the years 2001-03, the presence of subsidies for R&D extra moenia, is the most significant variable with the highest marginal effect while the cooperative variable turns out to be positive and significant (6%) after including relative input prices.
    Keywords: innovations, R&D networking, firm property rights., Consumer/Household Economics, Research and Development/Tech Change/Emerging Technologies, O31, O32, D21,
    Date: 2008–11–14
  12. By: Bannikova, N.; Schuele, H.; Khachatryan, A.; Khachatryan, N.
    Abstract: The rapid changes in Russian agriculture during the last fifteen years require development of particular strategies for efficient farm management. The West-European approaches of strategic management and planning decisions are not directly applicable in the Russian agricultural economy; Russian large and medium-sized agricultural enterprises act on different organisational principles, due to the specific peculiarities of their business mentality. The objective of the research is to adopt modern strategic management concepts to the peculiarities of Russian agriculture and to work out proposals on formation of strategic planning system in agricultural production. To this end it is necessary to define the strategic planning features which take into account the nature of modern stage of the development of Russian economy and the specific character of agricultural production; to indicate the preconditions which promote the wide implementation of strategic planning into economic practice; to establish the features of the concept of strategic planning for agricultural enterprises and to elaborate a methodical set of instructions providing formalized character to strategic planning. Applying the methodologies of monographic research and expert interviews, we conducted the analysis of peculiarities and problems of Russian agricultural production, revealed and systematized the features of development of strategy for agricultural enterprises. Based on the results of our investigation we developed strategic development models for the agricultural enterprises of Stavropol region applying the approach of Strength /Neutral / Weakness (SNW) analysis of the methodology of comparative advantage. The usefulness and empirical value of the developed models have been approved on the example of €܌UCH€ݠagricultural enterprise, which is the first in the region according to effectiveness indicators and the fourth according to its relative size.
    Keywords: Farm Management,
    Date: 2008
  13. By: Kelly, D.; Henchion, M.; O'Reilly, P.
    Abstract: The new EU Animal Health Strategy suggests a shift in emphasis away from control towards prevention and surveillance activities for the management of threats to animal health. The optimal combination of these actions will differ among diseases and depend on largely unknown and uncertain costs and benefits. This paper reports an empirical investigation of this issue for the case of Avian Influenza. The results suggest that the optimal combination of actions will be dependent on the objective of the decision maker and that conflict exists between an optimal strategy which minimises costs to the government and one which maximises producer profits or minimises negative effects on human health. From the perspective of minimising the effects on human health, prevention appears preferable to cure but the case is less clear for other objectives.
    Keywords: Knowledge transfer, technology transfer, Irish food sector, Research and Development/Tech Change/Emerging Technologies,
    Date: 2008
  14. By: Konstantinidis, C.; Sergaki, P.; Mattas, K.; Kontogeorgos, A.
    Abstract: The present paper investigates the effect of certain economic factors on the competitiveness of Greek Wine Enterprises and Unions of Agricultural Cooperatives (UACs). Data on 41 wineries and 10 UACs of Greece was collected for a period of three years (2004-2006). Financial analysis results were used with the help of a fixed effect model-panel data technique- using profitability as dependent variable in order to measure the competitiveness of wineries. The results indicated that the size of the enterprise as well as the square of the capital intensity have a positive influence on the winery€ٳ profit.
    Keywords: competitiveness, profitability, wineries, agricultural cooperatives, Agribusiness,
    Date: 2008
  15. By: Monterio, G.F.A.; Farina, E.M.M.Q.; Nunes, R.
    Abstract: The paper analyzes competition among supermarkets in Brazil. In contrast to part of the economic literature which suggests that the fast growth of big supermarket chains would destroy independent, medium and small supermarkets, the paper argues that big supermarket chains can coexist with different formats of independent food retailing. As a result, competition in food retail is complex and cannot be described as a simple Darwinian process of market concentration. The analysis is divided in two parts. In the first part, the competition between hypermarkets and supermarkets is examined. Evidences for the district of Sao Paulo, Brazil, suggest that these retailers form separate markets. The second part is focused on neighborhood supermarkets. The results differ from the general belief that independent supermarkets establish higher prices in comparison to big chain supermarkets. The analysis brings to light the heterogeneity of the competitive fringe in the oligopoly model of Brazilian retailing.
    Keywords: Food retail, Supermarkets, Differentiation, Agribusiness, Industrial Organization,
    Date: 2008
  16. By: Ketter, W.; Collins, J.; Gini, M.; Gupta, A.; Schrater, P. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: We present a computational approach that autonomous software agents can adopt to make tactical decisions, such as product pricing, and strategic decisions, such as product mix and production planning, to maximize profit in markets with supply and demand uncertainties. Using a combination of machine learning and optimization techniques, the agent is able to characterize economic regimes, which are historical microeconomic conditions reflecting situations such as over-supply and scarcity. We assume an agent is capable of using real-time observable information to identify the current dominant market condition and we show how it can forecast regime changes over a planning horizon. We demonstrate how the agent can then use regime characterization to predict prices, price trends, and the probability of receiving a customer order in a dynamic supply chain environment. We validate our methods by presenting experimental results from a testbed derived from the Trading Agent Competition for Supply Chain Management (TAC SCM). The results show that our agent outperforms traditional short- and long-term predictive methodologies (such as exponential smoothing) significantly, resulting in accurate prediction of customer order probabilities, and competitive market prices. This, in turn, has the potential to produce higher profits. We also demonstrate the versatility of our computational approach by applying the methodology to prediction of stock price trends.
    Keywords: agent-mediated electronic commerce;dynamic pricing;machine learning;rational decision making;market forecasting
    Date: 2008–10–20
  17. By: Rusali, M.; Gavrilescu, C.
    Abstract: The paper is part of the studies concerning trade patterns and agri-food foreign trade policies in the EU enlargement context, aiming to assess the competitive trade advantages and disadvantages of the Romania€ٳ agri-food products in the foreign trade relations. The analysis focuses on the challenges of the trade liberalization and its influence on the intensification of the commercial exchanges, the supply diversification and on the trade balance equilibrium, faced by Romania€ٳ agri-food sector over the transition and pre-accession period. The structural reforms of the transition and EU accession preparations induced paramount changes in Romania€ٳ agri-food trade pattern, i.e. a fluctuating evolution of the agri-food foreign trade, either in correlation with the variations in the agricultural supply, the performance deficiencies of the agri-food sector that provoked disequilibria on the export market, or with the effect of political changes upon the trade flows. The recent integration in the Single Market recalls a special attention on the opportunities for the competitive producers to attract benefits offered by the enlarged access possibilities and the openness to third countries. In this context, an in-depth analysis of the bilateral trade relation between Romania and EU has been performed by using an alternative method of the comparative trade advantage index, based on the one developed by Vollrath [1]. The results emphasize the identification of either the competitive agri-food trade potential, or of the sensitive zones that could be affected by the external competition post-accession, as well as the needed improvements in the Romanian agri-food sector€ٳ competitiveness.
    Keywords: Agri-food trade, competitiveness, comparative trade advantage index., International Relations/Trade,
    Date: 2008
  18. By: Liu, Xing
    Abstract: The goal of this study is to investigate the price relationship of EU biofuel market with other main markets in both horizontal level and vertical level. We first carry out Granger causality between ethanol price of EU, USA and Brazil. Secondly, we use vecto error cointegration Mechnism (VECM) to test the relationship between three selected vegetable oil prices in EU to see the competive potential of EU rapeseed oil compared with imported crude palm oil and soybean oil as the feedstock of biodiesel. Evidence shows that there is a unidirectional Granger causation from both USA and Brazil to EU market. USA price of ethanol is the most influential among the three price series, and EU has the least influence on the contrary. It indicates that it is very necessary for EU to set up its own price indicator, for instance, futures prices in EURONEXT. However, in biodiesel market, production in EU has some potential in competing with outside of the world since rapeseed oil price show some potential in price competition with other vegetable oils.
    Keywords: ethanol, vegetable oils, feedstock, directives, VECM, Granger causality, Crop Production/Industries, International Relations/Trade, Research and Development/Tech Change/Emerging Technologies,
    Date: 2008
  19. By: Gautier Duflos (Centre d'Economie de la Sorbonne - Paris School of Economics); Etienne Pfister (BETA-Règles - Université de Nancy II)
    Abstract: This article analyzes the individual determinants of acquisition activity and target choices in the pharmaceutical industry over the period 1978-2002. The "innovation gap" hypothesis states that acquiring firms lack promising drug compounds and acquire firms with more promising drug prospects. A duration model implemented over a panel of more than 400 firms relates the probabilities of being an purchaser or a target to financial, R&D ant patent data to investigate this explanation more deeply. Results show that purchasers are firms with a lower Tobin's Q and decreasing sales, which could indicate that acquisitions are used to compensate for low internal growth prospects. Firms with a higher proportion of radical patents in their portfolio, especially in pharmaceutical and biothechnological patent classes, face a higher probability of being targeted, indicating that acquiring firms are indeed searching for innovative competencies. However, acquiring firms also present a significant absorptive capacity : their R&D investment increases in the year preceding the operation and their patent stock is larger and more diversified than for non-acquiring firms. Finally, we observe that over the last ten years of the sample period, firms have paid a greater attention to the size of the target's portfolio.
    Keywords: M&A, pharmaceutical, innovations, patent citations.
    JEL: G34 L15 L21 O3
    Date: 2008–09
  20. By: Panico, Teresa; Del Giudice, Teresa; Pascucci, Stefano
    Abstract: In the years to come Rural Development Policies will be an increasingly important part of EU Cohesion Policies. In particular, Convergence Regions with a high percentage of rural areas and a major development gap will be the most affected by this scenario. The objectives of this paper are twofold. The first is to analyze Italian Rural Development Programs in order to investigate how the Italian regional authorities have interpreted the potential role of the new RD programs and identified the specific strategies to be pursued. The second objective is to evaluate the coherence between strategies and tools indicated in the different programs. The financial plans will be compared in order to detect the possible different strategic approaches existing among regions characterized by different situations and development levels of the agricultural sector and the rural economy. For developing the analysis we will adopt the menu approach (Terluin, Venema, 2004). We will analyze three main steps which have to be taken in applying this method: (1) identification of rural development priorities; (2) selection of rural development measures to determine rural development priorities; and (3) allocation of finance to take such rural development measures. Following this approach, the 21 Italian Rural Development Programs will be compared. The first results show that the different regions selected quite a large number of rural development measures from the potential menu. Moreover, the different importance given to the agricultural and rural sectors in selecting various measures is never clear-cut.
    Keywords: RDP, Policy Coherence, Italian RDP, Agricultural and Food Policy, Q10, Q18,
    Date: 2008–11–12

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