nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2010‒10‒09
thirteen papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Knowledge Commodification and New Patterns of Specialisation: Professionals and Experts in Knowledge-Intensive Business Services (KIBS) By Simone Strambach
  2. Do Clusters Really Matter for Innovation Practices in Information Technology? Questioning the Significance of Technological Knowledge Spillovers By Franz Huber
  3. Firm Strategy, Location and MNE-networks By Lööf, Hans; Johansson, Borje
  4. Organizational Learning Strategies of Start-up Firms; Creating the Office Of Strategic Thinking (OST) By Chatterjee, Sidharta
  5. Firm Growth and Profitability:The Role of Mobile IT and Organizational Practices By Heli Koski
  6. Globalization and Knowledge Spillover: International Direct Investment, Exports and Patents By Chang, C-L.; Chen, S-P.; McAleer, M.J.
  7. How do Japanese and French firms in steel industry address the institutional change and the globalization? Employment adjustment and age management in a downsizing context By Emilie Lanciano; Michio Nitta
  8. Venture capitalists in Spain: cluster analysis of criteria used in the screening process By Ginés Hernández Cánovas; María Camino Ramón Llorens
  9. SMEs, Entrepreneurship and Local Development in the Marche Region, Italy By Jonathan Potter; Alessandra Proto; Marco Marchese
  10. Strategic Random Networks By Ben Golub; Yair Livne
  11. Characterizing Global Stability and the Correspondence Principle in Games of Strategic Substitutes By Roy, Sunanda; Sabarwal, Tarun
  12. Stakeholder protection in corporate governance and in the legal system, the founders’ perspective, and the varieties of capitalism By Chilosi, Alberto
  13. Measuring firms’ financial constraints: Evidence for Portugal through different approaches By Filipe Silva; Carlos Carreira

  1. By: Simone Strambach (Department of Geography, Philipps University Marburg)
    Abstract: The knowledge society is characterized by knowledge becoming a kind of commodity that can be traded and priced. Knowledge-intensive business services (KIBS) are representative for such a knowledge-based economy, since their main input and output factor is directly related to knowledge itself. While research on KIBS has been mainly conducted on the firm and sector level, focusing on their role in innovation processes, little attention has been paid to the knowledge workers within the firms, whose knowledge assets have to be acquired, configured and deployed. Yet these knowledge creation processes on the micro-level are central to understand how KIBS can drive innovation in regional and national economies by contributing to new patterns of knowledge specialisation and the diversification of knowledge markets. Hence this paper seeks to elaborate on the generic processes which underlay knowledge processing and production. It will introduce the influences of different types of knowledge and knowledge bases of KIBS sub-sectors on the processes and structures in which knowledge is produced. Thereby it will reveal that by gaining experience-based expertise in horizontal and vertical knowledge domains of both their knowledge workers and their clients KIBS foster the emergence of composite and combinatorial knowledge driving knowledge specialisation further.
    Keywords: Knowledge development, Innovation, Professional Services, Business Services, Organization
    JEL: D23 L1 L84 O3
    Date: 2010–09
  2. By: Franz Huber
    Abstract: A widespread assumption in economic geography and the economics of innovation is that firms located in clusters benefit from territorial learning and knowledge spillovers. However, it remains unclear to what extent these benefits actually occur. This paper aims to address this issue and examines to what extent research and development (R&D) workers in the Cambridge Information Technology (IT) Cluster benefit from being located in the Cluster. The study shows why many do not believe that their work benefits from being located in the Cluster. The results suggest that academics as well as policy makers need to be more careful with the assumption of technological knowledge spillovers in innovative clusters. The significant advantages of the Cambridge IT Cluster seem to be of a different nature; in particular they concern labour market advantages and benefits from the global ‘brand’ of Cambridge.
    Keywords: Clusters; Knowledge Spillovers; Territorial Learning; Agglomeration Economies
    JEL: D83 O18 R11
    Date: 2010
  3. By: Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Johansson, Borje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper asks three explicit questions, where the first one concerns the impact of a firm’s choice of innovation strategy and knowledge resources. The study aims at confirming that firms with a strategy with R&D persistency have a markedly higher productivity, profitability and wage level than other firms. The second question is focused on the location of firms, with a distinction between firms dwelling in a metropolitan region and other firms. The hypothesis is that a metropolitan knowledge milieu may augment the performance of firms. The third question concerns knowledge exchange in regional and global networks that pertain to multinational affiliates. Applying Swedish data on individual firms and their location, the paper shows that firm performance is significantly higher when the three factors R&D persistency, metropolitan location and affiliation to a multinational group are combined.
    Keywords: R&D; knowledge; productivity; profitability; regional milieu
    JEL: F23 L25 O31 O33 R11
    Date: 2010–09–28
  4. By: Chatterjee, Sidharta
    Abstract: In this short paper, we discuss some efficient strategic content management practices that would help enhance a firm’s business horizons to deliver better quality product to their end customers. Since business firms who operate data mining and knowledge-based services related to market research needs to evolve sound information management practices through efficient data re-engineering, research and analysis (R&A) techniques. Companies in the business of market research needs to develop certain skills to win on empowered consumers and hence to stay ahead in debate in this age of hyper-competition. These companies in either way continuously innovate and standardize their content development strategic activities through process improvement from knowledge gain and expertise as well from knowledge manipulation in order to move up the value-chain. To this end, we propose some innovative, yet flexible strategies that shed some fresh light on the thought development process by proposing the establishment of a new Office of Strategic Thinking (OST) under an existing R&D set up for setting standards which are of highest and best in quality, while retaining the ability to innovate contemporaneously. Our study concentrates mainly on market research firms and new entrants who put in great effort to keep abreast of skills and process development methodologies in this ever-changing business environment.
    Keywords: Content management; OST; organizational approach to learning; market competition; knowledge innovation; market research; information management; value-creation; firm growth
    JEL: L16 L26 O32 O31 L15
    Date: 2010–08
  5. By: Heli Koski
    Abstract: This study uses a unique survey data from 398 Finnish manufacturing firms to explore how the order of magnitude of mobility and connectivity of a firm’s ICT stock in conjunction with various organizational innovation and HRM practices affect the firm’s performance. The data suggest that mobile connectivity as such does not significantly contribute to the firm’s growth and profitability. However, the empirical results find support for the agency theory based argument : a greater mobility associated with the use of a pertinent economic incentive scheme and a systematic performance monitoring seems to promote the firm’s growth. In addition, re-organization of tasks within an organization is implemented most successfully, boosting profitability, when the firm’s re-organization strategy incorporates the adoption of mobile, Internet-connected IT stock.
    Keywords: ICT use, mobility, connectivity, organizational practices, firm performance
    JEL: L25 M52 M54 O33
    Date: 2010–09–28
  6. By: Chang, C-L.; Chen, S-P.; McAleer, M.J.
    Abstract: This paper examines the impact of the three main channels of international trade on domestic innovation, namely outward direct investment, inward direct investment (IDI) and exports. The number of Triadic patents serves as a proxy for innovation. The data set contains 37 countries that are considered to be highly competitive in the world market, covering the period 1994 to 2005. The empirical results show that increased exports and outward direct investment are able to stimulate an increase in patent output. In contrast, IDI exhibits a negative relationship with domestic patents. The paper shows that the impact of IDI on domestic innovation is characterized by two forces, and the positive effect of cross-border mergers and acquisitions by foreigners is less than the negative effect of the remaining IDI.
    Keywords: international direct investment;export;triadic patent;outward direct investment;inward direct investment;R&D;negative binomial model
    Date: 2010–09–28
  7. By: Emilie Lanciano (COACTIS - Université Lumière - Lyon II : EA4161 - Université Jean Monnet - Saint-Etienne); Michio Nitta (Shaken - Social Science Departement - University of Tokyo)
    Abstract: Steel industry has been engaged for a very long time in a downsizing process which has deeply transformed social and industrial relations, work and employment management. Once, these industry was owned and managed by big national groups (sometimes public) and employed a lot of workers at different levels of qualification. Now, a large movement of concentration leads to the emergence of transnational leader. Steel industry has become more and more a footloose industry, with high technological level. After several downsizing operations, firms must adopt now more flexible strategies which integrate the aging of workforce (with the retirement of baby- boom generation), and the question of transmission of skills. The age management represents now the main way – and the cheapest one in the short term– to reduce and optimize the firm workforce, but also a crucial issue for the preservation of knowledge and skills, required by the activity. In these conditions, how do firms manage the new context of financial and economic crisis? What are the consequences on labour and industrial relations, and work organisation in two important plants belonging to two international leaders? We intend to discuss the hypothesis of the convergence of firms strategy and employment system. We will wonder if, and how, historical background and the nature of labour market in which firms are embedded, influence the downsizing strategy and the age management of firms. We will focus our comparative analysis on two steel plants, localised in France and in Japan. We will examine changes that have occurred in labour and industrial relations and human resource development in two steel industry plants after the 1980s, in Japan and in France. The paper presents the intermediate results of a comparative research on new dynamics of labour markets in France and in Japan . It has been led both by Japanese and French researchers which used statistical databases on Japanese and French Steel industry and qualitative methodology (semi-directive interviews).
    Keywords: downsizing, steelmaking industry, labour markets, age management, comparison, France, Japan
    Date: 2010–09–13
  8. By: Ginés Hernández Cánovas (Universidad Politécnica de Cartagena); María Camino Ramón Llorens (Dpto. Economía Financiera y Contabilidad)
    Abstract: This paper uses a survey dataset of 51 Venture Capital Companies to address a segmentation of the venture capital industry. Our paper yields two specific contributions. First, we analyze in a Continental European bank-based system the most important investment criteria identified by previous empirical literature. Second, we show that existing differences in the use of the investment criteria depend on the specific characteristics of the venture capital companies. Therefore, the same business proposal might obtain different decisions depending on the venture company that the entrepreneur approaches. Our paper provides a better insight into the screening process of venture capitalists and the results have clear implications for entrepreneurs and venture capital companies. The knowledge of what investment criteria are most important to venture capitalists might help entrepreneurs to elaborate better proposals, addressing them to the most suitable venture capital company. El presente estudio usa una encuesta postal realizada a 51 entidades de capital riesgo (ECR) con el objetivo de establecer diferentes tipologías de gestores y de empresas en la industria del capital riesgo. Nuestro trabajo realiza dos contribuciones específicas. En primer lugar, analizamos para el modelo bancario de la Europa Continental aquellos criterios de selección de inversiones más importantes identificados en la literatura empírica previa. En segundo lugar, mostramos que las diferencias en el uso de los criterios de selección de inversiones dependen de las características de las ECR. Por tanto, una misma propuesta de negocio podría obtener diferentes respuestas según la ECR que la evalúe. Nuestro trabajo proporciona una mejor comprensión del proceso de selección realizado por los gestores, y los resultados tienen claras implicaciones tanto para los empresarios como para las ECR. Conocer cuáles son los principales criterios de selección de inversiones podría ayudar a los empresarios a elaborar mejores propuestas, y buscar la financiación en ECR más adecuadas.
    Keywords: capital riesgo, análisis de conglomerados, toma de decisiones venture capital, cluster analysis, screening criteria, decision-making
    JEL: G24
    Date: 2010–09
  9. By: Jonathan Potter; Alessandra Proto; Marco Marchese
    Abstract: The Marche region is one of the most industrialised regions in Italy and is considered a region of excellence, not only for its economic performance, but also for its cultural, natural and social richness. Marche belongs to what has come to be called the “Third Italy”: a model of development based on small and medium-sized enterprises (SMEs) located in industrial districts. Its economy is driven by the performance of a myriad of SMEs, which have been characterised by a high level of creativity and innovation in the past…
    Date: 2010–07
  10. By: Ben Golub (Stanford Graduate School of Business); Yair Livne (Stanford Graduate School of Business)
    Abstract: To study how economic fundamentals affect the formation of social networks, a model is needed that (i) has agents responding rationally to incentives (ii) can be taken to the data. This paper combines game-theoretic and statistical approaches to network formation in order to develop such a model. Agents spend costly resources to socialize. Their effort levels determine the probabilities of relationships, which are valuable for their direct benefits and also because they lead to other relationships in a second stage of “meeting friends of friends”. The model predicts random graphs with tunable degree distributions and clustering, and characterizes how those statistics depend on the economic fundamentals. When the value of friends-of-friends is low, equilibrium networks can be either sparse or thick. But as soon as this value crosses a key threshold, the sparse equilibrium disappears completely and only densely connected networks are possible. This transition mitigates an extreme inefficiency.
    Keywords: network formation, random graphs, random networks, phase transition
    JEL: D85
    Date: 2010–09
  11. By: Roy, Sunanda; Sabarwal, Tarun
    Date: 2010–09–28
  12. By: Chilosi, Alberto
    Abstract: Not necessarily the most appropriate defence of stakeholder interests can be found in the institutions and practice of corporate governance, other specific kinds of legal provisions can be more suitable. In the literature the issue of protection of stakeholder interests (of employees in particular) is generally considered in a static context: how should corporate governance be shaped in relation to existing firms, according in particular to some subjective criteria of fairness and fair play. But in order to exist and to reach a given dimension the firm must be first founded and grow. Thus the propensity to found a firm and finance and manage its growth, and therefore the supply of entrepreneurship, depend, among others, on the extent of founders’ and co-owners’ rights, and thus on the institutions of corporate governance. As shown by Hall and Soskice (2001) the latter, together with the different legal setups, result in different varieties of capitalism, such as broadly speaking the Anglo-Saxon or the continental-European variety, with different characteristics, advantages and disadvantages. Among the disadvantages of the continental European model, not considered by Hall and Soskice, are much higher rates of long-run unemployment.
    Keywords: Stakeholders; Corporate Governance; Labour Market; Varieties of Capitalism
    JEL: K22 G34 P10
    Date: 2010–09–28
  13. By: Filipe Silva (Faculdade de Economia, Universidade de Coimbra, Portugal); Carlos Carreira (GEMF/Faculdade de Economia, Universidade de Coimbra, Portugal)
    Abstract: Today's shortage of financial resources calls for the attention of researchers to the problem of financial constraints faced by firms. In this paper we analyse firms' financial constraints by estimating both investment-cash flow sensitivities and cash-cash flow sensitivities upon a large unbalanced panel of Portuguese firms in order to obtain robust findings. Additionally, we classify firms according to characteristics that are generally believed to indicate the presence of constraints (size, age and dividend payment). Our results clearly show that Portuguese firms are, in general, financially constrained. Furthermore, we verify that such constraints are more severe for certain groups of firms, in particular those firms that are smaller and do not pay dividends. However, we do not find evidence that age as a good proxy for financial constraints. Finally, we cast some doubts on the direct implementation of the SA index as a measure of financial constraints.
    Keywords: Financial constraints; Firm-level studies; Portugal.
    JEL: D92 G32 L00 L2
    Date: 2010–07

This nep-cse issue is ©2010 by Joao Jose de Matos Ferreira. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.