nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2011‒03‒12
twenty-one papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. External End Users and Firm Innovation Performance By Spyros Arvanitis; Barbara Fuchs; Martin Woerter
  2. Clusters, Networks and Creativity By Karlsson, Charlie
  3. Market Integration and Technological Leadership in Europe. By Belderbos, Rene; Sleuwaegen, Leo; Veugelers, Reinhilde; Boiardi, Priscilla; Leten, Bart; Stroobants, Jesse
  4. The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? By Ambec, Stefan; Cohen, Mark A.; Elgie, Stewart; Lanoie, Paul
  5. How Does Size Matter? Investigating the Relationships Among Plant Size, Industrial Structure, and Manufacturing Productivity By Joshua Drucker
  6. Choosing between foreign investment and subcontracting: Strategies of Italian firms in Romania By Tattara, Giuseppe
  7. The evolution of patent functions: New trends, main challenges and implications for firm strategy By Pascal Corbel; Christian Le Bas
  8. Entrepreneurship, Innovation and Institutions By Erik Stam; Bart Nooteboom
  9. How do special economic zones and industrial clusters drive China's rapid development ? By Zeng, Douglas Zhihua
  10. Intrapreneurship versus independent entrepreneurship: A cross-national analysis of individual entrepreneurial behavior By Niels Bosma; Erik Stam; Sander Wennekers
  11. Unconventional factors of efficiency in public transport. A case study and theory. By Beria, Paolo; Grimaldi, Raffaele
  12. How efficient is the Italian hospitality sector? A window DEA and truncated-Tobit analysis By JG. Brida; Claudio Detotto; Manuela Pulina
  13. Cycles Inside Cycles. Spanish Regional Aggregation By Maria Dolores Gadea; Ana Gomez Loscos; Antonio Montañes
  14. Choosing between time and state dependence: micro evidence on firms' price-reviewing strategies By Daniel A. Dias; Carlos Robalo Marques; Fernando Martins
  15. The Effect of Information on Gender Differences in Competitiveness: Experimental Evidence By Seda Ertac; Balazs Szentes
  16. Going multinational and ownership:evidence from French matched firms. By Alexandre Gazaniol; Frédéric Peltrault
  17. Geographic Clustering and Productivity: An Instrumental Variable Approach for Classical Composers By Karol Jan Borowiecki
  18. Do we need big banks ? evidence on performance, strategy and market By Demirguc-Kunt , Asli; Huizinga, Harry
  19. Multi-stakeholder governance for effectively sharing social responsibility 1 (social contracts, deliberative democracy and endogenous conformity) By Lorenzo Sacconi
  20. Decision-making Strategies and Performance among Seniors By Sudipta Sarangi; Tibor Besedes; Cary Deck; Mikhael Shor
  21. Autonomy or Efficiency. An experiment on household decisions in two regions of India. By Alistair Munro; Bereket Kebede; Marcela Tarazona-Gomez; Arjan Verschoor

  1. By: Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Barbara Fuchs (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Woerter (University of Liechtenstein, Liechtenstein)
    Abstract: Research about users as a source of innovation has been largely restricted to case studies exploring specific innovation projects at the firm level. This study assesses empirically the relationship between external end users’ knowledge as an input factor to innovation and firms’ innovation success. The results strongly support the hypotheses: (i) that external end users have the potential to essentially improve the innovative performance of firms; (ii) that the technique of interaction during the innovation process and the characteristics of involved external users matter as well. The more firms make use of emphatic design and select specific users to acquire hard-to-articulate customer needs, the stronger is the relationship between access to external end users’ knowledge and firm innovation success measured in sales of innovative products.
    Keywords: user innovation, user interaction, lead user, innovation performance
    JEL: O31
    Date: 2011–03
  2. By: Karlsson, Charlie (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: An extensive amount of studies have been devoted to the importance of the creative process. Creativity is critical to research and in particular to innovation, a key feature of economic competitiveness. Most of the previous studies have dealt with the creativity of individuals, the creativity of teams and the importance of the organisational context. This chapter, however, emphasises the role of the characteristics of the local and regional economic milieu where the creative process takes place and the local and non-local networks of such milieus. Both the local ‘buzz’ related to interaction and learning opportunities, and non-local networks associated with integration of different milieus, offer special but different advantages for creative activities. The milieu will play an important role in creativity by supplying both a large number of incompatible ideas and good conditions for bringing them together in order to gain new, profound insights. Local accessibility, i.e. clustering, of incompatible ideas and the interregional accessibility to incompatible ideas in other regions are a function of the network characteristics of the local milieu. The purpose of this chapter is to explore the spatial concentration of creativity and the role of clustering and networks in stimulating creative regional economic milieus. One of the arguments of the chapter highlights how clustering of creative agents and creative processes in specific locations generates creative advantages that stimulate creativity and the in-migration of creative agents. Furthermore, the chapter stresses the idea that a better connected economic milieu to other economic milieus via networks transmitting new ideas, information knowledge, etc., will generate higher creative potential of that economic milieu.
    Keywords: creativity; creative process; clusters; artistic clusters; network theory; regional economics; local milieu; local and non-local interaction; innovation
    JEL: O31 R11
    Date: 2010–10–28
  3. By: Belderbos, Rene; Sleuwaegen, Leo; Veugelers, Reinhilde; Boiardi, Priscilla; Leten, Bart; Stroobants, Jesse
    Abstract: This study traces and analyses the changes in firm and industry structure due to EU market integration and the integration of the EU in the global economy. It focuses on changes in competitiveness based on innovation and technology development. The study provides information on the production, technology structure and geographical distribution of leading European firms. A database with firm-level data has been established and complemented by estimates of indicators of industry structure, including the diversification and technological advancement of a firm's production, the intra-EU multinationality of firms, as well as the degree of concentration and geographical agglomeration of industries. An in-dept empirical analysis of the relationship between technological leadership and market leadership has been conducted. The results indicate an increasing importance of technology for production leadership. Firms with the strongest market positions combine a broader technology portfolio strategy, while ensuring a deeper technology position in the sector of dominance. Technology leadership has a strong impact on the production share that new entrants can attain. The study confirms a positive link between technology and market leadership growth.
    Date: 2010–02
  4. By: Ambec, Stefan; Cohen, Mark A. (Resources for the Future); Elgie, Stewart; Lanoie, Paul
    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 profitable opportunities existed 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, we find conflicting evidence and 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 into the PH to date, draws policy implications from these insights, and sketches out major research themes going forward.
    Keywords: Porter Hypothesis, environmental policy, innovation, performance
    Date: 2011–01–19
  5. By: Joshua Drucker
    Abstract: Industrial concentration and market power have been studied extensively at the national scale, in fields ranging from economics and industrial organization to regional science and economic development. At the regional scale, however, industrial structure and firm size relationships have received little attention outside of non-generalizable case studies, primarily because accurate measurements require difficult-to-obtain plant- or firm-level information. Readily available secondary data sources on establishment size distributions (such as County Business Patterns or the Census of Manufactures) cannot be linked to performance information for particular establishments or firms. Yet region-specific industrial structure may be a crucial determinant of firm performance and thus regional economic fortunes as well (Chinitz 1961; Christopherson and Clark 2007). This paper examines how industrial concentration and agglomeration economies impact plant performance, focusing on the influence of establishment size in mediating these effects. The Longitudinal Research Database of the U.S. Census Bureau is accessed to construct production functions for three manufacturing industries nationwide. These production functions, specified at the establishment level, incorporate characteristics of establishments, industries, and regions, including spatially-differentiated measures of agglomeration economies. Establishment size is evaluated both as an absolute metric and relative to other regional industry plants, as theory suggests that absolute size may be most pertinent to agglomeration benefits but relative size more relevant to industrial structure (Caves and Barton 1990; Bothner 2005). The research builds on earlier work by the author that establishes a direct link between regional industry concentration and the productivity of manufacturing establishments.
    Date: 2011–03
  6. By: Tattara, Giuseppe
    Abstract: Vertical disintegration in most industries and the globalization of markets has led to significant changes in the pattern of international division of labour among manufacturing firms. At the same time increased competition from low cost producers, exchange rate constraints, the opening up of CEE countries have had huge consequences for the Italian industrial system. This paper deals with the Veneto footwear, furniture and refrigeraion industries and examines the effects of foreign direct investments and subcontracting in Romania. The reorganization of the division of labour, in the most dynamic suppliers induced a change in the “nature of subcontracting”, upgrading along the ladder of the value chain as more and more operations are offshored.
    Keywords: Foreign direct investment; International subcontracting;
    JEL: F32 D82
    Date: 2011
  7. By: Pascal Corbel (University of Versailles Saint-Quentin-en-Yvelines (UVSQ), F-78000 Versailles, France); Christian Le Bas (Université de Lyon, Lyon, F-69003, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France)
    Abstract: Recent publications in the field of Intellectual Property (IP) have shown that the previous literature did not grasp how complex patents are. The goal of this paper is to present an overview of all identified functions of patents and of the main strategic implications of such a complex picture. We first survey the main patent functions : innovation protection, functions related to trade and finance, defensive roles, and patent as an input in the innovation process. We then define each function and analyse their main evolution trends in relation with the current environment. We finally identify the strategic implications of each function. We focus on the implications of the newly identified functions and on the interaction between the different functions.
    Keywords: Patent, Intellectual Property, Strategic Management, Functions, Motives to patent
    JEL: F12 F15 F18 Q28
    Date: 2011
  8. By: Erik Stam; Bart Nooteboom
    Abstract: This paper discusses the nature of entrepreneurship and its relation to innovation along a cycle in which exploration and exploration follow upon each other. We place the roles of entrepreneurship in innovation policy within this cycle of innovation. Different types of innovation along the cycle of innovation are realized with different forms of entrepreneurship, which are constrained or enabled by different legal institutions. One of the key roles of governments is to design, change or destruct institutions in order to improve societal welfare. The question is what governments should do in the context of innovation policy. Here, social scientists can make a contribution by providing insight into what entrepreneurship and innovation is (theories about these phenomena), and how institutions affect them in reality (empirical evidence about their effects). This requires social scientists to be engaged scholars and to provide new policy options as an honest broker between the academic world and the policy world. The key question of this paper is: How can policy best enable innovation based entrepreneurship? The answer is derived from looking at both theoretical tenets and empirical evidence using an institutional design perspective, which aims at providing arguments for the design, change and/or destruction of institutions, given the goals of the governments. We provide an overview of some (empirically tests of) institutions that enable or restrain particular types of entrepreneurship. Examples of these institutions are intellectual property rights and the Small Business Innovation Research program, employment protection, and non-compete covenants.
    Keywords: entrepreneurship, innovation, institutions, innovation policy
    JEL: E61 G38 H57 K29 L26 L53 M13 O12 O31 O33 O38
    Date: 2011–02
  9. By: Zeng, Douglas Zhihua
    Abstract: In the past 30 years, China has achieved phenomenal economic growth, an unprecedented development"miracle"in human history. How did China achieve this rapid growth? What have been its key drivers? And, most important, what can be learned from China's success? Policy makers, business people, and scholars all over the world continue to debate these topics, but one thing is clear: the numerous special economic zones and industrial clusters that emerged after the country's reforms are without doubt two important engines of China's remarkable development. The special economic zones and industrial clusters have made crucial contributions to China's economic success. Foremost, the special economic zones (especially the first several) successfully tested the market economy and new institutions and became role models for the rest of the country to follow. Together with the numerous industrial clusters, the special economic zones have contributed significantly to gross domestic product, employment, exports, and attraction of foreign investment. The special economic zones have also played important roles in bringing new technologies to China and in adopting modern management practices. This study briefly summarizes the development experiences of China's special economic zones and industrial clusters (their formation, success factors, challenges, and possible areas or measures for policy intervention), based on case studies, interviews, field visits, and extensive reviews of the existing literature in an attempt to benefit other developing countries as well as the broader development community.
    Keywords: Economic Theory&Research,ICT Policy and Strategies,E-Business,Transport Economics Policy&Planning,Knowledge Economy
    Date: 2011–03–01
  10. By: Niels Bosma; Erik Stam; Sander Wennekers
    Abstract: This paper presents the results of the first international comparative study of intrapreneurship and independent entrepreneurship. The prevalence of intrapreneurship is about twice as high in high income countries as in low income countries. We find that at the individual level, intrapreneurs are much more likely to have the intention to start a new independent business than other employees. However, there is a negative correlation between intrapreneurship and early-stage entrepreneurial activity at the macro level. One explanation for these contrasting outcomes is the diverging micro level effect of education on intrapreneurship (positive effect) and early-stage entrepreneurial activity (negative effect).
    Keywords: intrapreneurship, comparative entrepreneurship, economic development, industrial organization, multi-level analysis
    Date: 2011–02
  11. By: Beria, Paolo; Grimaldi, Raffaele
    Abstract: In this paper we analyse some possible unconventional factors of efficiency in public transport. The occasion for such analysis rises from a case study in the southern Italian region of Sicily. Most of the regional bus service is here historically franchised to some local private bus companies, without tenders or any other form of competition. The structure of the network has never been planned ex-ante, as it is the result of negotiations among bus companies, local and regional authorities. Though this situation is obviously quite far from indications of the regulation theory, it results in a surprisingly efficient system, with very low unit costs. An analysis of this situation is here carried out in order to understand which factors are forcing those companies to be efficient and which problems this situation may generate. The quality and effectiveness of the offered service is also reckoned. Two factors seem to be most relevant to this results: the relatively low level of subsidies together with the fact of being private operators (rather an exception than a rule in Italy). In order to improve their efficiency, those companies also merged together but eventually split again in the last decades in order to reach a more efficient size and suggesting the presence of possible diseconomies of scale in the sector. Taking for granted that a form of regulation is needed, it is here suggested that regulatory strategies should adapt to this counterintuitive fact and not destroy the incentives already effective in the present situation. Our suggestion is to prefer medium sized tenders rather than large ones, not only for granting more contestability, but also for financial reasons.
    Keywords: regulation; bus; economies of scale; public transport; tender
    JEL: R40 L92 L33
    Date: 2010–04
  12. By: JG. Brida; Claudio Detotto; Manuela Pulina
    Abstract: This paper analyses the Italian regional efficiency of the hospitality sector using a data envelopment analysis (DEA), for the time span 2000-2004. Via a window DEA, pure technical efficiency is computed. The Lombardy region presents the best relative performance. Overall Italian regions denote important sources of inefficiency mostly related to their inputs. Via a truncated-Tobit analysis, the rate of utilisation and regional intrinsic features positively are found to affect hospitality efficiency. Nevertheless, empirical evidence does not support spill-over effects amongst Italian regions.
    Keywords: Regional hospitality sector; window DEA; double bootstrap; spatial heterogeneity.
    JEL: C14 C24 L83 R11
    Date: 2011
  13. By: Maria Dolores Gadea; Ana Gomez Loscos; Antonio Montañes (University of Zaragoza)
    Abstract: This paper sets out a comprehensive framework to identify regional business cycles within Spain and analyses their stylised features and the degree of synchronisation among them and the Spanish economy. We show that the regional cycles are quite heterogeneous although they display some degree of synchronisation that can be partially explained using macroeconomic variables. We also propose a dynamic factor model to cluster the regional co-movements and test if the country cycle is simply the aggregation of the regional ones. We find that the Spanish business cycle is not shared by the 17 regions, but is the sum of the different regional behaviours. The implications derived from our results are useful both for policy makers and analysts.
    Keywords: Business Cycle. Synchronisation measures. Dynamic factor models
    Date: 2011–03–01
  14. By: Daniel A. Dias (Department of Economics, University of Illinois.); Carlos Robalo Marques (Banco de Portugal, Research Department.); Fernando Martins (Banco de Portugal, Research Department, ISEG (Technical University of Lisbon) and Universidade Lusíada de Lisboa.)
    Abstract: Thanks to recent findings based on survey data, it is now well known that firms differ from each other with respect to their price-reviewing strategies. While some firms review their prices at fixed intervals of time, others prefer to perform price revisions in response to changes in economic conditions. In order to explain this fact, some theories have been suggested in the literature. However, empirical evidence on the relative importance of the factors determining firms’ different strategies is virtually nonexistent. This paper contributes to filling this gap by investigating the factors that explain why firms follow time-, state- or time- and state-dependent price-reviewing rules. We find that firms’ strategies vary with firm characteristics that have a bearing on the importance of information costs, the variability of the optimal price and the sensitivity of profits to non-optimal prices. Menu costs, however, do not seem to play a significant role. JEL Classification: C41, D40, E31.
    Keywords: Survey data, price stickiness, menu costs, information costs, multinomial probit.
    Date: 2011–03
  15. By: Seda Ertac (Koc University); Balazs Szentes (London School of Economics)
    Abstract: An important line of recent literature has found gender differences in attitudes toward competition, with men being more likely to choose competitive incentive schemes, even when factors such as ability and risk aversion are controlled for. This paper examines the effect of information on the gender gap in tournament entry. We present experimental evidence that the competitiveness difference between men and women declines significantly when individuals are given performance feedback before making their incentive scheme choice. The result suggests that policies that reduce uncertainty can reduce the gender gap in tournament entry.
    Keywords: Experiments, gender, competition, information, incentive schemes.
    JEL: C91 D83 J16
    Date: 2011–02
  16. By: Alexandre Gazaniol (Université Paris Dauphine, LEDa UMR 225 DIAL, IRD); Frédéric Peltrault (Université Paris Dauphine, LEDa UMR 225 DIAL, IRD)
    Abstract: (english) This paper estimates the impact of initiating production abroad on firms’ home performance. The analysis covers French manufacturers over the 1996 – 2007 period, and uses propensity-score matching techniques to compare firms which start to invest abroad (“switchers”) to similar domestic firms. The main particularity of our work is to distinguish the impact of initiating production abroad by firm ownership: we separately investigate the performance effect for independent switchers, switchers that own affiliates in France, and French- and foreign-owned switchers. Our first general result is that going multinational has a positive impact on sales, value added, employment, exports and profitability at home. However, we also find evidence that this impact is not independent of ownership. First, firms at the head of business groups are more likely to go multinational, even after controlling for size, Total Factor Productivity (TFP) and industry. Second, we find that parent companies and independent firms do not benefit from improved performance when going multinational: this may reflect that these firms face higher fixed costs than do affiliates of business groups when investing abroad (lack of experience in foreign markets, managerial costs, monitoring and coordinating affiliates, developing and/or adapting support functions etc.). Affiliates of domestic French business groups significantly improve their performance when switching, whereas the performances of foreign-owned firms and affiliates of multinational French groups remain relatively stable. This could show that firms which are already part of multinational groups have little to gain from going multinational themselves, since their group already provides them with skills and network effects, the security of supplies, and knowledge of foreign markets. _________________________________ (français) Ce travail étudie l’impact de l’implantation à l’étranger sur les performances des entreprises françaises du secteur manufacturier au cours de la période 1996-2007. A l’aide d’une méthode d’appariement, les performances des firmes qui s’implantent pour la première fois sont comparées à celles des entreprises domestiques ayant des caractéristiques similaires. La particularité de notre travail est de caractériser l’effet de l’implantation à l’étranger selon l’appartenance à un groupe : nous étudions ainsi séparément l’effet sur les entreprises indépendantes, les entreprises françaises ayant une filiale en France et les entreprises filiales de groupes français et étrangers. L’étude montre que l’implantation à l’étranger a un impact positif en France sur le chiffre d’affaires, la valeur ajoutée, les effectifs, les exportations et la rentabilité. Cependant, il s’avère que le résultat dépend de l’appartenance à un groupe. Tout d’abord, les entreprises têtes de groupe ont une plus forte propension à s’implanter à l’étranger, une fois que l’on tient compte de la taille, de la productivité totale des facteurs (PTF) et du secteur. Ensuite, nous montrons que les têtes de groupes et les entreprises indépendantes n’améliorent pas leurs performances quand elles s’implantent à l’étranger. Ce résultat peut s’expliquer par le fait que ces entreprises supportent des coûts fixes d’implantation plus élevés que les filiales de groupe. Enfin, nous montrons que les entreprises françaises filiales de groupes français améliorent significativement leurs performances alors que celles des filiales de groupes étrangers restent relativement stables. Les entreprises déjà intégrées dans une multinationale pourraient obtenir des gains plus faibles de leur propre implantation à l’étranger dans la mesure où leur groupe leur offre déjà l’accès à un réseau international.
    Keywords: multinational, ownership, firm heterogeneity.
    JEL: D23
    Date: 2011–01
  17. By: Karol Jan Borowiecki (Department of Economics, Trinity College Dublin)
    Abstract: It is difficult to estimate the impact of geographic clustering on productivity because of endogeneity issues. I use birthplace-cluster distance as an instrumental variable for the incidence of clustering of prominent classical composers born between 1750 and 1899. I find that geographic clustering strongly impacts the productivity of the clustering individuals: composers were approx. 33 percentage points more productive while they remained in a geographic cluster. Top composers and composers who migrated to the cluster are the greatest beneficiaries of clustering. The benefit depends on the clustering intensity and has a long-term impact.
    Keywords: geographic concentration, cities, mobility, productivity, urban history, composer
    JEL: D24 J24 J61 N90 O47 R11 Z19
    Date: 2011–03
  18. By: Demirguc-Kunt , Asli; Huizinga, Harry
    Abstract: For an international sample of banks, the authors construct measures of a bank's absolute size and its systemic size defined as size relative to the national economy. They examine how a bank's risk and return, its activity mix and funding strategy, and the extent to which it faces market discipline depend on both size measures. Although absolute size presents banks with a trade-off between risk and return, systemic size is an unmitigated bad, reducing return without a reduction in risk. Despite too-big-to-fail subsidies, the analysis finds that systemically large banks are subject to greater market discipline as evidenced by a higher sensitivity of their funding costs to risk proxies, suggesting that they are often too big to save. The finding that a bank's interest cost tends to rise with its systemic size can also in part explain why a bank's rate of return on assets tends to decline with systemic size. Overall, the results cast doubt on the need to have systemically large banks. Bank growth has not been in the interest of bank shareholders in small countries, and it is not clear whether those in larger countries have benefited. Although market discipline through increasing funding costs should keep systemic size in check, clearly it has not been effective in preventing the emergence of such banks in the first place. Inadequate corporate governance structures at banks seem to have enabled managers to pursue high-growth strategies at the expense of shareholders, providing support for greater government regulation.
    Keywords: Banks&Banking Reform,Debt Markets,Economic Theory&Research,Access to Finance,Bankruptcy and Resolution of Financial Distress
    Date: 2011–02–01
  19. By: Lorenzo Sacconi (University of Trento - Department of Economics and EconomEtica, Inter university centre of research University Milano - Bicocca)
    Date: 2011–03
  20. By: Sudipta Sarangi; Tibor Besedes; Cary Deck; Mikhael Shor
    Abstract: Using paper and pencil experiments administered in senior centers, we examine decision-making performance in multi-attribute decision problems. We find a significant decline in performance with age due to reduced reliance on common heuristics among our oldest subjects. Subjects in their early sixties incorporate a wide array of heuristics, septuagenarians employ progressively fewer strategies, and subjects in their 80s make nearly random selections. However, we find that increasing the number of options in a decision problem increases the number of heuristics brought to the task. This challenges the choice overload view that people give up when confronted with too much choice.
  21. By: Alistair Munro (National Graduate Institute for Policy Studies); Bereket Kebede; Marcela Tarazona-Gomez; Arjan Verschoor
    Abstract: Dyson and Moore (1983) posit that women in South India enjoy relatively more agency than in the North. Their conclusions have become part of the standard picture of Indian rural society. In this paper, we examine using experimental data the implications of the regional contrast in female autonomy for the efficiency of family decision-making. We take a sample of 1200 couples from one rural and one urban area in the north of India (Uttar Pradesh) and one area in the south (Tamil Nadu) that are often taken to exemplify differences in the autonomy of women and the nature of marital relationships. Generally, we find large-scale and robust evidence of inefficiency and the hiding of assets when this is possible. Men invest more and are more generous to their partners. Women are more willing to invest in a common pool when their income is earned through working and when assets are publicly observable. Regarding the focus of our paper, we find continuing significant differences between North and South and we find relatively little evidence that urban living is associated with changes in the nature of marital behaviour. There are some differences between response to treatment but the key and striking difference between the North and the South is that in both rural and urban sites in the former region household efficiency is considerably greater than in the latter, which does on the face of it suggest a tradeoff between autonomy and efficiency.
    Date: 2011–03

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