nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2009‒03‒22
thirteen papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Globalization and Innovation in Emerging Markets By Yuriy Gorodnichenko; Jan Svejnar; Katherine Terrell
  2. Strategic Information Disclosure and Competition for an Imperfectly Protected Innovation By Jos Jansen
  3. International venturing emerging paradigms - a study of the Indian IT industry By Varma, Sumati
  4. The Italian SMEs in the International context. A model to succeed in the global arena By Elena Cedrola; Loretta Battaglia; Alessandra Tzannis
  5. The Age Effect in Entrepreneurship: Founder’s Tenure, Firm Performance, and the Economic Environment By Marco Cucculelli; Giacinto Micucci
  6. Forecasting Russian Foreign Trade Comparative Advantages in the Context of a Potential WTO Accession By Ivan Savin; Peter Winker
  7. A Model of Growth with Intertemporal Knowledge Externalities, Augmented with Contemporaneous Knowledge Externalities By Mário A. P. M. Silva
  8. Productivity, Returns to Scale and Product Differentiation in the Retail Trade Industry: An empirical analysis using Japanese firm-level data By KATO Atsuyuki
  9. Corporate Finance and Comparative Advantage By Peter Egger; Christian Keuschnigg
  10. Strategic Communication Networks By Jeanne Hagenbach; Frédéric Koessler
  11. Determinants of Shopping Behavior of Urban Consumers By Rajagopal
  12. Accessibility and Industrial Location: evidence from Spain By Angel Alañón Pardo; Josep-Maria Arauzo-Carod
  13. The Growth of Knowledge-Intensive Entrepreneurship in India, 1991-2007 Analysis of its Evidence and Facilitating Factors By Sunil Mani

  1. By: Yuriy Gorodnichenko (University of Michigan); Jan Svejnar (University of Michigan); Katherine Terrell (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, we test for the effects of globalization through the impact of increased competition and foreign direct investment on domestic firms' efforts to raise their capability (innovate) by upgrading their technology or the quality of their product/service, taking into account firm heterogeneity. We find competition has a negative effect on innovation, especially for firms further from the frontier, and that the supply chain of multinational enterprises and international trade are important channels for domestic firm innovation. We do not find support for the inverted U effect of competition on innovation. There is weak evidence that firms in a more pro-business environment invest more in innovation and are more likely to display the inverted U relationship between competition and innovation.
    Keywords: emerging markets, globalization, innovation
    Date: 2008–04
  2. By: Jos Jansen (Max Planck Institute for Research on Collective Goods)
    Abstract: The imperfect appropriability of revenues from innovation affects the incentives of firms to invest, and to disclose information about their innovative productivity. It creates a free-rider effect in the competition for the innovation that countervails the familiar business-stealing effect. Moreover, it affects the disclosure incentives such that full disclosure emerges for extreme revenue spillovers (e.g., full protection and no protection of intellectual property), but either partial disclosure or full concealment emerges for intermediate spillovers. I analyze the implications of imperfect appropriability and strategic disclosure for the firms.profits and the probability of innovation.
    Keywords: R&D competition, innovation, spillovers, information disclosure, strategic substitutes, free-rider effect, externality
    JEL: D82 D83 L23 O31 O32
    Date: 2009–02
  3. By: Varma, Sumati
    Abstract: Cross border mergers and acquisitions is the fastest means of making an international presence for a business firm. It is a mode of outward FDI which has so far been explained best in terms of Dunning’s OLI framework. The emergence of outbound FDI from the developing world however, has looked at alternate frameworks emphasizing outward orientation, leverage through building linkages and achieving organizational efficiency through integration. The study seeks to explain outbound M&A in the Indian IT industry during 2000-2006, in the changing global competitive scenario .
    Keywords: Cross-border mergers and acquisitions; Indian IT; motives; strategy
    JEL: F23 G34
    Date: 2008–10–19
  4. By: Elena Cedrola (University of Macerata); Loretta Battaglia (University Cattolica di Milano); Alessandra Tzannis (University Cattolica di Milano)
    Abstract: <p><font face="CMR10" size="2"><font face="CMR10" size="2"><p align="left">This paper explores the internationalization process of the Italian SMEs, and aims to investigate their behaviour in the international contexts to ultimately outline general models</p><p align="left">able to optimize their peculiarities.</p><p align="left">The empirical study firstly examines 546 SMEs along their internationalization. The</p><p align="left">internationalization process is examined through its phases: decisions, marketing strategy,</p><p align="left">achievements and future perspectives. A second aim is to define sustainable paths for SMEs</p><p align="left">willing to expand successfully over the Country borders. It also proposes important issues</p><p align="left">and management implications to be considered in the international development of Italian</p><p align="left">SMEs.</p></font></font></p>
    JEL: O1 O11
    Date: 2009–03
  5. By: Marco Cucculelli; Giacinto Micucci
    Abstract: This paper tests the effect of founder’s tenure on firm performance by taking into account the impact of the changes occurring in the economic environment. We use a large dataset of founder-run firms that includes, in addition to financial data, company data directly collected through a survey of about 2,000 Italian firms. Unlike the negative relationship reported in most empirical papers, we found an inverted U-shaped relationship between founder-CEO tenure and firm performance. This relationship is strongly influenced by the characteristics of the environment in which the company competes: while experience plays a key role in fostering performance in less innovative- and less competitive sectors, a dynamic environment makes the performance of the firm less responsive to the benefits of founder tenure. From the viewpoint of policy, growing environment dynamism calls for greater efficiency of the market for corporate control, in order to assure a continued match between skills of CEOs and the external environment
    Keywords: ageing, entrepreneurship, founder-run firms, changing environment
    JEL: L25 J24 G34
    Date: 2009–03
  6. By: Ivan Savin (Department of Economics, Justus-Liebig University Gießen); Peter Winker (Department of Economics, Justus-Liebig University Gießen)
    Abstract: This paper proposes a new approach of forecasting “prospective" comparative advantages based on relative prices differences between countries in the context of economic liberalization. An empirical analysis based on the example of Central and East European countries that have already passed the transition period from specialization mainly in natural resource- and labor-intensive goods to \high-tech" goods confirms a significant influence of our “prospective" advantages on comparative advantages dynamics. Using this method we identify a set of industries in Russia that seem to be most promising for formation of comparative advantages in the context of its economic liberalization and joining the WTO agreements. These industries include high and medium technological industries like machinery building, pharmaceutical products, railway transport, electronic and medical equipment.
    Keywords: comparative advantage, competitive advantage, economy in transition, Balassa index, Lafay index.
    Date: 2009
  7. By: Mário A. P. M. Silva (Faculdade de Economia, Universidade do Porto)
    Abstract: The present model is essentially Romer’s (1990) model of endogenous growth with intertemporal knowledge externalities, augmented with contemporaneous knowledge externalities to give a richer explanation of the growth process. Both types of knowledge spillovers seem essential to capturing the features of knowledge in a model of growth. Introducing synchronic complementarities and knowledge externalities across inventive firms immediately creates the possibility of multiple equilibria and threshold effects in the present model. Another advantage of this theoretical formulation is that it allows for an analysis of the effects on steady-state growth of a variety of technology policies relying on changing knowledge complementarities parameters.
    Keywords: Endogenous growth, innovation, knowledge complementarities, knowledge externalities, general equilibrium
    Date: 2009–03
  8. By: KATO Atsuyuki
    Abstract: This paper examines productivity and returns to scale under the assumption of monopolistic competition using Japanese firm-level data. Although differentiating products (services) is considered important in firms' strategies and productivity growth, it has not been sufficiently investigated in previous studies. In this paper, we study this issue in two retail trade industries, department stores and supermarkets, applying the model of Melitz (2000). Our results indicate that the retail trade industries possibly follow increasing returns to scale if we consider the effects of product differentiation. In addition, product differentiation has a positive effect on firms' revenue. Thus, policy measures that promote economies of scale and product differentiation should contribute to further growth in these industries. In addition, the results indicate that the regulatory reform of the retail trade industry in 2000 made a positive contribution.
    Date: 2009–03
  9. By: Peter Egger; Christian Keuschnigg
    Abstract: Innovative firms typically have a high growth potential, need external funds to finance investment, and rely on the key effort and know-how of inside entrepreneurs. Given the limited amount of tangible assets and the non-contractible nature of entrepreneurial effort, these firms are often financially constrained. Access to external funds becomes an important factor in the expansion of innovative industries. This paper models a two sector economy of innovative and standard industries and shows how the pattern of comparative advantage is shaped by factor endowments and variables relating to corporate finance. In particular, a larger equity ratio of young entrepreneurial firms and tough corporate governance standards relax the financing constraints and create a comparative advantage in innovative industries
    Keywords: Innovative firms, corporate finance, comparative advantage
    JEL: F11 G34 K22 L26
    Date: 2009–03
  10. By: Jeanne Hagenbach (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Frédéric Koessler (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Normale Supérieure de Paris)
    Abstract: We consider situations in which individuals would like to choose an action which is close to that of others, as well as close to a state of nature, with the ideal proximity to the state varying across agents. Before this coordination game is played, a cheap-talk communication stage is offered to the individuals who decide to whom they reveal their private information about the state. The information transmission occurring in the communication stage is characterized by a strategic communication network. We provide an explicit link between players' preferences and the equilibrium strategic communication networks. A key feature of our equilibrium characterization is that whether communication takes place between two agents not only depends on the conflict of interest between these agents, but also on the number and preferences of the other agents with whom they communicate. Apart from some specific cases, the equilibrium communication networks are quite complex despite our simple one-dimensional description of preference heterogeneity. In general, strategic communication networks cannot be completely Pareto-ranked, but expected social welfare always increases as the communication network expands.
    Keywords: Cheap talk ; coordination ; incomplete information ; networks
    Date: 2009–02
  11. By: Rajagopal (Tecnológico de Monterrey, Campus Ciudad de México)
    Abstract: This study explores the influence of geo-demographic settings of commercial centers, customer attractions in shopping malls, and route to shopping of urban shoppers. The present research analyzes retailing patterns in urban areas in reference to customer orientation strategies, product search behavior and enhancing the customer value. Interrelationship among urban retailing, marketplace ambiance, conventional shopping wisdom of customers, long-term customer services, and technology led selling processes are also addressed in the study based on empirical survey. Broadly, this study makes contributions to the existing research in urban retailing towards factors determining shopping attractions, routes to shopping, and establishing the customer-centric strategies of the firms.
    Keywords: Shopping mall, multi-channel retailing, consumer behavior, customer-centric strategy, market attractiveness, customer satisfaction
    JEL: D12 L81 M31
    Date: 2009–03
  12. By: Angel Alañón Pardo (Department of Applied Economics I (Complutense University of Madrid) and Real Colegio Complutense at Harvard University); Josep-Maria Arauzo-Carod (Quantitative Urban and Regional Economics (QURE) Department of Economics (Rovira i Virgili University))
    Abstract: This paper deals with location decisions of manufacturing firms in Spain. We analyse how agglomeration economies and, especially, transport accessibility influence location decisions of firms. During the 1990s there was an intense programme of high capacity road construction which improved accessibility to municipalities. We analyse the location decisions of firms at municipality level and in three industries. The main empirical contributions of this paper are the econometric techniques used (spatial econometrics models) and some of the explanatory variables (local added value, road accessibility, and the characteristics of firms in neighbouring municipalities). The results show that agglomeration economies (including road network improvements) are important in industrial location decision-making.
    Date: 2009
  13. By: Sunil Mani
    Abstract: The paper takes a critical look at the available quantitative evidence on the growth of knowledge-intensive entrepreneurship. It then looks at five facilitating factors for the emergence of this phenomenon in terms of the existence of increased market opportunities, availability of financial support schemes in the form of venture capital funds, existence and enlargement of a number of government programmes, a number of private sector initiatives and education and training leading to the supply of technically trained personnel. The paper concludes with certain policy suggestions for the continued sustenance of this activity. [ WP 409]
    Keywords: India, knowledge-intensive entrepreneurship, knowledge
    Date: 2009

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