nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2010‒08‒06
twenty papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. How do firms’ outward FDI strategies relate to their activity at home? Empirical evidence for the UK By Helen Simpson
  2. Do External Technology Acquisitions Matter for Innovative Efficiency and Productivity? By Tseveen Gantumur; Andreas Stephan
  3. Quantity Competition, Endogenous Motives and Behavioral Heterogeneity By Chirco, Alessandra; Colombo , Caterina; Scrimitore, Marcella
  4. The determinants of innovation: What is the role of risk? By Pierluigi Murro
  5. Regional Hub Port Development - The Case of Montevideo, Uruguay By Gordon Wilmsmeier; Inmaculada Martínez-Zarzoso; Norbert Fiess
  6. Incentive-Based and Knowledge-Based Theories of the Firm: Some Recent Developments By Nicola Meccheri; Mario Morroni
  7. Understanding the competitiveness implications of future phases of EU ETS on the industrial sectors By Oberndorfer, Ulrich; Alexeeva-Talebi, Victoria; Löschel, Andreas
  8. The Effects of Ownership Structure and Industry Characteristics On Export Performance By Dahai Fu; Yanrui Wu; Yihong Tang
  9. The Impact of Venture Capital on Innovation Behaviour and Firm Growth By Michael Peneder
  10. Competition, product and process innovation: an empirical analysis By Carlos D. Santos
  11. The Porter Hypothesis at 20: can Environmental Regulation Enhance Innovation and Competitiveness? By Stefan AMBEC; Mark A. COHEN; Stewart ELGIE; Paul LANOIE
  12. The Internationalization of Small and Medium Enterprises in Regional and Global Value Chains By Lim, Hank; Kimura, Fukunari
  14. Capabilities of technology utilization and technology integration : Impact of 3D technologies on product development process and performance By Takeda, Yoko; Aoshima, Yaichi; Nobeoka, Kentaro
  15. Strategic Management of Tourism Sector in Bangladesh to raise Gross Domestic Product: An analysis By Muhammad Mahboob Ali; Rehana Parvin
  16. Determinants of Competitiveness of the Indian Auto Industry By Badri Narayanan G.
  17. Entrepreneurship and the extensive margin in export growth : a microeconomic accounting of Costa Rica's export growth during 1997-2007 By Lederman, Daniel; Rodriguez-Clare, Andres; Yi Xu, Daniel
  18. Chile: Boosting Productivity Growth by Strengthening Competition, Entrepreneurship and Innovation By Cyrille Schwellnus
  19. The National and International Effects;of Regional Policy Choices: Agglomeration Economies, Peripherality and Territorial Characteristics By Ugo FRATESI
  20. An empirical model for strategic network foundation By Nicholas Christakis; James Fowler; Guido Imbens; Karthik Kalyanaraman

  1. By: Helen Simpson
    Abstract: This paper investigates the structure of firms’ outward FDI and their behaviour at home in both manufacturing and business services sectors. UK multinationals with overseas affiliates in low-wage economies invest simultaneously in a large number of high-wage countries. I find that more productive multinationals operate in a greater number of countries, consistent with their being able to bear the fixed costs of investing in numerous locations abroad. UK manufacturing plants owned by large-scale, low-wage economy outward investors display lower domestic employment growth, in particular in low-skill activities, consistent with low-wage economy labour substituting for low-skill labour in the UK.
    Keywords: multinational enterprises, skills, globalisation
    JEL: F2
    Date: 2010–05
  2. By: Tseveen Gantumur; Andreas Stephan
    Abstract: To quickly adapt to technological change and developments, and thus remain competitive, firms increasingly resort to the use of external technology. This paper investigates whether and to what extent the acquisition of external disembodied technology affects the efficiency and productivity in innovation of technology acquiring firms. Using the stochastic frontier analysis combined with a difference-in-difference matching approach and firm-level panel from the German Innovation Survey for the period 1992-2004, we find that manufacturing firms that acquire disembodied technology experience more growth in innovative productivity than non-acquiring firms do. Thus, this study provides evidence on complementarity between internal and external R&D in innovation production, which is attributed by increasing returns to R&D scale and increasing technical efficiency. Moreover, we find that firm size significantly contributes to innovative efficiency and productivity of external technology acquirers.
    Keywords: Technology acquisition, innovative efficiency, innovative productivity, SFA, Difference-in-difference matching
    JEL: O30 L24 L25 L60
    Date: 2010
  3. By: Chirco, Alessandra; Colombo , Caterina; Scrimitore, Marcella
    Abstract: The paper shows that strategic quantity competition can be characterized by behavioral heterogeneity, once competing firms are allowed in a pre-market stage to optimally choose the behavioral rule they will follow in their strategic choice of quantities. In particular, partitions of the population of identical firms in profit maximizers and relative profit maximizers turn out to be deviation-proof equilibria, both in simultaneous and sequential game structures. Our findings that in a strategic framework heterogeneous behavioral rules are consistent with individual incentives provides a game-theoretic microfoundation of heterogeneity.
    Keywords: Behavioral Heterogeneity; Endogenous Motives; Relative Performance; Multistage Games; Quantity Competition.
    JEL: L21 L13 C72
    Date: 2010–07
  4. By: Pierluigi Murro (University of Bari)
    Abstract: Because of its importance in understanding and explaining growth, the topic of innovation has received a huge attention in the economic literature. However, our knowledge of the factors that inuence in- novation and its related activities is not as exhaustive as it could be. The present study aims at contributing to analyse the determinants of innovation, with a special focus on rm risk. Employing a rich sample of Italian manufacturing rms, we tested for the impact on innovation of the riskiness of the rm, as proxied by the probability of default. We found that riskiness of enterprise reduces the tendency to innovate for the rms. The main channel through which rm risk aects innovation capability appears to be that of innovation nancing.
    Keywords: Technological Change; Financial Risk and Risk Management
    JEL: O3 G32
    Date: 2010–07
  5. By: Gordon Wilmsmeier (Edinburgh Napier University / Scotland); Inmaculada Martínez-Zarzoso (Georg-August-Universität, Göttingen / Germany); Norbert Fiess (The World Bank, Buenos Aires)
    Abstract: This paper reflects on port development in Uruguay in an environment of trilateral interport competition. The regional characteristics of port development in terms of their geographical, functional and operational characteristics are discussed by analysing the port system’s evolution. The case of Montevideo as the success or failure of a regional hub port development strategy is analysed in detail. Particular attention is given to the evolution and impact of the liner shipping service network in defining the role of a port within a regional port system. Further, the evolution of the port of Montevideo in terms of institutional and organisational and the related strategy are described, with focus on the effect on transhipment cargo in the port. The main findings are twofold. First, port development in Montevideo been driven proactively and under a clear strategy, but still faces a number of challenges. Second, economies of scale in transport, port infrastructure and connectivity are important determinants of port development, of which the latter is principally driven by external actors, the shipping lines. The paper shows that despite strong efforts Uruguay and its principal port Montevideo are highly dependent on external factors, particularly the level of connectivity, in their strategy to develop Montevideo as a regional hub. Thus the findings are relevant in relation to the discussion of Montevideo’s development potentials as a hub on South America’s East Coast in particular and the effects of external influences on port development from in general.
    Keywords: Regional port development; transhipment, connectivity; distance; Latin America
    Date: 2010–06–30
  6. By: Nicola Meccheri; Mario Morroni
    Abstract: This article presents a critical review of advances in incentive-based and knowledge-based theories of the firm. In particular, we address some developments in the incentive-based approach regarding relational contracts and contracts as "reference points". As far as the evolution of knowledge-based theories is concerned, we focus on the interesting implications of the concept of dynamic capabilities. Finally, we investigate some recent attempts to bridge these two main streams of research, which have for a long time been regarded as rival rather than complementary.
    Keywords: Theory of the firm, contracts, incentives, knowledge, competencies
    JEL: D21 D23
    Date: 2010–06–10
  7. By: Oberndorfer, Ulrich; Alexeeva-Talebi, Victoria; Löschel, Andreas
    Abstract: In making key decisions for the future phases of the European Union Emissions Trading Scheme (EU ETS), policy makers need to fully understand the competitiveness implications of these decisions on industrial sectors. In this paper, we conduct an empirical analysis of cost pass-through ability of producers of selected products within the sectors refineries, glass, chemicals and ceramics of the UK economy. Our results provide new insights into the debate on the ability of pass-through of costs generated by the EU ETS. They suggest that some of the sectors analysed have the ability to pass-through a portion of their carbon costs to the consumers: The UK sectors are not capable to completely pass-through their costs into output prices, with the exception of UK ceramic goods. --
    Keywords: Emissions Trading,Competitiveness,Cost Pass-Through
    JEL: C22 D40 H23
    Date: 2010
  8. By: Dahai Fu (UWA Business School, The University of Western Australia); Yanrui Wu (UWA Business School, The University of Western Australia); Yihong Tang (School of International Trade and Economics, University of International Business and Economics Beijing)
    Abstract: Ownership structure and industry characteristics as internal and external factors respectively significantly impact the export performance of Chinese manufacturing firms. Three different yet related models, namely, logit, tobit and ordered probit models, that correspond to three different indicators of export performance are considered. It was found that the export performance of Chinese manufacturing firms is related not only to foreign capital involvement but also to the extent of foreign investors’ control. Foreign controlled enterprises are more likely to show better export performance than those controlled by domestic investors. Furthermore, the impact of industry concentration on export performance is unclear, while both industry export-orientation and industry capital intensity have a strong impact on the export performance of Chinese firms.
    Keywords: Export performance; Chinese firms; Ownership; Industry characteristics
    Date: 2010
  9. By: Michael Peneder (WIFO)
    Abstract: Proposing a novel research design for firm-level impact studies, I investigate the effects of venture capital financing on corporate performance by applying a two-stage propensity score matching on Austrian micro-data. Controlling for differences in industry, location, legal status, size, age, credit rating, export and innovation behaviour, the findings (i) assert the financing function of venture capital, showing that recipients lacked access to satisfactory alternative sources of capital; (ii) identify selection effects, where venture capital is invested in firms with high performance potential; and finally (iii) confirm the value adding function in terms of a genuine causal impact of venture capital on firm growth, yet not on innovation output.
    Keywords: venture capital, entrepreneurship, firm growth, propensity score matching
    Date: 2010–04–20
  10. By: Carlos D. Santos (Dpto. Fundamentos del Análisis Económico)
    Abstract: Competition has long been regarded as productivity enhancing. Understanding the mechanism by which competition affects innovation and productivity is therefore an important topic for economic policy. The main contribution of this paper is to disentangle the relationship between competition and two sides of innovation: product and process. I write down a model and discuss the conditions under which we can identify the causal mechanism. Overall I find that competition, measured by the number of competitors or market shares, has negative effects on product innovation and no effects on process innovation. The explanation is very simple. By shifting demand, competition directly changes the optimality condition for product but not for process innovation. Thus, competition has no direct effects on process innovations or, as a consequence, productivity.
    Keywords: competition, innovation, R&D, product innovation, process innovation
    JEL: L11 L60 O30
    Date: 2010–07
  11. By: Stefan AMBEC; Mark A. COHEN; Stewart ELGIE; Paul LANOIE (IEA, HEC Montréal)
    Abstract: Twenty years ago, Harvard Business School economist and strategy professor Michael Porter stood conventional wisdom about the impact of environmental regulation on business on its head by declaring that well designed regulation could actually enhance competitiveness. The traditional view of environmental regulation held by virtually all economists until that time was that requiring firms to reduce an externality like pollution necessarily restricted their options and thus by definition reduced their profits. After all, if there are profitable opportunities to reduce pollution, profit maximizing firms would already be taking advantage of those opportunities. Over the past 20 years, much has been written about what has since become known simply as the Porter Hypothesis (“PH”). Yet, even today, there is conflicting evidence, alternative theories that might explain the PH, and oftentimes a misunderstanding of what the PH does and does not say. This paper provides an overview of the key theoretical and empirical insights on the PH to date, draw policy implications from these insights, and sketches out major research themes going forward.
    Keywords: Porter Hypothesis, environmental policy, innovation, performance.
    Date: 2010–07
  12. By: Lim, Hank (Asian Development Bank Institute); Kimura, Fukunari (Asian Development Bank Institute)
    Abstract: <p>Production networks and the regional division of labor have been established in East Asia resulting in massive vertical intra-industry trade in parts and components within the region. This phenomenon is known as cross-border production sharing or the fragmentation of production processes into many stages across different countries. New development strategies claim that participation in international production and distribution networks is the key to accelerating economic development in the era of globalization. This process suggests that vertical input-output linkages between local firms and multinational corporations are the most powerful channels to accelerate technology transfers and spillovers. <p>Given the trends of globalization and economic integration in East Asia, there is significant potential for the small and medium enterprise (SME) sector to increase its contribution to the region's development through greater participation in global value chains. However, multiple market failures exist with regard to the development of SMEs and local entrepreneurship. These risks can be mitigated by proper policy measures such as strengthening technological and human resource capabilities through better networking and facilitating access to financing for SMEs. Despite many distortions and inefficiencies in implementing regional economic integration schemes in East Asia, there are many cumulative positive effects contributing to the emerging trend internationalization of SMEs in the region. This process can be significantly strengthened by creating a positive business environment through the standardization of products and services, rules and regulations, and a seamless market infrastructure in the region.
    Keywords: internationalization SMEs; regional development policies; regional market failure
    JEL: D20
    Date: 2010–07–29
  13. By: Grégory Wegmann (LEG - Laboratoire d'Economie et de Gestion - CNRS : UMR5118 - Université de Bourgogne)
    Abstract: This paper analyses the strategic management accounting concept with an instrumental point of view. We try to show in what extend the ABC developments could be included in a strategic approach of the management accounting and to test if the ABC is a relevant tool to drive the strategy. The first part synthesizes the strategic management accounting developments, which try to improve the Activity-Based Costing method. In the first part, we describe them using the Strategic Management Accounting stream, with a link with cost management and ABC. The second part exposes a taxonomy of the reasons why using the ABC method. In a third part, we confront our developments to the field reality with two case studies.
    Keywords: Strategic Management Accounting, Activity-Based Costing, Case Study
    Date: 2010–07–05
  14. By: Takeda, Yoko; Aoshima, Yaichi; Nobeoka, Kentaro
    Abstract: Multi-functional technologies widely influence on organization and often require organizational technology integration capabilities to achieve the total effectiveness. Technology integration capability here implies not only utilizing technologies in the present setting of organizational environment but also reforming organizational process and structure towards total optimization. This paper aims to exam technology integration capabilities among Japanese and Chinese firms through questionnaire surveys regarding impact of 3D technologies on product development process and performance. The results indicated that Japanese companies improved their total performance with process reformation leveraged by 3D technologies; however, among Chinese companies, no significant relationships were observed among 3D technology usage, process reformation and the total performance improvement although they improve the partial performance such as manufacturability by utilizing the technologies. Chinese companies, which have a huge growing market and are on the process of rapidly improving their productivities without strong organizational inertia, could have enough advantage by utilizing technologies to improve the partial performance. On the other hand, Japanese companies, which compete in mature market and have already had highly efficient organizational process, could not find the merits of technology usage without technology integration capabilities. This would be regarded as disadvantage of process-advanced company that they cannot have enough incentive to introduce advanced technology and new entries have a chance to leap-frog the advanced companies in usage of technology in general.
    Date: 2010–06
  15. By: Muhammad Mahboob Ali (Atish Dipankar University of Science and Technology; Bangladesh); Rehana Parvin (Presidency University; Bangladesh)
    Abstract: Tourism sector brings tremendous opportunities as a fastest-growing economic sector in terms of foreign exchange earnings, creation of employment opportunities and raising purchasing power. As such tourism sector can play positive contribution towards enhancing Gross Domestic Product (GDP) of a country. The tourism sector in Bangladesh has been gradually growing from mid Nineties to till now. The study has been undertaken to observe effective and efficient utilization of strategic management of tourism sector to raise Gross domestic product through which macroeconomic sustainability over the time period of the country can be improved. Time period of the study is from December 2009 to February 2010.Authors’ suggested that through improving the efficiency and effectiveness of services of tourism sector ,arranging better facilities ,cost cutting techniques, technological improvements and infrastructural development, both local and foreign tourists can be encouraged to tour with different alternative causes . As such tourism sector may be grown up under holistic approach which in turn will raise Gross Domestic Products as macro economic variables of the country will be improved and sustainable development can be attained. They also argued that through developing public and private sector partnership, Bangladesh Government, related other autonomous organizations/bodies and also foreign direct investment to build strategic leadership, formulating appropriate strategies and implementing of these strategies will create new opportunities and strengthening capacity building and minimizing the weakness as well as removing threats can be feasible.
    Date: 2010–07
  16. By: Badri Narayanan G.
    Abstract: This paper analyses the determinants of competitiveness of auto industry in India, based on a field survey and a quantitative analysis of secondary data. It highlights that all segments of Indian auto sector are growing at a fairly high rates and their productivity as well as export intensity is on the rise. Domestic sales are rising, but they have declined in certain sub-segments of vehicles. However, the R&D expenditure has been scarce. Effective rate of protection of automobile assembly is far higher than that of auto-components manufacturing. Unorganised sector, which is quite significant in auto-component manufacturing, has grown more rapidly in the urban areas than in the rural areas. The econometric analysis suggests various measures that could be taken by the government, particularly, the credit facilitation for SMEs. A field survey comprising auto manufacturers in India underlines various constraints faced by the sector, such as the shortage of skilled manpower along with poor infrastructure, fluctuating steel prices and unavailability of land at reasonable price. This suggests that the government could facilitate the industry in becoming more competitive by taking steps such as structural fiscal reforms, cut in import duties of raw materials and capital goods, promotion of R&D and FDI, training facilities, research-backed negotiations of FTAs, roadmap for harmonising emission norms across the country and infrastructure improvement. Industry, on the other hand, should improve its R&D capabilities and market research. [ICRIER Working Paper No. 201]
    Keywords: Indian Auto Industry, Competitiveness, Efficiency and Indian Auto Policy
    Date: 2010
  17. By: Lederman, Daniel; Rodriguez-Clare, Andres; Yi Xu, Daniel
    Abstract: The literature on the correlation between exports and economic development runs deep into the history of economic thought and permeates policy debates. This paper studies the microeconomic structure of export growth in Costa Rica, with special emphasis on the extensive margin of trade, encompassing new exporting firms, new products, and new export markets, as well as the unit values of new versus incumbent products. The data suggest that few new firms survive the test of exporting -- more than 40 percent of firms exit export activities after one year -- and this firm turnover is associated with a steady deterioration of export unit values (prices). Furthermore, most new export products are associated with product switching by incumbent exporting firms. The typical new product introduced by incumbent firms tended to be priced at about 90 percent of the unit values of incumbent products. In contrast, the usual suspected obstacles to export growth, such as the inability of small firms to enter exporting activities or to grow their exports, appear to be important sources of export growth. In fact, the smallest exporting firms experienced the fastest growth in their export values. Some of these results are compared withthose from other countries that have been examined in related literature.
    Keywords: Economic Theory&Research,Markets and Market Access,Airports and Air Services,Microfinance,Tax Law
    Date: 2010–07–01
  18. By: Cyrille Schwellnus
    Abstract: Productivity growth has declined since the late 1990s, slowing the catching-up process. Structural reforms to strengthen competition, entrepreneurship and innovation would go a long way toward enhancing it. Recent competition policy reforms that strengthen enforcement of cartel law must now be implemented effectively. The National Economic Prosecutor should receive sufficient resources and the ceiling on fines against cartels, which has recently been raised, may need to be reviewed again. Entrepreneurship should be strengthened by reducing regulatory “red tape” for start-ups and simplifying bankruptcy procedures. Recent reforms to the innovation policy framework are welcome but the focus on sectoral priority clusters will need to be accompanied by appropriate monitoring procedures and sunset clauses for public support. This Working Paper relates to the 2010 Economic Survey of Chile (<P>Chili : Augmenter la croissance de la productivité par le renforcement de la concurrence, l'entrepreneuriat et l'innovation<BR>Le déclin de la croissance de la productivité observé depuis la fin des années 90 ralentit le processus de rattrapage. Des réformes structurelles visant à renforcer la concurrence, l’entrepreneuriat et l’innovation ouvriraient largement la voie à un raffermissement de cette croissance. Il convient désormais de mettre concrètement en oeuvre les récentes réformes de la politique de la concurrence visant à consolider l’application de la législation sur les ententes. Il faut doter le Procureur économique national de ressources suffisantes et revoir éventuellement le plafond – déjà relevé il y a peu – des amendes frappant les auteurs d’ententes. L’entrepreneuriat doit être renforcé grâce à l’allègement de la réglementation qui pèse sur la création d’entreprise et à la simplification des procédures de faillite. Les toutes dernières réformes du cadre de la politique de l’innovation vont dans le bon sens mais il faudra assortir les pôles sectoriels prioritaires de procédures de suivi adaptées et de clauses de caducité du soutien de l’État. Ce document de travail se rapporte à l’Étude économique de l’OCDE du Chili 2010 (
    Keywords: growth, productivity, competition, innovation, regulation, Chile, productivité, croissance, réglementation, innovation, concurrence, Chili
    JEL: F43 L16 L5 O3 O4 O54
    Date: 2010–06–16
  19. By: Ugo FRATESI ([n.a.])
    Abstract: This paper analyzes the effects of national regional policy choices on domestic and foreign regions to detect the different interests at play. The analysis starts from a new 2-country-4-region model with agglomeration economies, an immobile production factor and a mobile one, allowing the study of international capital and profit flows moreover, different assumptions on bilateral transport costs allow to obtain results in different spatial settings. It is shown that concurrent and often conflicting interests co-exist, especially when agglomeration economies are strong. The other key variables influencing the results are the characteristics and specificities of regions, which can be introduced in the model, and the existence of peripheral regions.
    Keywords: Agglomeration economies, Efficiency and Equity, Peripherality, Regional Policy, Territorial Characteristics
    JEL: E61 H79 R13 R58
    Date: 2010–07
  20. By: Nicholas Christakis; James Fowler; Guido Imbens (Institute for Fiscal Studies and Harvard University); Karthik Kalyanaraman (Institute for Fiscal Studies and UCL)
    Abstract: <p>We develop and analyze a tractable empirical model for strategic network formation that can be estimated with data from a single network at a single point in time. We model the network formation as a sequential process where in each period a single randomly selected pair of agents has the opportunity to form a link. Conditional on such an opportunity, a link will be formed if both agents view the link as beneficial to them. They base their decision on their own characateristics, the characteristics of the potential partner, and on features of the current state of the network, such as whether the the two potential partners already have friends in common. A key assumption is that agents do not take into account possible future changes to the network. This assumption avoids complications with the presence of multiple equilibria, and also greatly simplifies the computational burden of anlyzing these models. We use Bayesian markov-chain-monte-carlo methods to obtain draws from the posterior distribution of interest. We apply our methods to a social network of 669 high school students, with, on average, 4.6 friends. We then use the model to evaluate the effect of an alternative assignment to classes on the topology of the network.</p>
    Date: 2010–06

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