nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2009‒02‒14
eleven papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Globalization and Innovation in Emerging Markets By Gorodnichenko, Yuriy; Svejnar, Jan; Terrell, Katherine
  2. Intra-firm Conflicts and Interfirm Competition By Werner Güth; Kerstin Pull; Manfred Stadler
  3. “Some like it hot!”: The role of emotion and identity in interpreting and responding to diversity as a strategic issue. By Susan Schneider; Patricia Garcia-Prieto; Véronique Tran
  4. Innovative Firms or Innovative Owners? Determinants of Innovation in Micro, Small, and Medium Enterprises By de Mel, Suresh; McKenzie, David; Woodruff, Christopher
  5. Strategic Storage and Competition in European Gas Markets By Edmond Baranes; François Mirabel; Jean-Christophe Poudou
  6. New small firms and dimensions of economic performance By Shaffer , Sherrill; Hasan , Iftekhar; Zhou, Mingming
  7. Bringing Emotion To Strategic Issue Diagnosis: Contributions From Emotion Psychology And Social Psychology By Patricia Garcia-Prieto; Véronique Tran; Susan Schneider
  8. Innovation Success of Non-R&D-Performers: Substituting Technology by Management in SMEs By Rammer, Christian; Czarnitzki, Dirk; Spielkamp, Alfred
  9. Exporting quality: is it the right strategy for the Italian manufacturing sector? By Imbriani, Cesare; Morone, Piergiuseppe; Testa, Giuseppina
  10. A Model of Imitative Behavior in the Population of Firms and Workers By Elvio Accinelli; Silvia London; Edgar J. Sanchez Carrera
  11. The big players in Italian local public services. Constraints, opportunities and growth strategies By Magda Bianco; Daniela Mele; Paolo Sestito

  1. By: Gorodnichenko, Yuriy (University of Michigan); Svejnar, Jan (University of Michigan); Terrell, Katherine (University of Michigan)
    Abstract: Globalization brings opportunities and pressures for domestic firms in emerging markets to innovate and improve their competitive position. Using data on firms in 27 transition economies, the authors test for the effects of globalization through the impact of increased competition and foreign direct investment on domestic firms's efforts to innovate (raise their capability) by upgrading their technology, improving the quality of their product or service, or acquiring certification. They find that competition has a negative effect on innovation, especially for firms further from the efficiency frontier, and we do not find support for an inverted U effect of competition on innovation. The authors show that the supply chain of multinational enterprises and international trade are important channels for domestic firms' innovation. They detect no evidence that firms in a more pro-business environment are more likely to display a positive or inverted U relationship between competition and innovation, or that they are more sensitive to foreign presence.
    Keywords: competition; innovation; emerging markets; spillovers
    JEL: F23 O16 P23
    Date: 2009–01–01
  2. By: Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany); Kerstin Pull (University of Tübingen, Department of Economics and Business Administration); Manfred Stadler (University of Tübingen, Department of Economics and Business Administration)
    Abstract: We study interaction effects between intra-firm conflicts and interfirm competition on a duopolistic market with seller firms employing one or more agents and implementing tournament incentives. We show that inter-firm competition leads to higher incentive intensity, higher efforts and output levels but lower profits.
    Keywords: Tournament, Worker compensation, Strategic competition
    JEL: C72 L22 M52
    Date: 2009–01–30
  3. By: Susan Schneider (University of Geneva, Suisse.); Patricia Garcia-Prieto (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels.); Véronique Tran (ESCP EAP, Paris, France)
    Abstract: Although the business case for diversity has been well established, efforts to recognize diversity as a strategic issue and to implement diversity initiatives have often been thwarted. We consider diversity to be a strategic issue as it can have an important impact on organizational performance (Ansoff, 1980). However, the response to diversity as a strategic issue is subject to interpretation on the part of both decision-makers and those concerned with the implementation of those decisions. We argue that diversity is a “hot issue” because of its potential to evoke strong emotions. The cognitive antecedents which determine these emotions are, in fact, similar to those that lead to interpretation of strategic issues as threats or opportunities. This may help to explain how emotions are linked to strategic issue interpretation, to the decisions taken, and the likely responses to those decisions. We propose that individuals’ salient identities can influence how diversity as a strategic issue and diversity initiatives are interpreted in ways that elicit specific emotions and different categories of emotion. These emotions in turn will lead to behaviors, such as resistance or support for this issue and the proposed initiatives. Implications for leadership are discussed.
    Date: 2009–02
  4. By: de Mel, Suresh (University of Peradeniya); McKenzie, David (World Bank); Woodruff, Christopher (University of California, San Diego)
    Abstract: Innovation is key to technology adoption and creation, and to explaining the vast differences in productivity across and within countries. Despite the central role of the entrepreneur in the innovation process, data limitations have restricted standard analysis of the determinants of innovation to consideration of the role of firm characteristics. We develop a model of innovation which incorporates the role of both owner and firm characteristics, and use this to determine how product, process, marketing and organizational innovations should vary with firm size and competition. We then use a new large representative survey from Sri Lanka to test this model and to examine whether and how owner characteristics matter for innovation. The survey also allows analysis of the incidence of innovation in micro and small firms, which have traditionally been overlooked in the study of innovation, despite these firms comprising the majority of firms in developing countries. More than one quarter of microenterprises are found to be engaging in innovation, with marketing innovations the most common. As predicted by our model, firm size is found to have a stronger positive effect, and competition a stronger negative effect, on process and organizational innovations than on product innovations. Owner ability, personality traits, and ethnicity are found to have a significant and substantial impact on the likelihood of a firm innovating, confirming the importance of the entrepreneur in the innovation process.
    Keywords: innovation, microenterprises, SMEs, development
    JEL: O31 L26
    Date: 2009–01
  5. By: Edmond Baranes; François Mirabel; Jean-Christophe Poudou
    Abstract: In this paper, we study how competition on downstream gas markets is influenced by sourcing decisions in the supply chain. We analyze the sequential relationships between storage decisions and intermediate pricing in spot markets. We show that an upstream leadership in the access to storage facilities leads a dominant firm to adopt strategic storage decision. This strategy consists in stockpiling more than supplied in the downstream market. This behavior is a part of a raising rival's cost strategy for the leader. Furthermore in some cases, optimal regulation of gas storage access may not prevent such a behavior.
    Keywords: Storage, spot market, gas markets, regulation
    Date: 2008
  6. By: Shaffer , Sherrill (University of Wyoming and Centre for Applied Macroeconomi Analysis, Australian National University); Hasan , Iftekhar (Lally School of Management, Rensselaer Polytechnic Institute and Bank of Finland); Zhou, Mingming (University of Alaska at Fairbanks)
    Abstract: Using data from US labour market areas, we quantify empirical associations between entry by small firms and a vector of economic performance measures encompassing levels, volatilities and growth rates of several income and employment variables. Distinct and robust associations are found for net and gross rates of entry. These results suggest a richer variety of effects of entry than previously documented, and point to several potential tradeoffs associated with entry by small firms.
    Keywords: growth; stability; employment; entry
    JEL: J23 M13 O10
    Date: 2009–01–21
  7. By: Patricia Garcia-Prieto (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels.); Véronique Tran (ESCP EAP, Paris, France); Susan Schneider (University of Geneva, Suisse.)
    Abstract: Managers analyze their environment in order to diagnose strategic issues, events which may have an important impact on the organizational performance. But to date little has been said about the role of emotion in the process of strategic issue diagnosis (SID). Our paper focuses on how emotions and social identities can influence SID, which has been primarily discussed from a purely cognitive perspective. First, we build on cognitive appraisal theory of emotion to better predict individual emotional and behavioral responses to strategic issues. Second, we integrate concepts from intergroup emotion theory to predict when these emotional and behavioral responses will be based on group membership. In this way, we can better understand how not only how individuals may personally respond but also how group memberships (or social identities) may influence the process of strategic issue diagnosis. After reviewing both theories of emotion we discuss how both cognitive appraisals and the cognitive dimensions identified by existing SID frameworks can predict specific “discrete emotion” responses to the issue (e.g., joy, anger) in turn predicting specific “behavioral responses” to the issue (e.g., support, reject). We then illustrate when individual-level SID processes become group membership-level and conclude by outlining implications for theory and research.
    Keywords: Emotion, Cognition, Social Group Membership, Strategic Issue Diagnosis
    Date: 2009–02
  8. By: Rammer, Christian; Czarnitzki, Dirk; Spielkamp, Alfred
    Abstract: This paper investigates the impact of in-house R&D and innovation management practices on innovation success in small and medium-sized firms (SMEs). While there is little doubt about the significance of technology competence for generating successful innovations, inhouse R&D activities may be a particular challenge for SMEs due to high risk exposure, high fixed costs, high minimum investment and severe financial constraints. SMEs may thus opt for refraining from R&D and relying more on innovation management tools in order to achieve innovation success. We analyse whether such a strategy can pay off. Based on data from the German CIS we find that R&D activities are a main driver for innovation success if combined with external R&D, using external innovation sources or by entering into cooperation agreements. SMEs without in-house R&D can yield a similar innovation success if they effectively apply human resource management tools or team work to facilitate innovation processes.
    Keywords: Innovation Success, R&D, Innovation Management, SMEs
    JEL: L25 O31 O32 O38 O47
    Date: 2008
  9. By: Imbriani, Cesare; Morone, Piergiuseppe; Testa, Giuseppina
    Abstract: ABSTRACT: Recently, most European manufacturing firms have been engaged in a number of innovative activities to survive the growing competition coming from newly-industrialising countries. Italian manufacturing industry, which relies largely on SMEs, is struggling to regain competitiveness in global markets. In light of these stylised facts, we first investigate whether innovating activities and quality goods’ production enhance Italian SMEs’ probability to be exporter. Our findings suggest that both products’ quality and innovative activities affect considerably SMEs’ likelihood to export. Subsequently, using the Chow test, we find evidence for a structural break produced by quality, which results in substantial differences between high and low-quality firms. The former are more likely to export if they introduce product innovation, marketing innovation and/or organisational changes, the latter increase their chances of exporting when introducing process innovations and organisational changes.
    Keywords: SMEs; exports; innovative activities; quality; probit
    JEL: O31 C25 L1
    Date: 2008–12–19
  10. By: Elvio Accinelli; Silvia London; Edgar J. Sanchez Carrera
    Abstract: We study an imitation game of strategic complementarities between the percentage of high-skilled workers and innovative firms, namely, human capital and R&D, respectively. We show that this model has two pure Nash equilibria, one of them with high investment in R&D and skilled workers while the other one, which we interpret as poverty trap, exhibits lack of skills and underinvestment. Furthermore, we show that we can avoid the poverty trap if the number of innovative firms is larger than a threshold value allowing an increment of the number of skilled workers
    Keywords: Imitative behavior, conformism, poverty traps, strategic complementarities
    JEL: C72 C79 D83 O12
    Date: 2009–02
  11. By: Magda Bianco (Banca d'Italia); Daniela Mele (Banca d'Italia); Paolo Sestito (Banca d'Italia)
    Abstract: One of the objectives of the reforms and liberalization of the last 15 years in local public services was to reduce the traditional fragmentation of production. This was to be achieved through restructuring that reduced inefficiencies and made it more possible to exploit economies of scale, thereby stimulating the emergence of national “big players”. In this paper we analyze the evolution and current position of the largest operators that have emerged in the different sectors of local public services. The aim is to identify factors that have helped or hindered the growth process. Through an analysis of twelve among the largest businesses we identify four evolutionary paths. In our view the main drivers have been: a) a presence in the energy sector (mainly due to its high profitability); b) a favourable local political framework; and c) a tradition of efficient internal organization and independence of local politics.
    Keywords: local public services, liberalization, growth strategies
    JEL: L11 L21 L25 L90
    Date: 2008–09

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