nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2009‒11‒21
fourteen papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. What explains the evolution of productivity and competitiveness? The innovation link By Jaumandreu, Jordi
  2. Strategy vs. business models vs. tactics By Casadesus-Masanell, Ramon; Ricart, Joan E.
  3. The Evolution of Markets and the Revolution of Industry: A Unified Theory of Growth By Klaus Desmet; Stephen L. Parente
  4. Drivers of Globalization: An Evolutionary Perspective on Firm-State Relations in the Asian Newly Industrialized Economies By Henry Wai-chung Yeung
  6. From Business model to Business model portfolio in the european biopharmaceutical industry By Valérie Sabatier; Vincent Mangematin; Tristan Rouselle
  7. Promarket Reforms and Allocation of Capital in India By Desai, Sameeksha; Eklund, Johan E.; Högberg, Andreas
  8. Competition and Quality Upgrading By Mary Amiti; Amit K. Khandelwal
  9. Organizing the un-Organized? The Rise, Recession and Revival of the Indian Diamond Industry By Indu Rao
  10. Small firms, growth and financial constraints By Agustí Segarra; Mercedes Teruel
  11. Female-owned firms in Latin America : characteristics, performance, and obstacles to growth By Bruhn, Miriam
  12. Attracting talent to family-owned businesses: The perceptions of MBA students By Ceja, Lucia; Tapies, Josep
  13. Family Business, Employment, and GDP By Johansson, Dan; Sjögren, Hans; Bjuggren, Carl Magnus
  14. SMEs in Argentina: Who are the Exporters? By Gianmarco I. P. Ottaviano; Christian Volpe Martincus

  1. By: Jaumandreu, Jordi (IESE Business School)
    Abstract: This paper addresses the recent evolution of productivity and competitiveness in Catalonia and their links with the innovation activity of firms. Firstly, it summarizes the evolution of productivity, competitiveness, firms' strategies and the state of innovation. A slowdown in productivity growth and increasing revealed difficulties in some world markets are real, and the weakness of innovation may be a reason. The paper then quantifies some of the links between innovation, productivity and competitiveness. Innovation has a positive impact on productivity and competitiveness. First of all, innovation expenditures induce cost advantages and these cost advantages are a significant explanation for firms' exports. Furthermore, product innovation helps exports, too. Moreover, R&D activities in Catalonia benefit from high spillovers, and productivity impact is even higher when firms develop R&D activities outside as well. Despite all this, the current level of innovation expenditure is comparatively low and shows signs of lack of dynamism. Firms need to switch from the current equilibrium to the requirements of the coming years.
    Keywords: Labor productivity; Competitiveness; innovation; cost;
    Date: 2009–07–17
  2. By: Casadesus-Masanell, Ramon (Harvard Business School); Ricart, Joan E. (IESE Business School)
    Abstract: The notion of business model has been used by strategy scholars to refer to "the logic of the firm, the way it operates and how it creates value for its stakeholders." On the surface, this notion appears to be similar to that of strategy. We present a conceptual framework to separate business model from strategy. Business model, we argue, is a reflection of the firm's realized strategy. We find that in simple competitive situations there is a one-to-one mapping between strategy and business model, which makes it difficult to separate the two notions. We show that the concepts of strategy and business model differ markedly when there are important contingencies upon which a well-designed strategy must be based. Our framework also delivers a clear separation between tactics and strategy. This distinction is possible because strategy and business model are different constructs.
    Keywords: Business model; Strategy; Competitive dynamics; Interaction;
    Date: 2009–08–03
  3. By: Klaus Desmet (Universidad Carlos III, CEPR and Centro Studi Luca d’Agliano); Stephen L. Parente (University of Illinois and CRENoS)
    Abstract: This paper puts forth a unified theory of growth that captures a number of relevant features of countries transitions from stagnant, predominantly rural economies to vibrant, industrialized economies that have been overlooked by the literature. In our theory, increasing variety of consumer goods and increasing firm size, which are the consequence of a gradual expansion in the market, sow the seeds for process innovation and an economy’s take-off. We demonstrate this mechanism in a dynamic general equilibrium model calibrated to England’s long-run development, and explore how various factors affected the timing of its take-off.
    Keywords: Uni…ed Growth Theory, Industrial Revolution, Innovation, Competition, Market Revolution
    JEL: N33
    Date: 2009–11–17
  4. By: Henry Wai-chung Yeung
    Abstract: The emergence of firms from the Asian Newly Industrialized Economies (NIEs) in the global economy during the past two decades has been phenomenal. Many pundits have attributed the competitive success of these Asian NIE firms and their home economies to the relentless efforts of the so-called developmental states. They argue that state initiatives such as active industrial policy and financial support have enabled these "national champions" to venture into and compete successfully in the global economy. This statist approach to the globalization of Asian firms and their home economies, however, has unfortunately ignored the complex and dynamic evolutionary nature of firm-state relations within the changing context of economic globalization. Drawing upon an institutional and evolutionary theory of change and adjustments, I aim to explain how the global emergence of Asian firms cannot be simply read off from and explained by their embeddedness in the developmental state. Since the 1990s, these Asian firms have strategically disembedded from state apparatus and successfully reembedded themselves in dynamic global production networks. This shift of strategic partnership of Asian firms from firm-state to firm-firm networks has profound implications for our understanding of the present and future trajectories of regional economies in Asia. It presages the demise of the developmental state as the primary driver of economic change and growth in Asian economies. In developing my conceptualization of changing firm-state relations, this paper draws upon several emerging and interrelated research frontiers in economic geography that call for more theoretical attention to trans-local actors and processes, evolutionary dynamics of change, and institutional contexts.
    Keywords: Firm-state relations, evolutionary dynamics, globalization, selection environment, global production networks
    JEL: L50 O19 P16
    Date: 2009–11
  5. By: Fernanda Ricotta (Dipartimento di Economia e Statistica, Università della Calabria)
    Abstract: Due to the emergence of global value chains, trade has increased in intermediates goods. The first objective of the paper is to provide a picture of Italian intermediate imports by industry and over time. Moreover, this paper attempts to study three possible factors than can influence the import of intermediate goods - global sourcing, outsourcing and MNE networks - using pooled cross-section data for the period 1985-2004 for Italian industries. The econometric results point to a different relationship for high and medium-high technology industries and medium-low and low technology industries relative to the role of inward and outward FDI in explaining the imported intermediate demand. The results suggest that outsourcing is important in explaining intermediate imports for medium-low and low technology industries. On the contrary, for high and medium-high technology industries the data give support to the global-sourcing hypothesis while the evidence for the MNE network hypothesis is weak.
    Keywords: Input-Output tables, Intermediate imports, Multinational firms
    JEL: D57 F14 F23
    Date: 2009–10
  6. By: Valérie Sabatier (GAEL - Economie Appliquée de Grenoble - INRA : UR1215 - Université Pierre Mendès-France - Grenoble II, 3PX Therapeutics - 3PX Therapeutics); Vincent Mangematin (MTS - Management Technologique et Strategique - Grenoble Ecole de Management); Tristan Rouselle (3PX Therapeutics - 3PX Therapeutics)
    Abstract: At the crossroad of firm's core competencies and of the anticipations of consumers' needs, the business model approach complements corporate and business strategy approaches. Firms combine several business models simultaneously to deliver value to different markets, building a portfolio of business model. For managers, business model and business model portfolio are particularly useful to address customer's needs and organisational capabilities of the firm. They also emphasise how the initial core competency of the firm can be extended or redeployed to increase the rent. Business model portfolio describes the firm's strategy to balance time-to-market, revenue stream, risk and interdependencies. It conceptualises firm diversification within the same industry to generate and capture rents. They finally describe two generic dimensions: core competence extension to enlarge the market and to address additional customers and core competence redeployment to serve similar market with the same core competence.
    Keywords: Biopharmaceutical; portfolio; corporate strategy; business strategy; core competence; coherence; value chain
    Date: 2009–11–12
  7. By: Desai, Sameeksha (University of Missouri Kansas City); Eklund, Johan E. (Ratio Institute); Högberg, Andreas (Jönköping International Business School)
    Abstract: The government of India initiated pro-market reforms in the 1990s, after almost five decades of socialist planning. These and subsequent policy reforms are credited as the drivers of India’s radical economic transformation. Prior to reforms, private investment was strictly regulated and restricted to certain areas and sectors. There have since been numerous changes in sectors important for investment, which should lead to changes in outcomes of firm-level strategic decision making and investment behavior. By most estimates, India will continue to grow. The purpose of this paper is to investigate changes in investment behavior from the introduction of reforms to current conditions. Reforms changed several institutional frameworks for firm operations, allowing firms to pursue more competitive strategies. Given the importance of ownership in determining firm efficiency and access to capital, we examine the effect of ownership on the performance of Indian firms for the period 1991-2006. We also examine industry differences in capital allocation. We compute a measure of investment efficiency derived from the accelerator principle: Elasticity of capital with respect to output. We examine the effect of various ownership structures on investment behavior and the efficiently of capital allocation across different sectors of the economy. We find that the allocation of capital has been slow to respond to reforms, indicating similar pace of firm responses.
    Keywords: allocation of capital; India; institutional reforms; ownership
    JEL: E22 E23 E44 G18 G20 L50
    Date: 2009–11–18
  8. By: Mary Amiti; Amit K. Khandelwal
    Abstract: How does competition affect innovation? We address this question by using a novel approach to measure quality -- an important component of innovation -- using highly disaggregated product data for a large set of countries. Constructing an internationally comparable measure of quality enables us to separate the effect of reducing import tariffs, our measure of competition, on quality upgrading from other country level differences in competitive environments, and product demand shocks. We base our analysis on recent theoretical frameworks that predict that the effect of competition on innovation depends on firms' proximity to the world technological frontier. As predicted by theory, we find that lower tariffs are associated with quality upgrading for products close to the world frontier; whereas lower tariffs discourage quality upgrading for varieties distant from the frontier.
    JEL: F1
    Date: 2009–11
  9. By: Indu Rao
    Abstract: This paper presents summary of findings from research conducted in the Indian diamond industry over a period of last four years. Insights about the remarkable rise, growth and the unique working of the industry is given. A case study of a 40 years old large- sized CPD unit to help gain further understanding of the Indian diamond industry is also done.
    Keywords: Indian, diamond industry, research, Incredible Growth, India, GLOBAL TURMOIL
    Date: 2009
  10. By: Agustí Segarra (GRIT, Universitat Rovira Virgili); Mercedes Teruel (GRIT, Universitat Rovira Virgili)
    Abstract: This paper analyses the impact of different sources of finance on the growth of firms. Using panel data from Spanish manufacturing firms for the period 2000-2006, we investigate the effects of internal and external finances on firm growth. In particular, we examine three dimensions of these financial sources: a) the performance of the firms’ capital structure in accordance with firm size; b) the effects of internal and external financial sources on growth performance; c) the combined effect of equity, external debt and cash flow on firm growth. We find that low-growth firms are sensitive to cash flow and short-term bank debt, while high-growth firms are more sensitive to long-term debt. Furthermore, equity capital seems to reduce barriers to external finance. Our main conclusion is that during the start-up phase, firms are unable to increase their financial leverage and so their capital structure fails to promote correct investment strategies. However, as their equity capital increases, alternative financial mechanisms, in particular long-term debt, become available, which have a positive impact on firm growth.
    Keywords: firm growth, small firms.
    JEL: L25 R12
    Date: 2009–10
  11. By: Bruhn, Miriam
    Abstract: This paper examines the characteristics and performance of female-owned firms in Latin America. Data from firm surveys show that female-owned firms tend to be smaller than male-owned firms in terms of employees, sales, costs, and physical capital. Female-owned firms also have lower profits than male-owned firms, but for larger firms this difference disappears after controlling for labor and capital inputs. Medium-size and large female-owned firms are as productive as male-owned firms of the same size, although micro and small female-owned firms are less productive than male-owned firms. There is no evidence that the differences between female and male-owned firms are due to differences in access to finance or regulatory burdens. However, this paper finds a negative correlation between child care and household obligations and female-owned firm size and performance.
    Keywords: Access to Finance,Microfinance,Gender and Health,Gender and Law,E-Business
    Date: 2009–11–01
  12. By: Ceja, Lucia (IESE Business School); Tapies, Josep (IESE Business School)
    Abstract: This paper examines the perceptions that MBA students hold regarding family-owned businesses compared to non-family firms. The study is based on the assumption that attracting talent is critical not only for continuous competitive advantage, but also for the survival of family-owned businesses. Therefore, family-owned firms should promote themselves as equally attractive as non-family organizations in terms of employment opportunities. MBA graduates represent a rich pool of talent that can help family-owned firms to prosper across generations. One avenue of inquiry in this regard is to study MBA students and their perceptions. Consequently, studying whether MBA students hold a specific image regarding family-owned businesses is brought to the forefront. With this aim, the authors engaged in an enquiry process, dealing with MBA students' perceptions of the strengths and weaknesses of family-owned firms compared to non-family businesses. The sample was composed of 213 MBA students from 20 different countries. The results showed that MBA students do indeed hold a particular image regarding family-owned firms. More specifically, some of the findings are that MBA students perceive family-owned firms as having more problems within the ownership than non-family businesses, are not as good as non-family firms in attracting talented managers, have less job rotation, are slower in their internationalization processes, are slower in the implementation of new technologies, have more difficulty in issuing equity and have a later retirement age than non-family firms. Limitations of the study and future research are discussed.
    Keywords: family-owned businesses; non-family firms; MBA students; talent; perceptions;
    Date: 2009–08–07
  13. By: Johansson, Dan (The Ratio Institute); Sjögren, Hans (Department of Management and Engineering, Linköping University); Bjuggren, Carl Magnus (Department of Management and Engineering, Linköping University)
    Abstract: We analyze the proportion of family business and its contribution to employment and gross domestic product (GDP). Our analysis adds to the literature by including all listed firms and by investigating a longer period than has heretofore been reported. The main contribution is to extend the analysis to include all firms in the economy using census data. Our study is devoted to the case of Sweden. Family business makes up half of the listed firms, and three quarters of all firms, accounting for one-fourth of total employment, and one-fifth of GDP. Their importance has increased during the period studied.
    Keywords: Family Firms; Employment; GDP; Sweden; Ownership
    JEL: L11 L25 L26
    Date: 2009–11–17
  14. By: Gianmarco I. P. Ottaviano (Bocconi University); Christian Volpe Martincus (Inter-American Development Bank)
    Abstract: There exists a growing body of literature which looks at export decisions made by firms. Most studies focus on developed countries and do not explore whether different behavioral patterns prevail over the firm size distribution. This paper aims at filling this gap in the literature by analyzing the export behavior of a statistically representative sample of 192 Small and Medium-Size Enterprises (SMEs) in a developing country, Argentina, over the period 1996-1998. We find that the level of employment, sourcing from abroad, investment in product improvement and average productivity are associated with a higher probability of exporting. Training activities for employees are important to export outside of MERCOSUR.
    Keywords: SME, Exports, Argentina
    JEL: F10 F14 D21 L60
    Date: 2009–11–17

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