nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2009‒07‒03
sixteen papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Blue Ocean versus Competitive Strategy: Theory and Evidence By Burke, A.E.; Stel, A.J. van; Thurik, A.R.
  2. Network-independent partner selection and the evolution of innovation networks. By Joel BAUM; Robin COWAN; Nicolas JONARD
  3. The structure and dynamics of the global network of inter-firm R&D partnerships 1989-2002 By Bojanowski, Michał; Corten, Rense; Westborck, Bastian
  4. The dynamic management of manufacturing networks By Vereecke, A.; De Meyer, A.
  5. Knowledge Structures. By Moritz Müller; Robin COWAN; Geert Duysters; Nicolas JONARD
  6. The Effect of Entry on R&D Investment of Leaders: Theory and Empirical Evidence By Dirk Czarnitzki; Federico Etro; Kornelius Kraft
  7. The Endogenous Market Structures Approach. A Technical Survey with Applications to the Theory of Business Cycles, Trade and Growth By Federico Etro
  8. Strategic Corporate Social Responsibility and Economic Performance By Belu, Constantin; Manescu, Cristiana
  9. The evolution of markets and the revolution of industry: A quantitative model of England’s development, 1300-2000 By Klaus Desmet; Stephen L. Parente
  10. Export, FDI and Productivity – Evidence for French Firms By Vivien Procher; Dirk Engel
  11. Owner Identity and Firm Performance: Evidence from European Companies By Marco Cucculelli
  12. CREATING SPATIAL ORGANIZATIONS By Deprez, Frank Lekanne; Tissen, René
  13. Accumulation of Technological Capabilities and Economic Development: Did Brazil’s Regime of Intellectual Property Rights Matter? By Roberto Mazzoleni; Luciano Martins Costa Póvoa
  14. Information Logistics Research Report Frameworks in the healthcare industry By Willems, Anouk; Willems, Jan; Hadjasinski, Andrzej
  15. Do Regional Investment Grants Improve Firm Performance? Evidence from Sweden By Ankarhem, Mattias; Daunfeldt, Sven-Olov; Quoreshi, Shahiduzzaman; Rudholm, Niklas
  16. Entrepreneurial Orientation, Intangible Assets and Firm Growth: the impact of ‘Spirit and Material’ on the growth of Chinese private firms By Gavin C. Reid; Zhibin Xu

  1. By: Burke, A.E.; Stel, A.J. van; Thurik, A.R. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Blue ocean strategy seeks to turn strategic management on its head by replacing ‘competitive advantage’ with ‘value innovation’ as the primary goal where firms must create consumer demand and exploit untapped markets. Empirical analysis has been focused on case study evidence and so lacks generality to resolve the debate. We provide a methodological synthesis of the theories enabling us to bring statistical evidence to the debate. Our analysis finds that blue ocean and competitive strategies overlap and managers do not face a discrete either/or decision between each strategy. Our evidence for the Dutch retail industry indicates that blue ocean strategy has prevailed as a dominant long term viable strategy.
    Keywords: blue ocean strategy;competitive advantage;innovation;entrepreneurial discovery;retailing
    Date: 2009–05–29
  2. By: Joel BAUM; Robin COWAN; Nicolas JONARD
    Abstract: Empirical research on strategic alliances has focused on the idea that alliance partners are selected on the basis of social capital considerations. In this paper we emphasize instead the role of complementary knowledge stocks (broadly defined) in partner selection, arguing not only that knowledge complementarity should not be overlooked, but that it may be the true causal force behind alliance formation. To marshal evidence on this point, we design a simple model of partner selection in which firms ally for the purpose of learning and innovating, and in doing so create an industry network. We abstract completely from network-based structural and strategic motives for partner selection and focus instead on the idea that firms’ knowledge bases must “fit” in order for joint leaning and innovation to be possible, and thus for an alliance to be feasible. The striking result is that while containing no social capital considerations, this simple model replicates the firm conduct, network structure, and contingent effects of network position on performance observed and discussed in the empirical literature.
    Date: 2009
  3. By: Bojanowski, Michał; Corten, Rense; Westborck, Bastian
    Abstract: This paper examines the structure and dynamics of the global network of inter-firm research and development (R&D) partnerships using longitudinal data for 1989--2002. We contribute to a recent literature that has attributed patterns and changes in the network to major political and technological developments, but which has omitted the structure in the underlying firm population. Two often made claims are that R&D collaboration is important in nowadays fierce competitive environment, but that the importance of international partnerships has declined over time. We integrate data on firms and alliances and confront both hypotheses with our data and a novel set of methods, which enable to control for structure in the firm population.
    Keywords: Inter-firm collaboration; R\&D partnerships; International technology transfer; Social network analysis
    JEL: L14 O32
    Date: 2009–05–07
  4. By: Vereecke, A.; De Meyer, A. (Vlerick Leuven Gent Management School)
    Abstract: The structure and organization of international manufacturing has changed over the past twenty years. It seems as if manufacturing is moving towards emerging countries e.g. China or India, often to take advantage of lower labour costs. Whilst production cost is an important consideration in choosing a location for the factory, we argue that one should not become victim of a herd effect and that other parameters, such as quality, flexibility, transportation and energy costs need to be taken into consideration in the determination of the optimal manufacturing network. Relocating a factory is changing the strategic architecture of the company’s manufacturing network and requires a long term view and a good model to design the architecture of the manufacturing network. Based on a longitudinal empirical study of eight European multinational companies we have gained an understanding of the dynamics of a company’s manufacturing architecture. We observed that market entry drives the creation of new factories more than mere production cost, and that skills and knowledge can be a ticket for a safe future of the factory. Over ten years, we observed an increase in the knowledge sharing role of factories. And we also learnt that it is important to keep a significant variety of factories in order to provide flexibility in reshaping the strategic architecture of your manufacturing.
    Keywords: international manufacturing, network management, manufacturing architecture
    Date: 2009–06–20
  5. By: Moritz Müller; Robin COWAN; Geert Duysters; Nicolas JONARD
    Abstract: This paper investigates how technological distance between firms affects their network of R&D alliances. Our theoretic model assumes that the benefit of an alliance between two firms is given by their technological distance. This benefit-distance relationship determines the ego-network of each firm as well as the overall network structure. Empirical relevance is confirmed for the bio-pharmaceutical industry. Although we find that the network structure is largely explained by firm size, technological distance determines the positioning of firms in the network.
    Keywords: technological distance, research alliance, network formation, pharmaceutical industry.
    Date: 2009
  6. By: Dirk Czarnitzki; Federico Etro; Kornelius Kraft
    Abstract: We develop a simple model of competition for the market that shows that, contrary to the Arrow view, endogenous entry threat in a market induces the average firm to invest less in R&D and the incumbent leader to invest more than the average firm. We test these predictions with a Tobit model based on a unique dataset and survey for the German manufacturing sector (the Mannheim Innovation Panel). In line with our predictions, endogenous entry threats perceived by the firms reduce R&D intensity for the average firm, but not for an incumbent leader. Moreover, the size of the firms and their patent stocks, proxy for the protection of IPRs, are positively related to R&D intensity. These results hold after a number of robustness tests with instrumental variables.
    Keywords: R&D, Entry, Endogenous market structures, Leadership
    JEL: O31 O32
    Date: 2009–05
  7. By: Federico Etro
    Abstract: The EMSs approach to macroeconomics introduces strategic interactions and en- dogenous entry decisions in the analysis of aggregate phenomena. This approach departs from the perfectly competitive environment, in the sense that rms do not take prices as given, but they do choose their entry and production strategies and they interact strategically. In general equilibrium, this leads to novel implications for the mechanism of propagation of aggregate shocks, for the theory of the gains from trade and for the sources of the growth process. We introduce this emerging literature and discuss some of its implications.
    Date: 2009–05
  8. By: Belu, Constantin (Department of Economics, School of Business, Economics and Law, Göteborg University); Manescu, Cristiana (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper studies the link between Corporate Social Responsibility (CSR) and economic performance of companies. Acknowledging the argument that companies might behave socially responsible strategically, i.e. favoring the CSR dimensions that provide competitive advantages, we construct a novel CSR index based on a Data Envelopment Analysis (DEA) model. We argue that this index accounts for CSR achievements from a strategic perspective, and use it to analyze the link between CSR and economic performance expressed by Return on Assets (ROA). When explicitly accounting for strategic behavior of companies, our findings reveal a significant positive relationship between CSR and economic performance.<p>
    Keywords: Corporate Social Responsibility; Data Envelopment Analysis; Strategic CSR; System-GMM
    JEL: C23 C67 M14
    Date: 2009–06–11
  9. By: Klaus Desmet (Universidad Carlos III de Madrid); Stephen L. Parente (University of Illinois)
    Abstract: This paper argues that an economy\'s transition from Malthusian stagnation to modern growth requires markets to reach a critical size, and competition to reach a critical level of intensity. By allowing an economy to produce a greater variety of goods, a larger market makes goods more substitutable, raising the price elasticity of demand, and lowering mark-ups. Firms must then become larger to break even, which facilitates amortizing the fixed costs of innovation. We demonstrate our theory in a dynamic general equilibrium model calibrated to England\'s long-run development and explore how various factors affect the timing of takeoff.
    Keywords: competition; industrial revolution; innovation; market revolution; unified growth theory
    JEL: N33 O14 O33 O41
    Date: 2009–05–25
  10. By: Vivien Procher; Dirk Engel
    Abstract: The decision of companies to enter international markets, either via exports or foreign direct investment (FDI), has been postulated by the self-sorting model of Helpman, Melitz and Yeaple (HMY, 2004). In the strict sense, the theoretical predictions of HMY only apply to firms that become engaged in marketdriven (horizontal) FDI. Hence, in this paper we apply more precise methodologies to test the HMY hypothesis. First, we classify MNEs according to the underlying motives for investing abroad (market-driven vs. resource-driven FDI). Second, we highlight the role of productivity growth in the post-entry period.Our findings suggest that productivity affects the FDI decision considerably whereas expected feedback and learning effects of FDI on productivity are remarkably lower.We further detect that more market-driven MNEs exhibit a higher productivity than comparatively less market-driven MNEs.
    Keywords: Foreign direct investment, horizontal and vertical FDI, multinational enterprises, productivity
    JEL: F10 F23 D21 D24
    Date: 2009–06
  11. By: Marco Cucculelli (Universit… Politecnica delle Marche, Faculty of Economics "Giorgio Fu…")
    Abstract: Empirical evidence of the distribution of firms based on owner identity for a set of European countries reveals substantial differences. Using the sensitivity of a firm's sales to demand shocks as a measure of risk-taking behavior, the paper explores if owner identity affects the willingness of the firms to take risk in order to improve their current situation (venturing risk). Consistent with a hypothesis of risk-avoidance behavior, small- and medium-sized family-owned companies appear to under-react to changes in market demand, notably when ownership is highly concentrated and growth options are significant. However, they confirm their status of good performers when pure profitability measures are used. Conversely, industrial- and nonconcentrated family-owned firms appear more prone to deal with venturing risk, especially when the intensity of the risk is large as in the case of fast-growing companies or demand changes in nondomestic markets.
    JEL: G32 L25
    Date: 2009–05
  12. By: Deprez, Frank Lekanne; Tissen, René (Nyenrode Business Universiteit)
    Abstract: This paper addresses the spatial design of modern organizations in the context of a fundamental change which is currently taking place in the way companies view their organizations and the inherent performance expectations, requirements and results underlying these. This change involves a managerial shift in perspective from the commonly adopted resource-based view of the firm, towards the knowledge based view of the firm. This paper follows the notion that company performance from a knowledge-based perspective benefits more from new ways of organizing, than from new ways of managing. A different type of organizations is introduced - that of the spatial organization - in which traditional one size fits all organizational ‘structures’ are replaced by ‘spatial arrangements’ which aim to connect people, knowledge and technology in a mentally fitting –natural- way. A number of core spatial organizational forms are presented and discussed (modular, circular, cellular, constellar). This paper encompasses part two of a series of Nyenrode research papers on spatial organizations, of which part one describes the theoretical foundations underlying their emergence.
    Keywords: Knowledge Economy, Knowledge Based View of the Firm, Spatial Arrangements, Organizational Design, Spatial Organizations
    Date: 2009
  13. By: Roberto Mazzoleni (Hofstra University, Department of Economics); Luciano Martins Costa Póvoa (Curso de Ciencias Economicas, Universidade Federal de Goiás)
    Abstract: This paper presents an historical analysis of the role of intellectual property rights and the accumulations of technological capabilities in Brazil. The aircraft, pharmaceutical and oil industries are analyzed in detail. While Brazil was then among the pioneers worldwide in recognizing the social value of inventive activities and the importance of protecting and rewarding the work of inventors, both the industrialization of the country and the development of technological capabilities have lagged significantly behind the creation of patent laws. Key reasons for this include the weak incentives for innovation in industries that grew behind the walls of protectionist policies and the second-order significance of IPR in the sectors where the accumulation of technological capabilities was a direct focus of other policy instruments. Este artigo apresenta uma análise histórica sobre o papel das leis de patentes na acumulação de capacidades tecnológicas da indústria brasileira. Em particular, são analisadas as indústrias aeronáutica, farmacêutica e de extração de petróleo. Embora o Brasil tenha sido um dos primeiros países a conceder patentes a inventores, tanto o processo de industrialização quanto o desenvolvimento de capacidades tecnológicas ficaram atrasados em relação à criação das primeiras leis de patentes. Entre as principais razões para este atraso estão os fracos incentivos para a inovação durante o período de substituição de importação e o papel apenas secundário das patentes em setores em que a acumulação de capacidades tecnológicas foi foco de outros instrumentos de política industrial.
    Date: 2009–05
  14. By: Willems, Anouk; Willems, Jan; Hadjasinski, Andrzej (Nyenrode Business Universiteit)
    Abstract: The research report takes the perspective of Information Logistics and investigates relating concepts like Knowledge Management, Information Systems and Context Awareness in the context of the healthcare industry. The aim of Information Logistics is to deliver the right information product, in the right format, at the right place at the right time for the right people in a customer demand driven approach. This principle is of high importance in dynamic organizations like the healthcare industry. Many problems arise in this industry as a consequence of the present lack of congruous media. This is caused not only by the parallel usage of both paper-based and digital documents, but also by the usage of different digital data structure formats which leads to inconsistencies of the data collected. With multiple data structures, miscommunications arise easily and negatively affect performance. Therefore, the principle of Information Logistics is necessary in the healthcare industry to structure, manage and use information in the right way. A relating concept of Information Logistics is Knowledge Management as it discusses the access and use of knowledge and information in organizations. More specific, Knowledge Management keeps track of know-how in organizations and enables transparency of knowledge- and information flows. Information Logistics is present in organizations in memory systems and information systems. Healthcare organizations use Health- and Hospital Information Systems to grasp the rapidly changing information elements in and between health organizations. An important factor has to be taken into account when discussing Information Logistics, namely context awareness. In order to deliver relevant information at the right time to its users, systems need to be aware of the users’ context, which includes the current time, their location, or the devices they use.
    Keywords: Information Logistics, Knowledge Management, Tacit Knowledge, Explicit Knowledge, Knowledge Logistics, Medical Informatics, Information Systems, Health Information Systems, Context Awareness
    Date: 2009
  15. By: Ankarhem, Mattias (Ministry of Finance); Daunfeldt, Sven-Olov (The Ratio Institute); Quoreshi, Shahiduzzaman (The National Institute of Economic Research); Rudholm, Niklas (The Swedish Retail Institute and Dalarna University)
    Abstract: The effect of Swedish regional investment grants during 1990-1999 on firm performance, in terms of returns on equity and number of employees, were studied using a propensity-score matching-method to control for sample selection. Firms that received grants did not perform better in terms of returns on equity when compared to matched firms in the control group. In most years, recipient firms also did not hire more employees. The results thus cast doubt on the use of regional investment grants as a general policy instrument to improve firm performance.
    Keywords: Economic efficiency; propensity score matching; sample selection; logit regression; panel data
    JEL: R11 R58
    Date: 2009–06–09
  16. By: Gavin C. Reid; Zhibin Xu
    Abstract: This paper has three contributions. First, it shows how field work within small firms in PR Chinese has provided new evidence which enables us to measure and calibrate Entrepreneurial Orientation (EO), as ‘spirit’, and Intangible Assets (IA), as ‘material’, for use in models of small firm growth. Second, it uses inter-item correlation analysis and both exploratory and confirmatory factor analysis to provide new measures of EO and IA, in index and in vector form, for use in econometric models of firm growth. Third, it estimates two new econometric models of small firm employment growth in PR China, under the null hypothesis of Gibrat’s Law, using our two new index-based and vector-based measures of EO and IA. Estimation is by OLS with adjustment for heteroscedasticity, and for sample selectivity. Broadly, it finds that EO attributes have had little significant impact on small firm growth, and indeed innovativeness and pro-activity paradoxically may even dampen growth. However, IA attributes have had a positive and significant impact on growth, with networking, and technological knowledge being of prime importance, and intellectual property and human capital being of lesser but still significant importance. In the light of these results, Gibrat’s Law is generalized, and Jovanovic’s learning theory is extended, to emphasise the importance of IA to growth. These findings cast new empirical light on the oft-quoted national slogan in PR China of “spirit and material”. So far as small firms are concerned, this paper suggests that their contribution to PR China’s remarkable economic growth is not so much attributable to the ‘spirit’ of enterprise (as suggested by propaganda) as, more prosaically, to the pursuit of the ‘material’.
    Keywords: entrepreneurial orientation; intangible assets; small business growth; PR China
    JEL: L21 L26 L53 M21
    Date: 2009–07

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