nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2009‒01‒10
six papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. The Relationship between Successor, Planning Characteristics, and the Transfer Process on Post-Transfer Profitability in SMEs By Lorraine Uhlaner; Petra Gibcus; Niek Timmermans; Martha Berent
  2. Firm dynamic governance of global innovation by means of flexible networks of connections By Gay, Brigitte
  3. Product innovation and firm survival in a network industry By Fumiko Hayashi; Zhu Wang
  4. Growth policy in a small, open economy. Domestic innovation and learning from abroad By Brita Bye, Taran Fæhn, and Leo A. Grünfeld
  5. Recent Changes in Crop Production Costs and Implications for Regional Competitiveness By Olson, Kent D.; Zakharova, Lena
  6. Competition Policy and Market Leaders By Ilir Maçi; Kresimir Zigic

  1. By: Lorraine Uhlaner; Petra Gibcus; Niek Timmermans; Martha Berent
    Abstract: The aim of this study is to examine the relationship between successor characteristics, transfer planning characteristics and post-transfer profitability within Dutch SMEs. On the one hand, based on the resource dependency view, it is assumed that successors with more knowledge and experience, derived from work experience from outside the target firm, will be able to extract higher rents from the firm than those with less (diverse) work experience. On the other hand, based on the knowledge management literature, and in particular, concepts such as tacit knowledge, this research makes the contrasting prediction that post-transfer profitability is likely to be higher in firms where the successor is an insider and is related to the predecessor. Moreover, this paper proposes, based on the theory of planned behaviour, that written plan and strategic intent have a positive association with post-transfer profitability. The study is based on quantitative analysis of a random sample of Dutch SMEs. Initial results from the current study suggest that determinants of post-transfer profitability may be quite different in the family-to-family ownership vs. nonfamily ownership transfer conditions (i.e. whether or not the successor is related to the predecessor). Significant interaction effect is found such that the effect of strategic planning, in particular, varies depending on the nature of the transfer relationship (family to family, vs family to non-family). Other results offer mixed support for the proposed theories.
    Date: 2009–01–07
  2. By: Gay, Brigitte
    Abstract: Today a plethora of inter-company alliances exists. Firms have networked value chains, disclosing consequently their strategy, which assets are internalized or externalized, and their ability to cope with fast change. The picture of all interfirm alliances in high tech sectors is that of an unstable complex network, or macrostructure, that evolves quickly and into which firms are differently entwined. Structural metrics borrowed from network research in sociology such as centrality and constraint (or lack of “structural holes”) can be used to assess dynamically a firm’s position in the macro structure and therefore the market: does the firm occupy a dominant or dominated position in an industry? How do its partners and competitors perform? Drawing also from recent theories on complex networks developed by statistical physicists, we show that firms are embedded in dynamic complex networks that have a ‘scale-free’ format, with only a few firms or “hubs” controlling the system, as well as a cohesive or ‘small-world’ structure. This small-world structure, which allows rapid diffusion of innovation along very short paths, also constrains firms continuously and can lead to a fast reversal of their position on the market. Taking as an example a major sector of the biopharmaceutical industry, this study offers insights for managers to assess effectively their environment and navigate under constant pressure within these ever-changing networks.
    Keywords: Innovation; alliances; structural holes; centrality; complex networks; small world
    JEL: L65 L14 L24 O3
    Date: 2008–07
  3. By: Fumiko Hayashi; Zhu Wang
    Abstract: This paper studies product innovation and firm survival in the U.S. ATM/debit card industry. The industry started with a few shared ATM networks in the early 1970s. The number of networks grew quickly up until the mid 1980s, but then declined sharply. We construct a theoretical model based on Jovanovic and MacDonald (1994). In contrast to their model focusing on cost-saving technological innovation, our model shows a major product innovation may also trigger the shakeout. The theoretical predictions are tested using a novel dataset on network entry, exit, size, location, ownership and product choices. The findings suggest introducing the point of sale debit function in the mid 1980s played an important role driving the network consolidation. Unlike previous studies, we find little advantage of being early industry entrants. Rather, due to network effects in the industry, large networks had better chance to adopt the product innovation and survive the shakeout.
    Date: 2008
  4. By: Brita Bye, Taran Fæhn, and Leo A. Grünfeld (Statistics Norway)
    Abstract: Research and development (R&D) play a pivotal role for innovation and productivity growth, and knowledge spillovers can make the case for public support to private R&D. In small and open economies, absorption of foreign knowledge through exports and imports can be even more decisive for economic growth than domestic innovation. This macro economic analysis investigates how policies should be formed in order to reap the largest productivity effects, when both these sources of growth interplay. In particular, the firms’ capacity to absorb knowledge from abroad depends on domestic R&D, and this reinforces the efficiency arguments for stimulating R&D. We find that from a welfare perspective, export promotion of R&D-based technologies proves slightly more efficient than R&D support.
    Keywords: Absorptive capacity; Computable general equilibrium model; Endogenous growth; Research and Development; Spillovers; Two faces of R&D.
    Date: 2008–12
  5. By: Olson, Kent D.; Zakharova, Lena
    Abstract: Rapid increases in input prices have cast a large shadow over the enthusiasm created by higher product prices. In this paper we forecast the trends in input prices and use these trends to forecast production costs for corn, soybeans, and wheat at the national level, and for regions within the U.S. Although the Heartland is forecast to maintain its competitive edge in corn costs, the Northern Great Plains and Prairie Gateway regions are forecast to increase their competitive advantage due to using less fertilizer and chemicals on average which results in relative costs decreasing for these regions. For soybeans, the Heartland is forecast to maintain its competitive edge although the Eastern Uplands region was forecast to increase its competitive advantage due to using less fertilizer and chemicals. With wheat, the Prairie Gateway region was forecast to have the best improvement in relative costs, while the Northern Great Plains loses some competitive edge. However, since individual farms have different costs due to physical conditions and timing of input purchases, and crop prices are fluctuating, actual profit levels are hard to predict.
    Keywords: Crop Production/Industries,
    Date: 2008–12
  6. By: Ilir Maçi; Kresimir Zigic
    Abstract: We study the potential loss in social welfare and changes in incentives to invest in R&D that result when the market leading firm is deprived of its position. We show that under plausible assumptions like free entry or repeated market interactions there is a social value of market leadership and its mechanical removal by means of competition policy is likely to be harmful for society.
    Keywords: Market leaders, Competition policy, Innovation.
    JEL: F12 F13 L11 L13 L16 K21
    Date: 2008–11

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