nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2010‒01‒30
seventeen papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Human resource management and learning for innovation: pharmaceuticals in Mexico By Santiago-Rodriguez, Fernando
  2. State of Competition in the Wholesale and Retail Sector By Ma. Teresa Dueñas-Caparas
  3. Creating First-Mover Advantages- The Case of Samsung Electronics By Jang-Sup SHIN; Sung-Won JANG
  4. Screening, Competition, and Job Design By Bartling, Björn; Fehr, Ernst; Schmidt, Klaus M.
  5. Managing R&D activities in the Italian red biotech industry. A comparison between Italian independent firms and multinational companies By Alessia Pisoni; Alberto Onetti; Luciano Fratocchi; Marco Talaia
  6. The Impact of Market Reforms on Competition, Structure and Performance of the Philippine Economy By Rafaelita M. Aldaba
  7. Sustaining Philippine Advantage in Business Process Outsourcing By Ceferino S. Rodolfo
  8. Industrial Agglomeration and Industrial Policies- The Philippine Experience By PIDS
  10. Assessment of Competitiveness and Logistics Infrastructure of the Philippine Garments Industry By Emilio T. Antonio Jr.; Ma. Cherry Lyn S. Rodolfo
  11. Export Status and Performance in a Panel of Italian Manufacturing Firms By Vito Amendolagine; Rosa Capolupo; Nadia Petragallo
  12. Development Strategy, Optimal Industrial Structure and Economic Growth in Less Developed Countries By Justin Yifu Lin; Pengfei Zhang
  13. Recombinant Knowledge and Growth: The Case of ICTs By Cristiano Antonelli; Jackie Krafft; Francesco Quatraro
  14. Enhancement and Deepening of the Competitiveness of the Philippine Electronics Industry Under a Bilateral Setting By Myrna S. Austria
  15. Competition Policy and Regulation in Ports and Shipping By Gilberto M. Llanto; Enrico L. Basilio; Leilanie Basilio
  16. The Location Decisions of Foreign Logistics Firms in China- Does Transport Network Capacity Matter? By Anthony Chin; Hong Junjie
  17. Intrapreneurship - An international study By Niels Bosma; Sander Wennekers; Erik Stam

  1. By: Santiago-Rodriguez, Fernando (UNU-MERIT)
    Abstract: This paper investigates the influence of human resource management on learning from internal and external sources of knowledge. Learning for innovation is a key ingredient of catching-up processes. The analysis builds on survey data about pharmaceutical firms in Mexico. Results show that the influence of human resource management is contingent on the knowledge flows and innovation goals pursued by the firm. Practices such as training-- particularly from external partners; and remuneration for performance are conducive to learning for innovation.
    Keywords: Learning, R&D, human resource management, pharmaceuticals, Mexico
    JEL: O31 O32 O54
    Date: 2010
  2. By: Ma. Teresa Dueñas-Caparas (Philippine Institute for Development Studies)
    Abstract: The study assesses the state of competition in the Philippine wholesale and retail sector, focusing on the distribution of specialized goods and pharmaceutical products. It uses the traditional tools of analysis like concentration ratios and price-cost margins in determining the competitive state of the sector. The study also analyzes the other dimensions in retail competition like price, geographical location, retail product and retail service. Industry data from the National Statistics Office were used in the analysis, aided by a small-scale survey conducted in the Metro Manila area. The department store and grocery subsector appears to operate in a competitive environment despite the presence of two big dominating firms in the market. No price or quantity leader-follower behavior was observed, as validated by the tools used in the analysis. On the other hand, one firm, whose strategic advantages include economies of scope and space, retail image and consumer loyalty, dominates the distribution of pharmaceutical products. Potential market entrants face these forms of challenges—factors that are not regarded as anti-competitive and are welfare enhancing to the general public. The need for competition policy is recommended to guard against possible merger of the giant firms in the department store and grocery subsector. Any possible collusion between the big firms could result to a monopolistic outcome. The study observes that the apparent high price of pharmaceutical products is mainly attributed to the manufacturing process, and not at the distribution of these goods. Hence, it is recommended that a study analyzing the state of competitiveness of manufacturing pharmaceutical products be conducted.
    Keywords: competition policy, distribution sector, pharmaceutical products, and dimensions of competition
    JEL: L65
    Date: 2010–01
  3. By: Jang-Sup SHIN; Sung-Won JANG (Singapore Centre for Applied and Policy Economics)
    Abstract: This paper analyzes the sources of first-mover advantages by examining the case of Samsung Electronics, a firm which has maintained and strengthened the technological leadership in the DRAM industry since 1992. The focus is on endogeneity of first-mover advantages under changing technological and competitive environments, part of which are also shaped by the technology leader. The paper also discusses general implications of this case study for strategy and organization for innovation.
    Keywords: first-mover advantage, Samsung Electronics, DRAM
    JEL: O32 L63
    Date: 2010–01
  4. By: Bartling, Björn; Fehr, Ernst; Schmidt, Klaus M.
    Abstract: In recent decades, many firms offered more discretion to their employees, often increasing the productivity of effort but also leaving more opportunities for shirking. These “high-performance work systems” are difficult to understand in terms of standard moral hazard models. We show experimentally that complementarities between high effort discretion, rent-sharing, screening opportunities, and competition are important driving forces behind these new forms of work organization. We document in particular the endogenous emergence of two fundamentally distinct types of employment strategies. Employers either implement a control strategy, which consists of low effort discretion and little or no rent-sharing, or they implement a trust strategy, which stipulates high effort discretion and substantial rent-sharing. If employers cannot screen employees, the control strategy prevails, while the possibility of screening renders the trust strategy profitable. The introduction of competition substantially fosters the trust strategy, reduces market segmentation, and leads to large welfare gains for both employers and employees.
    Keywords: job design; high-performance work systems; screening; reputation; competition; trust; control; social preferences; complementarities
    JEL: C91 D86
    Date: 2010–01
  5. By: Alessia Pisoni (Department of Economics, University of Insubria, Italy); Alberto Onetti (Department of Economics, University of Insubria, Italy); Luciano Fratocchi (Department of Mechanical Thermal and Managerial Engineering – University of L’Aquila); Marco Talaia (Business Research Department – University of Pavia)
    Abstract: This paper aims at analysing the main features of R&D activities carried out by the Italian biotech companies. The proposed contribution can be ascribed to the massive stream of research related to the reconfiguration of the value chain activities at the international level. Such a topic has become more and more actual because of both the markets globalisation and diffusion of networked architectures within internationalised companies (see, among others, Bartlett 1986; Bartlett and Goshal 1987, 1990; Bartlett, Doz and Hedlund 1990; Forsgren 1993; Forsgren and Holm 1993; Forsgren, Holm and Johanson 1991, 1992; Forsgren and Johanson 1992; Forsgren and Pedersen 1998; Hedlund 1979, 1980, 1986, 1994; Hedlund and Ridderstrale 1994; Hedlund and Rolander 1990; Lipparini and Fratocchi 1999). Within such a stream of research, we decided to focus the attention on the biotech industry, due to its specific features, that deeply influence both the strategic behaviour of firms and the economic environment of the countries where they operate.Keeping in mind the different types of biotech firms operating at global level, we have decided to focus our attention to a less heterogeneous population. In so doing, we narrowed the analysis to the red biotech segment (that is health care biotech companies which develop drugs and diagnostics), because of its absolute predominance both in Italy (73% of enterprises, 94% of total revenue and 86% of investments1) and at worldwide level (51% of EU firms and 60% of USA ones2). First of all we collected data for a sample of companies operating in the Italian red biotech industry. Particularly, we focused on R&D activities: we tried to quantify its extent, to understand where they are located (domestically or abroad) and the role played by alliances/cooperation with -in and -out the industry. More specifically, in order to reach the goals above described, attention was paid to the aptitude of the Italian country-system to attract investments from abroad. In doing so, we studied separately the Italian independent firms and MNCs. Analysing the peculiarities of how Italian independent firms and MNCs manage R&D activities, we tried to find out the existence of a different approach to R&D investments. The paper is structured in four main sections. In the first one, the main relevant features of biotech firms are discussed and the literature background presented. The second paragraph deals with sample and methodology description. In the third section, the main results regarding the analysis of R&D activities carried out by the red Italian biotech companies are presented. The conclusions complete the paper.
    Keywords: Biotech, localisation, R&D, collaborative R&D, MNCs.
    Date: 2010–01
  6. By: Rafaelita M. Aldaba (Philippine Institute for Development Studies)
    Abstract: The paper studies the impact of trade liberalization on competition and productivity. Competition is the main channel through which trade liberalization affects economic performance. Competition fosters innovation and technology adoption which leads to increases in competitiveness and growth that will have large consequences for poverty and inequality. To realize these expected effects, it is important that firms change their behavior and adjust to the new market environment. The success of reforms depends to a great extent on the capacity of firms to exploit the new competitive conditions in the market and on their ability to take advantage of the opportunities offered to them. Firms, however, will not venture into the unknown and uncertain. They will only take advantage of the new market opportunities if the government program for implementing policy reforms is a credible one. Policy reversals, delays in timetable, and inconsistent decision-making may undermine the success of liberalization. Hence, the overall environment for market transactions is also an essential ingredient. Therefore, the strength of competition is a function not only of the behavior of firms but also of the external environment within which they compete. This includes the state of transport and communications, framework of laws and regulations, effectiveness of the financial system in matching investment resources with entrepreneurial opportunities, as well as information available to consumers. The experience of the Philippine manufacturing sector shows that which despite liberalization, competition and productivity growth have remained weak due to inadequate physical and institutional infrastructure.
    Keywords: competition, trade liberalization, effective protection, total factor productivity growth
    JEL: F13 O24 F10
    Date: 2010–01
  7. By: Ceferino S. Rodolfo (Philippine Institute for Development Studies)
    Abstract: This study looked at the sustainability of the growth and development of business process outsourcing (BPO) in the Philippines. It was prompted by the sector’s spectacular growth in several of its subsectors, mainly contact call centers, medical transcription, animation, and software development. Doubts about the sustainability of this hypergrowth situation are increasingly being felt, as the industry experiences difficulties in meeting the demands of the market—specifically, the country’s ability to supply the skilled workforce. In addressing sustainability, the government will have to grapple with several important issues, such as the main drivers of the BPO phenomenon, the size of the global BPO market, and the competiveness of the Philippines as a BPO location. These questions were directly addressed by the study. Only after these issues have been addressed can policymakers provide broader and longer term directions for the industry, specifically on- (1) whether the present level of priority given to BPOs is appropriate and consistent with national economic goals or should the government instead prioritize other sectors, and (2) whether the country’s educational system should be aligned with the goals of enhancing the competitiveness of the BPO industry, and the consequences of this educational thrust on other strategic sectors of the economy.
    Keywords: Business Process Outsourcing, Philippines, development, education
    JEL: O14 O10 O21 L80
    Date: 2010–01
  8. By: PIDS (Philippine Institute for Development Studies)
    Abstract: In the relatively new body of ideas dubbed “new economic geography� and “spatial economics,� we find insights on the potentials of industrial agglomeration for regional and national economic development. This paper looked into the evolution of industrial development in the country as a means of elucidating the centripetal and centrifugal forces leading to agglomeration of firms and investments. A micro perspective was provided with the case study extended into the prime region in the country, Greater Manila Area. It was found that industrial agglomeration in the country takes the form of special economic zones and industry clusters, indicating that the government is taking the route towards regional dispersal of industries and the clustering strategy to spur industrial dynamism and competitiveness and consequently, regional and national economic development.
    Keywords: economic geography, spatial economics, industrial development, economic development
    JEL: L52 L50 L51
    Date: 2010–01
  9. By: Thulin, Per (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper investigates the relationship between inter-firm labor mobility and regional productivity growth. Previous studies have shown that density is positively correlated with growth. I claim that it is not density in itself, but rather the attributes associated with it that drives economic growth. One such attribute is the increased possibility for labor mobility and knowledge diffusion that follows when firms and individuals locate in close proximity to each other. This hypothesis is tested using a matched employer-employee dataset where regional labor mobility is instrumented with density. The result shows that labor mobility increases regional growth rates.
    Keywords: Labor mobility; regional growth; agglomeration economies
    JEL: J62 R11 R23
    Date: 2009–12–18
  10. By: Emilio T. Antonio Jr.; Ma. Cherry Lyn S. Rodolfo (Philippine Institute for Development Studies)
    Abstract: The paper discusses the state of the Philippine Garments Industry, with specific focus on its competitiveness and logistics infrastructure, and how the industry can make use of the prospective Free Trade Agreement with the US. With the signing of the Agreement on Textiles and Clothing on January 1, 2005 which called for the removal of all quotas over a 10-year phase-out period, textiles and apparels had been integrated into the mainstream of trade. The question, therefore, is how the Philippines should position itself into this new era of trade in garments. For the Philippines to compete, the industry needs to move up in the value chain, significantly improve its supply chain and seek preferential access to the US. Consolidation of resources among firms and investments generation for productivity enhancement are greatly needed. An FTA can likely increase the Philippines’ competitiveness in the US market but the long-term solutions should be focused on industrial upgrading. Logistics must be improved and investments on physical and human capital must be made to improve the clustering programs between garments producers and textile firms.
    JEL: L67 F13 P33
    Date: 2010–01
  11. By: Vito Amendolagine (Department of Economics & Mathematics, University of Bari); Rosa Capolupo (Department of Economics & Mathematics, University of Bari); Nadia Petragallo (Department of Economics & Mathematics, University of Bari)
    Abstract: Following a growing literature we test, in this paper, the two alternative hypotheses of self selection and learning by exporting across different Italian manufacturing firms. Using matched sampling techniques, we estimate whether new export-oriented firms are more efficient than domestically-oriented firms on the basis of three Italian representative Surveys of manufacturing firms covering consecutive triennial periods (1995-2003). Our findings indicate that export entrants improve their productivity in the first period after entry. This occurs for both total factor productivity (TFP) and labour productivity growth rates. These results are consistent with those found in the existing literature for many countries. The only lasting significant effect that we find among the different measures of performances is that new exporters earn higher profits than their domestic counterparts.
    Keywords: international trade, Export-led growth, productivity, matched techniques
    JEL: F11 F14 O12 C22
    Date: 2010–01
  12. By: Justin Yifu Lin; Pengfei Zhang (China Center for Economic Research)
    Abstract: In this paper, we develop an endogenous growth model that combines structural change with repeated product improvements. There are two sectors in the present paper, one is traditional sector, and the other is modern sector. The technological progress in the traditional sector takes the form of horizontal innovation based on expanding variety, while the technologies in the modern sector become not only increasingly capital-intensive but also progressively productive over time. The application of the basic model to the less developed economies show that the optimal industrial structure in the less developed countries (LDCs) is endogenously determined by its factor endowments; the firm in the LDCs that enters the capital-intensive, advanced industry in the developed countries (DCs) would be nonviable owing to the relative scarcity of capital in the LDCs’ factor endowments; whether the industrial structure matches with the factor endowment structure or not is the fundamental cause to explain differences in economic performance among the LDCs.
    Keywords: Capital Intensity, Development Strategy, Factor Endowments, Endogenous Growth, Industrial Structure, Productivity, Technology, Viability
    JEL: D24 O11 O14 O30 O40 O41
    Date: 2010–01
  13. By: Cristiano Antonelli (Department of Economics, University of Turin - University of Turin); Jackie Krafft (GREDEG - Groupe de recherche en Droit Economie Gestion - Université de Nice Sophia-Antipolis); Francesco Quatraro (Department of Economics, University of Turin - University of Turin, GREDEG - Groupe de recherche en Droit Economie Gestion - Université de Nice Sophia-Antipolis)
    Abstract: The economics of recombinant knowledge is a promising field of investigation. New technological systems emerge when strong cores of complementary knowledge consolidate and feed an array of coherent applications and implementations. However, diminishing returns to recombination eventually emerge, and the rates of growth of technological systems gradually decline. Empirical evidence based on analysis of the co-occurrence of technological classes within two or more patent applications, allows the identification and measurement of the dynamics of knowledge recombination. Our analysis focus on patent applications to the European Patent Office, in the period 1981-2003, and provides empirical evidence on the emergence of the new technological system based upon information and communication technologies (ICTs) and their wide scope of applications as the result of a process of knowledge recombination. The empirical investigation confirms that the recombination process has been more effective in countries characterized by higher levels of coherence and specialization of their knowledge space. Countries better able to master the recombinant generation of new technological knowledge have experienced higher rates of increase of national multifactor productivity growth.
    Date: 2010
  14. By: Myrna S. Austria (Philippine Institute for Development Studies)
    Abstract: The participation of the Philippines in the global production network of multinational electronic companies has undoubtedly shaped the pattern and structure of the country’s international trade since the early 1990s. While the industry has remained the largest foreign exchange earner for the country, the country’s participation in the global production network industry is confronted, for the longest time, with one major issue. That is, the country hardly progressed beyond the lowest level of the production chain - labor intensive and import dependent assembly and testing; and hence, the value added of the industry has remained small. The industry is competitive in 18 electronic products that accounted for about 86 percent of the industry’s total exports. The government, however, needs to address the weaknesses and inadequacies of the local support structures that have constrained the ability of the country to move towards higher levels of the value chain in order to ensure that the global players currently operating in the country will remain and expand operations. Since the global production network is market-driven, negotiations under an RP-US Free Trade Area should be focused on trade and investment liberalization and facilitation in order to improve the functioning of the markets of both economies.
    Keywords: International trade, global production networks, competitiveness, free trade agreements, local support structures, harmonization of standards, mutual recognition of procedures
    JEL: P33 L63 F14
    Date: 2010–01
  15. By: Gilberto M. Llanto; Enrico L. Basilio; Leilanie Basilio (Philippine Institute for Development Studies)
    Abstract: The Philippines is an archipelago of approximately 7,107 islands. It has a long coastline extending to 235,973 square kilometers which is longer than that of the United States (UNESCAP 2002b). The country’s archipelagic configuration requires an efficient maritime transport infrastructure composed of ports and shipping for growth and socioeconomic integration. The integration of peripheral islands to the urban economic nodes such as Metro Manila, Cebu, Davao and General Santos and the diffusion of investments and economic activities fundamentally count on an efficient road and maritime transport network. This paper examines competition policy and the regulatory framework of the port and shipping sectors. It assesses the policies and programs of the government in promoting competition in these sectors and recommends areas for policy and regulatory reform. After a brief description of the analytical underpinnings of competition policy and regulation the paper reviews the present state of competition and regulation in Philippine ports and interisland shipping to identify emerging issues that call for policy action. It provides specific recommendations for policy and regulatory reform.
    Keywords: maritime transport, ports and inter-island shipping, competition policy, regulatory framework, market contestability, landlord port model
    JEL: L51 L90 O19
    Date: 2010–01
  16. By: Anthony Chin; Hong Junjie (Singapore Centre for Applied and Policy Economics)
    Abstract: In recent years the logistic needs have created tremendous pressure on the ‘hard’ transport infrastructure. Logistics and the harness of information technology are the key facilitators of mobility. The Chinese logistics market is still in its infancy and creates tremendous opportunities for investors. It recognized as one of important driving forces both for national economy and business. Beijing, Tianjin, Shanghai, Shenzhen and Guanzhou aspire to be regional or international logistics hubs and have adopted preferential policies in attracting FDIs in logistics. From 1996 to 2001, foreign capital invested in transportation, storage, post and telecommunications increased from USD6.96 billion to USD15.16 billion. This study looks at the location decisions of foreign logistics firms and identifies with the aid of a multinomial logit model factors that are crucial in attracting them to China. This is important as they have an important role to play in filling in the gap left by traditional Chinese firms, which largely concentrate, on warehousing and distribution. The results suggest that location of logistics firms depends on transport infrastructure, market size, labor quality and cost, agglomeration economies, communication cost, economic privatization degree, as well as government incentives. The importance of the above factors varies by source of region. European and North American firms favor higher population densities, lower labor cost, convenient airway transport and large cities while logistics firms from Hong Kong, Macao and Taiwan put more emphasis on communication infrastructure.
    Keywords: logistics, transport infrastructure, investment,
    JEL: H54 P33
    Date: 2010–01
  17. By: Niels Bosma; Sander Wennekers; Erik Stam
    Abstract: This paper presents the results of a novel international study of intrapreneurship ( i.e., employees developing new business activities for their employer), carried out in eleven countries in the framework of the Global Entrepreneurship Monitor. At the individual level, it is found that intrapreneurs are much more likely to have intentions to start a new independent business than other employees. However, at the macro level the study finds a negative correlation between intrapreneurship and independent entrepreneurship. One explanation for these contrasting outcomes is a diverging effect of per capita income on intrapreneurship (positive effect) and early-stage entrepreneurial activity (negative effect).  
    Date: 2010–01–12

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