nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2009‒08‒16
nineteen papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  2. National Innovation System and the Emergence of Indian Information and Software Technology Multinationals By Jaya Prakash Pradhan
  3. A Dynamic Oligopoly Game of the US Airline Industry: Estimation and Policy Experiments By Aguirregabiria, Victor; Ho, Chun-Yu
  4. Technical Change, International Competitiveness, and Role of the State: Indian Machine Tool Industry's Experience By Vinish Kathuria
  6. The role of entrepreneurial culture and human capital in innovation By Isabel Pizarro; Juan C.Real; M.Dolores de la Rosa
  7. Prospective Structural Analysis: An application to Rural Development Strategies By Albalá, Ambrosio M.; Lozano, Martin J.M.; Perez, Hernandez P.P.
  8. Determinants of Energy Intensity: A Preliminary Investigation of Indian Manufacturing By Sahu, Santosh; Narayanan, K
  9. Strategic Vertical Separation By Sloev, Igor
  10. A Nonparametric Test of Strategic Behavior in the Cournot Model By Deb, Rahul; Fenske, James
  11. Computerization, accounting transparency and competitiveness of public administration: a regional analysis By Carlo Maria Arpaia; Raffaele Doronzo; Paquale Ferro
  12. Learning, Knowledge Diffusion and the Gains from Globalization By Kunal Dasgupta
  13. What Determines the Attractiveness of the European Union to the Location of R&D Multinational Firms? By Siedschlag, Iulia; Smith, Donal; Turcu, Camelia; Zhang, Xiaoheng
  14. Innovative Sales, R&D and Total Innovation Expenditures: Panel Evidence on their Dynamics By Wladimir Raymond; Pierre Mohnen; Franz Palm; Sybrand Schim van der Loeff
  15. Competition and Growth in an Endogenous Growth Model with Expanding product Variety without Scale Effects Revisited By Bianco, Dominique
  16. Business opportunities in local food supply chains: an investigation in England and Australia By Pearson, David; Bailey, Alison
  17. What policies do we need for Southern Italy? The role of national and regional policies in the last decade By Luigi Cannari; Marco Magnani; Guido pellegrini
  19. A Dynamic Model of Economic Growth in a Small Tourism Driven Economy By Schubert, Stefan Franz; Brida, Juan Gabriel

  1. By: Gurgu, Elena (Universitatea Spiru Haret, Facultatea de Marketing si Afaceri Economice InternationaleUniversitatea Spiru Haret, Facultatea de Marketing si Afaceri Economice Internationale)
    Abstract: The Lisbon Strategy, established by the European Council in March 2000 like an action plan and development for the European Union, intends to address low productivity and stagnation of economic growth in the EU, through the formulation of various policy initiatives to be adopted by all Member States EU. According to the strategy mentioned above, the European Union must become the most dynamic and competitive knowledge-based economy in the world capable of sustainable economic growth, jobs with more and better and greater social cohesion.
    Keywords: Lisbon Strategy; European Union; productivity; economic growth; policy initiatives; knowledge-based economy; sustainable economic growth; social cohesion
    JEL: O11 O22 O33
    Date: 2009–08–09
  2. By: Jaya Prakash Pradhan
    Abstract: This study analyzes the factors leading to the emergence of these Indian IST firms as multinationals in the global market. Applying the theoretical framework of national innovation system (NIS), the study establishes that origin of Indian IST multinationals are critically linked to the overall policy environment and strategic government intervention in skill formation, development of supporting institutions, proactive role of Indian households in undertaking human capital investment and providing risk taking entrepreneurs , and also to the firm-level business strategies.
    Keywords: multinational, national innovation system (NIS), Indian, IST firms, economy, global market,
    Date: 2009
  3. By: Aguirregabiria, Victor; Ho, Chun-Yu
    Abstract: This paper studies the contribution of demand, costs, and strategic factors to the adoption of hub-and-spoke networks in the US airline industry. Our results are based on the estimation of a dynamic oligopoly game of network competition that incorporates three groups of factors that may explain hub-and-spoke networks: (1) travelers may value the services associated with the scale of operation of an airline in the hub airport; (2) operating costs and entry costs in a route may decline with the airline's scale of operation in the origin and destination airports (e.g., economies of scale and scope); and (3) a hub-and-spoke network may be an effective strategy to deter the entry of other carriers. We estimate the model using data from the Airline Origin and Destination Survey with information on quantities, prices, and entry and exit decisions for every airline company in the routes between the 55 largest US cities. As methodological contributions, we propose and apply a method to reduce the dimension of the state space in dynamic games, and a procedure to deal with the problem of multiple equilibria when using a estimated model to make counterfactual experiments. We find that the most important factor to explain the adoption of hub-and-spoke networks is that the cost of entry in a route declines importantly with the scale of operation of the airline in the airports of the route. For some of the larger carriers, strategic entry deterrence is the second most important factor to explain hub-and-spoke networks.
    Keywords: Airline industry; Hub-and-spoke networks; Entry costs; Industry dynamics; Estimation of dynamic games; Counterfactual experiments in models with multiple equilibria.
    JEL: C10 L93 L13 C63 L10 C35 C73
    Date: 2009–08–09
  4. By: Vinish Kathuria
    Abstract: The production of machine tools has long been associated with industrialisation besides a formidable factor of technical change and international competitiveness. This potent role of machine tool industry was amply recognised by several countries. As a consequence, they framed policies to influence the technical change and competitiveness of the industry. The present paper is an enquiry into the role of the state in India to see, whether the intervention led to generation of capabilities and an internationally competitive industry or not? [GIDR WP NO. 121].
    Keywords: international competitiveness, industrialisation, Technical Change, Competitiveness, Industry, India, competitive indusstry, industrial development, economic system, machinery, Japan, Taiwan, technological level, developing countries, South Korea,
    Date: 2009
  5. By: Olaru, Silvia Delia (Universitatea Spiru Haret, Facultatea de Marketing si Afaceri Economice Internationale); Gurgu, Elena (Universitatea Spiru Haret, Facultatea de Marketing si Afaceri Economice Internationale)
    Abstract: Nowadays the managers have two important tasks: to find a solution for the present issues and get ready for the future. For a better preparation, they need to know that they may rely on the best strategic weapon of the informational era: the changing specialized company. To reject the change is a dangerous move. The companies will eventually go through a change, irrespective of the sizes, resources or quality of their offer in full operation. The excessive change, fluctuating, revolutionary is similary dangerous. The companies may not afford to keep on bearing the costs that derive from the change process loss of the employment places and the discord among the employed people. The success of the today companies comes from their ability to produce changes. The present products and services only provide a temporary competitive advantage. A durable competitive advantage relies on the company's capacity to master the change. The sources of the competitive advantage include the basic competency, time contraction, the continuing improvement and the closer and closer relations with the key partners. In a nutshell, the companies that are centralized, moving swiftly, flexible will be better off in supporting their ability to deal with the market changes and even create new markets.
    Keywords: a new strategic logic; durable competitive advantage; strategic alliances; organizational hierarchy
    JEL: F21 L11
    Date: 2009–08–09
  6. By: Isabel Pizarro (Department of Business Administration, Universidad Pablo de Olavide); Juan C.Real (Department of Business Administration, Universidad Pablo de Olavide); M.Dolores de la Rosa (Department of Business Administration, Universidad Pablo de Olavide)
    Abstract: The objective of the present study is to analyze the role played by the entrepreneurial culture of the organization and the value and uniqueness of employees’ knowledge (human capital) in generating innovation. This research has been conducted with a sample of companies in the most innovative sectors of Spanish industry, applying the Partial Least Squares (PLS) technique. The results demonstrate significant relationships between innovation and the two dimensions of the human capital .We have also found that entrepreneurial culture acts as a moderating variable between human capital and innovation, in the way that employees of high value generate more innovation in the presence of this type of culture.
    Keywords: Innovation; human capital; entrepreneurial culture
    Date: 2009–06
  7. By: Albalá, Ambrosio M.; Lozano, Martin J.M.; Perez, Hernandez P.P.
    Abstract: The Council Regulation (EC) 1698/2005 approved on 20th September 2005 was the starting point of the fourth programme of Rural Development Aid for the period 2007- 2013. This communitarian programme affects Andalusia, an European region situated in the south of Spain. The authors of this paper have helped in the elaboration of the rural strategy for this region. We would like especially to point out the use of the Prospective Structural Analysis (PSA) methodology as a competent method to analyse the complexity of elements, variables and present interactions in rural zones as well as to understand variables in the present and future situation. Results obtained with the application of the PSA method to a region show the strength of this methodology in order to help the process of reflection about influencing economic and social agents in the analysed area. These results were compared with Rural Development Plan proposed for 2007-2013 period.
    Keywords: Rural Development, Strategic Analyses, Prospective Structural Analyses, Community/Rural/Urban Development, O18,
    Date: 2009–04–01
  8. By: Sahu, Santosh; Narayanan, K
    Abstract: The demand for energy, particularly for commercial energy, has been growing rapidly with the growth of the economy, changes in the demographic structure, rising urbanization, socio-economic development. In this context the energy intensity is one of the key factors which impact the projections of future energy demand. The Indian manufacturing sector is among the largest consumer of commercial energy compared to the other industries in India. Energy consumption per unit of production in the manufacturing of steel, aluminum, cement, paper, textile, etc. is much higher in India, in comparison to other developing countries. The purpose of this study is to understand the factors that influence industrial energy intensity in Indian manufacturing. The analysis undertaken in this paper find a positive relationship between energy intensity and firm size and an inverted U’ shaped relationship between energy intensity and size of the firm. The analysis shows that the foreign owned firms are less energy intensive compared to the domestic firms. Capital intensive firms as well as firms spending more on repair and maintenance are found to be more energy intensive. Further the results shows that expenditure on the research and development contribute to reduce firm level energy intensity and there is a sizable difference between highly energy intensive firm and less energy intensive firms.
    Keywords: Energy Intensity, Commercial Energy Consumption, Indian Manufacturing Industries
    JEL: B23 Q4
    Date: 2009–04–16
  9. By: Sloev, Igor
    Abstract: The paper explores incentives for strategic vertical separation of firms in a framework of a simple duopoly model. Each firm chooses either to be a retailer of its own good (vertical integration) or to sell its good through an independent exclusive retailer (vertical separation). In the latter case a two-part tariff is applied. Retailers compete in quantities, goods are perfect substitutes and firms' cost functions are quadratic. I show that the equilibrium outcome crucially depends on the degree of (dis)economies of scale and asymmetry of costs. Two asymmetric equilibria arise, in which one firm separates while another integrates, under conditions that both firms' cost functions exhibit a sufficiently high diseconomies of scale, or extreme asymmetry of costs. Under a moderate asymmetry of costs a unique equilibrium exists in which the firm with the lower degree of diseconomies of scale separates, while its rival integrates. With the degree of diseconomies of scale low for both firms in the unique equilibrium both firms separate.
    Keywords: Vertical oligopoly; Vertical Separation; Vertical Integration; Delegation
    JEL: L42 L22
    Date: 2009–08–10
  10. By: Deb, Rahul; Fenske, James
    Abstract: We devise a nonparametric test of strategic behavior in a multiproduct Cournot oligopoly. It is assumed that firms have cost functions that do not change over the period of observation but that market demand can change in each period. Market prices and firm-specific production quantities are observed and it is assumed that neither the inverse demand functions nor the cost functions are known. The driving assumptions of the test are that market inverse demand functions are decreasing and differentiable at each period and that cost functions are increasing and convex for each firm. Under these very general conditions, we show that this test imposes strong restrictions on observed data. We apply the test to the crude oil market and find that strategic behavior is strongly rejected.
    Keywords: Competitive behavior; Multiproduct Cournot oligopoly; Nonparametric test; Crude oil market; OPEC.
    JEL: D21 C14 D43 C72
    Date: 2009–08–01
  11. By: Carlo Maria Arpaia (Banca d'Italia); Raffaele Doronzo (Banca d'Italia); Paquale Ferro (Banca d'Italia)
    Abstract: The aim of this work is to provide information of use in evaluating Italian local public entities from two angles: 1) computerization and supply of web-services; 2) “accounting transparency†and use of accounting information for internal control and benchmarking. The analysis is based on data gathered periodically by the Bank of Italy. In order to give a broader view of the quality of Italian public administration, the outcome of the analysis is compared with the Formez research on business activity policies, employment policies and territorial competitiveness policies. The computerization index shows a better performance by northern regions. The “accounting transparency†index, based on SIOPE data, instead reveals that geographical location is not a crucial determinant of the performance gap between Italian regions.
    Keywords: Public administration, competitiveness, computerization, Mezzogiorno
    JEL: H11 R58
    Date: 2009–07
  12. By: Kunal Dasgupta
    Abstract: We develop a dynamic, general equilibrium model to understand how multinationals affect host countries through knowledge diffusion. Workers learn from their managers and knowledge diffusion takes place through worker mobility. We identify two forces that determine wages : the labour demand effect and the learning effect. The former tends to raise wages while the latter tends to reduce it. We show that in a model without learning, an integrated steady-state equilibrium in which incumbent host country managers operate alongside multinationals, can never be a Pareto improvement for the host country. In contrast, we present a novel mechanism through which a Pareto improvement occurs in the presence of learning dynamics. We study how integration affects the life time earnings of agents and the degree of inequality in the host country, as well as, analyze the pattern of multinational activity. In the quantitative section of the paper, we calibrate our model to fit key moments from the U.S. wage distribution and quantify gains from integration. Our estimates suggest that learning produces welfare gains that range from 2% for middle-income countries to 43% for the low-income countries.
    Keywords: Multinationals, knowledge di¤usion, learning, welfare gains, worker mobility
    JEL: F23
    Date: 2009–07–30
  13. By: Siedschlag, Iulia (ESRI); Smith, Donal (ESRI); Turcu, Camelia (CRIEF, University of Poitiers); Zhang, Xiaoheng (ESRI)
    Abstract: We analyse 446 location decisions of foreign affiliates in the R&D sector incorporated in the European Union over 1999-2006. Our results suggest that on average, the location probability increases with the size of demand, agglomeration economies, low production cost, R&D intensity, flexibility of labour markets, access to skilled labour and information technology infrastructure. Our evidence suggests that after controlling for the R&D intensity of regions, European Union?s regional policy and country level tax differences have had no significant effects in fostering the attractiveness of regions to R&D foreign investment. We find evidence of geographical structures relevant for the location choice of R&D multinational firms across the European Union. Further, we find that European investors have responded differently to location characteristics in comparison to North American investors.
    Date: 2009–07
  14. By: Wladimir Raymond; Pierre Mohnen; Franz Palm; Sybrand Schim van der Loeff
    Abstract: This paper studies the dynamic relationship between input and output of innovation in Dutch manufacturing using an unbalanced panel of enterprise data from five waves of the Community Innovation Survey during 1994-2004. We estimate by maximum likelihood a dynamic panel data bivariate tobit with double-index sample selection accounting for individual effects. We find persistence of innovation input and innovation output, a lag effect of the former on the latter and a feedback effect of the latter on the former. The lag effect remains significant in the high-tech sector even after four years. Firm and industry effects are also important. <P>Dans cette étude nous estimons une fonction de production de l’innovation dynamique sur base des données de panel de cinq vagues d’enquêtes d’innovation communautaires (CIS) aux Pays-Bas couvrant la période 1994 à 2004. Nous estimons par maximum de vraisemblance un modèle tobit bivarié avec une double sélection et prise en compte des effets individuels. Nous trouvons une persistence dans l’innovation tant au niveau de l’intrant que de l’extrant et des effets de retard croisés entre les deux. Les retards perdurent au-delà de 4 ans dans le secteur high-tech. Les effets individuels et les effets particuliers aux industries sont également significatifs.
    Keywords: innovation production function, panel data, CIS data, bivariate dynamic tobit, Netherlands, fonction de production de l’innovation, données de panel, tobit bivarié dynamique, Pays-Bas
    JEL: C33 C34 O31
    Date: 2009–08–01
  15. By: Bianco, Dominique
    Abstract: This paper shows that the results of Bianco (2006) depend critically on the assumption that there are no difference between the intermediate goods share in final output, the returns of specialization and the degree of market power of monopolistic competitors. In this paper, we disentangle the market power parameter from the intermediate goods share in final output and the returns to specialization. The main result of this paper is the death of the inverted-U shape relationship between competition and growth. Indeed, we find a decreasing relationship between competition and growth which is due to the composition of two negative effects on growth : resource allocation and Schumpeterian effects.
    Keywords: Endogenous growth; Horizontal differentiation; Technological change; Imperfect competition.
    JEL: O41 O31
    Date: 2009–08
  16. By: Pearson, David; Bailey, Alison
    Abstract: There is widespread support from Government, media and consumers for local food networks. The profile of local food buyers and their expectations has been explored and we have some knowledge of its social, economic and environmental contribution. This research contributes by exploring the structure and scope of local food activities. This paper reports on a one year scoping study that examined local food within two contrasting countries, England and Australia. It used a literature review and interviews with key stakeholders to identify the business opportunities that exist in this sector. In conclusion there are many more local food activities in England than in Australia. Further, at a national level in both countries it remains fragmented and confused. However, at a local level there are many successful businesses - farmers markets are the most successful business model in England and Australia, with box schemes also working well in England. The research priorities are to develop a clearer definition of local food as well as exploring the possibility of creating some form of consumer assurance for the âlocalnessâ of foods.
    Keywords: local food, business, England, Australia, Community/Rural/Urban Development,
    Date: 2009–04–01
  17. By: Luigi Cannari (Banca d'Italia); Marco Magnani (Banca d'Italia); Guido pellegrini
    Abstract: In this paper we examine the Italian regional policies launched in the second half of the 1990s and aimed at promoting the development of Southern Italy. Ten years on, the goals have not been reached, either in terms of social and economic development, or of the performance of firms receiving government aid. In evaluating the discrepancy between targets and results we argue that the failure of regional policies is a facet of the more general failure of Italian economic policies in the last fifteen years, clearly witnessed by the stagnation of growth and productivity both in the North and Centre and in the South. Two main aspects are highlighted: the effectiveness of regional policies has been affected by national legal rules that have had different effects across regions and have usually allowed a lower quality of public expenditure in the South; the effectiveness of regional policies has been diminished also by attributing importance to regional governments as control centres of public intervention.
    Keywords: regional policies, regional development, cohesion
    JEL: R58
    Date: 2009–07
  18. By: Gurgu, Elena (Universitatea Spiru Haret, Facultatea de Marketing si Afaceri Economice Internationale)
    Abstract: The National Strategy for Sustainable Development at the 2030 horizon is the result of Romanian assumed obligation, as EU member, in conformity with the established objectives at the EU level. The strategy proposes a vision of Romanian development in the perspective of the following two decades. At the 2013 horizon is proposed the organic incorporation of the principles and the practices of sustainable development into the Romanian programmes and public politics. For 2020 horizon it is estimated to be tauched the actual medium level of EU countries at the basic indicators of sustenable development. For the year 2030 it is estimated a significant aproach of Romania of the medium level of EU countries.The performence of these tasks will assure on medium and long term a higher economic development and a substantial reduction of socio-economic disparty between Romania and the other EU countries.
    Keywords: sustenable development; Six Sigma methodology; Benchmarking process; total productive maintenance technicque
    JEL: O11
    Date: 2009–08–09
  19. By: Schubert, Stefan Franz; Brida, Juan Gabriel
    Abstract: The paper studies the dynamics of economic growth caused by an increase in the growth rate of tourism demand. We develop a simple dynamic model of a small open economy, which is completely specialized in the production of tourism services (island economy model), populated by a large number of intertemporally optimizing agents, deriving utility from consuming an imported good. Tourism services are produced by means of a simple AK technology by using imported capital, its accumulation associated with adjustment costs. Moreover, the economy can lend or borrow at the international financial markets at the given world interest rate. Adjustments in the relative price of tourism services ensure market clearance for tourism services. The long-run growth rate of the economy is tied to the growth rate in tourism demand. An increase in the latter increases thus the economy’s long-run balanced growth rate. In contrast to the standard one-good small open economy endogenous growth model, where the economy is always on its balanced growth path, we show that there are transitional dynamics after an increase in the growth rate of tourism demand. In particular, the short-run growth rate of output rises gradually towards its higher long-run level, and the market price of tourism increases during transition. Thus, an increase in the growth of tourism demand, say, caused by higher economic growth abroad, leads to a boom in the small open economy and increasing terms of trade. Adjustments of the relative price of tourism services (i. e. the real exchange rate) can therefore not protect the economy from demand disturbances.
    Keywords: tourism demand; growth; economic dynamics
    JEL: O41 F41 R11
    Date: 2009–03

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