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on Economics of Strategic Management |
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Issue of 2009‒02‒28
fourteen papers chosen by Joao Jose de Matos Ferreira University of the Beira Interior |
| By: | James R. Lincoln |
| Abstract: | This paper examines the changing process of strategic alliance formation in the Japanese electronics industry between 1985 and 1998. With data on 128 Japanese electronics/electrical machinery makers, we use a dyad panel regression methodology to address a series of hypotheses drawn from embeddedness and strong/weak tie theory on how keiretsu and prior alliance networks have constrained partner choice in new R&D and nonR&D alliances. We argue and find that the keiretsu effect is smaller on R&D than nonR&D alliances, and that this is truer of the “weaker-tie” horizontal keiretsu than the “stronger-tie” vertical keiretsu. Dividing our time series into four periods (1984-88, 89-90, 91-94, 95-98), however, reveals some important variations in the keiretsu role over time. The horizontal and vertical keiretsu effects on R&D alliances had vanished by 1991-94 (the post-bubble recession era), but they continued in the nonR&D case, in part, we believe, because these provided a means of reducing costs and capacity in a stringent macroeconomic environment. Following previous strategic alliance research, we further examine how the prior alliance network conditioned strategic alliance formation in Japanese electronics and how those patterns varied over time. The data suggest that, as the strategic alliance founding process became “disembedded” from Japan’s legacy keiretsu networks, it was driven increasingly by prior direct and indirect alliance ties. |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hitcei:2008-18&r=cse |
| By: | Van Beers, Cees; Dekker, Ronald |
| Abstract: | This aim of this paper is twofold. First it examines the determinants of acquisitions and divestitures of Dutch firms in the period 1996-2004. Second, it investigates the impact of acquisitions and divestitures on the firm’s innovative output performance. An econometric model is specified and estimated with Community Innovation Survey data for the Netherlands in the period 1996-2004. The main findings of this study are as follows. First, innovating firms are significantly more involved in acquisition activities than non-innovating firms, which suggests that acquisitions are a strategy to gain access to new technologies or knowledge. Second, lack of knowledge as a barrier to innovate increases the chance of acquiring assets of other firms although not significantly. Lack of finance as a barrier to innovate increases significantly the chance of divesting assets. Third, acquisitions motivated by knowledge barriers in the innovation process affect the probability of positive innovative sales positively while acquisitions motivated by other reasons than innovation barriers affect this probability negatively. No effect of knowledge barriers induced acquisitions on the level of the innovative sales could be found. |
| Keywords: | Innovation; performance; mergers; acquisitions; divestitures; strategy. |
| JEL: | L10 D40 |
| Date: | 2009–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13464&r=cse |
| By: | Hamid, Naved |
| Abstract: | The objective of this paper is to set out the key components of a development strategy for Pakistan. A fundamental premise of our analysis is that the world economic environment is changing dramatically and a development strategy today must position itself to take advantage of the changes taking place. The paper is divided into five sections: First we provide a brief review of Pakistan's experience with development strategies so far. next we discuss the changes that have occurred, or taking place in the global economy, which have strategic relevance for Pakistan. In the third section we look at the current situation in Pakistan with regard to the potential drivers of growth, based on the earlier discussion of the global developments. In the final section key elements of an alternative development strategy for Pakistan are outlined. |
| Keywords: | Development Strategy; Growth; Globalization |
| JEL: | O11 O20 O40 |
| Date: | 2008–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13491&r=cse |
| By: | Lommerud, Kjell Erik; Meland, Frode; Straume, Odd Rune |
| Abstract: | We analyze unionized firms’ incentives to outsource intermediate goods production to foreign (low-cost) subcontractors. Such outsourcing leads to increased wages for the remaining in-house production. We find that stronger unions, which imply higher domestic wages, reduce incentives for international outsourcing. Though somewhat surprising, this result provides a theoretical conciliation of the empirically observed trends of deunionization and increased international outsourcing in many countries. We further show that globalization - interpreted as either market integration or increased product market competition - will increase incentives for international outsourcing. |
| Keywords: | Deunionization; Globalization; International outsourcing |
| JEL: | F16 J51 L24 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6998&r=cse |
| By: | Franklin Allen; Elena Carletti; Robert Marquez |
| Abstract: | In countries such as Germany, the legal system is such that firms are necessarily stakeholder oriented. In others like Japan social convention achieves a similar effect. We analyze the advantages and disadvantages of stakeholder-oriented firms that are concerned with employees and suppliers compared to pure shareholder-oriented firms. We show that in a context of imperfect competition stakeholder firms have higher prices and lower output than shareholder-oriented firms. Surprisingly, we also find that firms can be more valuable in a stakeholder society than in a shareholder society. With globalization stakeholder firms and shareholder firms often compete. We identify the circumstances where stakeholder firms are more valuable than shareholder firms, and compare these asymmetric equilibria with symmetric equilibria with stakeholder and shareholder firms. Finally, we show that, in some circumstances, firms may voluntarily choose to be stakeholder-oriented because this increases their value. |
| Keywords: | stakeholder-oriented firms, shareholder-oriented firms, firm value, globalization |
| JEL: | G34 D43 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:eui:euiwps:eco2009/10&r=cse |
| By: | Frank H. Page, Jr., Myrna H. Wooders (Indiana University Bloomington Vanderbilt University) |
| Abstract: | In all social and economic interactions, individuals or coalitions choose not only with whom to interact but how to interact, and over time both the structure (the “with whom”) and the strategy (“the how”) of interactions change. Our objectives here are to model the structure and strategy of interactions prevailing at any point in time as a directed network and to address the following open question in the theory of social and economic network formation: given the rules of network and coalition formation, the preferences of individuals over networks, the strategic behavior of coalitions in forming networks, and the trembles of nature, what network and coalitional dynamics are likely to emergence and persist. Our main contributions are (i) to formulate the problem of network and coalition formation as a dynamic, stochastic game, (ii) to show that this game possesses a stationary correlated equilibrium (in network and coalition formation strategies), (iii) to show that, together with the trembles of nature, this stationary correlated equilibrium determines an equilibrium Markov process of network and coalition formation which respects the rules of network and coalition formation and the preferences of individuals, and (iv) to show that, although uncountably many networks may form, this endogenous process of network and coalition formation possesses a nonempty finite set of ergodic measures and generates a finite, disjoint collection of nonempty subsets of networks and coalitions, each constituting a basin of attraction. Moreover, we extend to the setting of endogenous Markov dynamics the notions of pairwise stability (Jackson-Wolinsky, 1996), strong stability (Jackson-van den Nouweland, 2005), and Nash stability (Bala-Goyal, 2000), and we show that in order for any network-coalition pair to be stable (pairwise, strong, or Nash) it is necessary and sufficient that the pair reside in one of finitely many basins of attraction - and hence reside in the support of an ergodic measure. The results we obtain here for endogenous network dynamics and stochastic basins of attraction are the dynamic analogs of our earlier results on endogenous network formation and strategic basins of attraction in static, abstract games of network formation (Page and Wooders, 2008), and build on the seminal contributions of Jackson and Watts (2002), Konishi and Ray (2003), and Dutta, Ghosal, and Ray (2005). |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:inu:caeprp:2009-002&r=cse |
| By: | Clayton, Tony; Dal Borgo, Mariela; Haskel, Jonathan |
| Abstract: | We (a) propose an implementable innovation index, (b) relate it to existing innovation definitions and (c) show whole-economy and industry-specific results for the UK market sector, 2000-2005. Our innovation measure starts by observing that we could get more GDP without innovation by simply duplicating existing physical capital and labour (e.g. adding a second aircraft and crew on an existing route). Thus we propose to measure innovation as the additional GDP over and above the addition existing physical capital and labour. In our measure this is the contribution to GDP growth of market sector investment in knowledge (or intangible) capital. This contribution is measured from company spending on knowledge/intangible assets and TFP growth. We relate our measure to the literature on innovation definitions, TFP, creative industries and hidden innovation. We implement it for six UK market sector industries, 2000-2005, combining with output and tangible investment data from the EUKLEMS database. Our main findings are as follows. Over 2000-2005, market sector labour productivity grew at 2.74% per annum, of which the contribution of knowledge capital, our innovation measure, was 1.24% pa. In turn, manufacturing accounted for about 60% of this latter figure. If one includes increase in labour skill deepening (0.45% pa) as innovation, then innovation contributed 61% (=(1.24+0.45)/2.74)of labour productivity growth over the period. |
| Keywords: | innovation; productivity growth |
| JEL: | E01 E22 O47 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7158&r=cse |
| By: | Clayton, Tony (Office of National Statistics); Dal Borgo, Mariela (University of Warwick); Haskel, Jonathan (Imperial College London) |
| Abstract: | We (a) propose an implementable innovation index, (b) relate it to existing innovation definitions and (c) show whole-economy and industry-specific results for the UK market sector, 2000-2005. Our innovation measure starts by observing that we could get more GDP without innovation by simply duplicating existing physical capital and labour (e.g. adding a second aircraft and crew on an existing route). Thus we propose to measure innovation as the additional GDP over and above the addition existing physical capital and labour. In our measure this is the contribution to GDP growth of market sector investment in knowledge (or intangible) capital. This contribution is measured from company spending on knowledge/intangible assets and TFP growth. We relate our measure to the literature on innovation definitions, TFP, creative industries and hidden innovation. We implement it for six UK market sector industries, 2000-2005, combining with output and tangible investment data from the EUKLEMS database. Our main findings are as follows. Over 2000-2005, market sector labour productivity grew at 2.74% per annum, of which the contribution of knowledge capital, our innovation measure, was 1.24% pa. In turn, manufacturing accounted for about 60% of this latter figure. If one includes increase in labour skill deepening (0.45% pa) as innovation, then innovation contributed 61% (=(1.24+0.45)/2.74)of labour productivity growth over the period. |
| Keywords: | innovation, productivity growth |
| JEL: | O47 E22 E01 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4021&r=cse |
| By: | Giroud, Xavier; Mueller, Holger M |
| Abstract: | This paper examines the hypothesis that firms in competitive industries should benefit relatively less from good governance, while firms in non-competitive industries--where lack of competitive pressure fails to enforce discipline on managers--should benefit relatively more. Whether we look at the effects of governance on long-horizon stock returns, firm value, or operating performance, we consistently find the same pattern: The effect is monotonic in the degree of competition, it is small and insignificant in competitive industries, and it is large and significant in non-competitive industries. By implication, the effect of governance (in non-competitive industries) reported in this paper is stronger than what has been previously reported in Gompers, Ishii, and Metrick (2003, "GIM") and subsequent work, who document the average effect across all industries. For instance, GIM’s hedge portfolio - provided it only includes firms in non-competitive industries -earns a monthly alpha of 1.47%, which is twice as large as the alpha reported in GIM. The alpha remains large and significant even if the sample period is extended until 2006. We also revisit the argument that investors in the 1990s anticipated the effect of governance, implying that the alpha earned by GIM’s hedge portfolio is likely due to an omitted risk factor. We find that while investors were indeed not surprised on average, they underestimated the effect of governance in non-competitive industries, the very industries in which governance has a significant effect in the first place. |
| Keywords: | Corporate Governance; G-index; Product Market Competition |
| JEL: | D4 G3 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6974&r=cse |
| By: | Acharya, Viral V; DeMarzo, Peter; Kremer, Ilan |
| Abstract: | We consider the release of information by a firm when the manager has discretion regarding the timing of its release. While it is well known that firms appear to delay the release of bad news, we examine how external information about the state of the economy (or the industry) affects this decision. We develop a dynamic model of strategic disclosure in which a firm may privately receive information at a time that is random (and independent of the state of the economy). Because investors are uncertain regarding whether and when the firm has received information, the firm will not necessarily disclose the information immediately. We show that bad news about the economy can trigger the immediate release of information by firms. Conversely, good news about the economy can slow the release of information by firms. As a result, the release of negative information tends to be clustered. Surprisingly, this result holds only when firms can preempt the arrival of external information by disclosing their own information first. These results have implications for conditional variance and skewness of stock and market returns. |
| Keywords: | disclosure; disclosure dynamics; disclosure timing; earnings announcement; skewness; stochastic volatility; strategic disclosure |
| JEL: | D82 G14 G3 M4 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6985&r=cse |
| By: | Chen, Yongmin; Horstmann, Ignatius J; Markusen, James R. |
| Abstract: | There exist two approaches in the literature concerning the multinational firm's mode choice for foreign production between an owned subsidiary and a licensing contract. One approach considers environments where the firm is transferring primarily knowledge-based assets. An important assumption there is that the relevant knowledge is absorbed by the local manager or licensee over the course of time: knowledge is non-excludable. More recently, a number of influential papers have adopted a property-right view of the firm, assuming the application abroad of physical capital, the owner of which retains full and exclusive rights to the capital should a relationship break down. In this paper we combine both forms of capital assets in a single model. The model predicts that foreign direct investment (owned subsidiaries) is more likely than licensing when the ratio of knowledge capital to physical capital is high, or when market value is high relative to the book value of capital (high Tobin's-Q). |
| Keywords: | FDI; hold-up; knowledge capital; outsourcing; physical capital |
| JEL: | F2 F23 L2 L22 L23 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7073&r=cse |
| By: | Barba Navaretti, Giorgio; Faini, Riccardo; Tucci, Alessandra |
| Abstract: | This paper examines whether the export decision of firms is affected by their ownership structure, specifically it looks at whether family control is an obstacle to entering foreign markets. The underlying assumption is that family firms are risk averse. Risk aversion may be an obstacle to entering foreign markets, as far as these are perceived as more volatile and risky than the domestic one, particularly when such choice entices bearing relatively high sunk costs. We develop an illustrative theoretical model that shows how the combination between high risk aversion and low initial productivity may hinder family firms’ decision to enter foreign markets, particularly distant ones. The empirical analysis, based on a detailed panel data set of Italian firms covering the years from 1995 to 2003, confirms such predictions by showing that family controlled firms do indeed export less than other type of companies even after controlling for firm heterogeneity in productivity, size, technology and access to credit. |
| Keywords: | exports; family firms; firm structure; foreign markets |
| JEL: | F1 F14 L2 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7082&r=cse |
| By: | Barrios, Salvador; Huizinga, Harry; Laeven, Luc; Nicodeme, Gaetan |
| Abstract: | Using a large international firm-level data set, we estimate separate effects of host and parent country taxation on the location decisions of multinational firms. Both types of taxation are estimated to have a negative impact on the location of new foreign subsidiaries. In fact, the impact of parent country taxation is estimated to be relatively large, possibly reflecting its international discriminatory nature. For the cross-section of multinational firms, we find that parent firms tend to be located in countries with a relatively low taxation of foreign-source income. Overall, our results show that parent-country taxation – despite the general possibility of deferral of taxation until income repatriation – is instrumental in shaping the structure of multinational enterprise. |
| Keywords: | corporate taxation; dividend withholding taxation; location decisions |
| JEL: | F23 G32 H25 R38 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7047&r=cse |
| By: | Martin, Philippe; Mayer, Thierry; Mayneris, Florian |
| Abstract: | This paper analyzes empirically a public policy promoting industrial clusters in France. Cluster policies have become popular in many countries but have not been extensively evaluated empirically. We use data on production and employment for firms that benefited from the policy and on firms that did not, both before and after the policy started. We first show that the policy selected firms in relative decline. Furthermore, our results suggest that the policy had no major effect on their productivity but may have helped them in terms of employment. |
| Keywords: | clusters; localization economies; public policies |
| JEL: | C23 R10 R11 R12 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7102&r=cse |