nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2013‒11‒14
eight papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Industrial diversity and innovation spillovers: dynamic innovation and adoption By Philip Amison; David Bailey
  2. Towards DUI Regional Innovation Systems By Phil Cooke
  3. Innovation and trade policy coordination: the role of firm heterogeneity By Navas, Antonio; Sala, Davide
  4. Benchmarking for Routines and Organizational Knowledge By Mircea Epure
  5. Firm Heterogeneity and the Localization of Economic Activities By Pamela Bombarda
  6. Over-Confidence and Entrepreneurial Choice Under Ambiguity By Shyti , Anisa
  7. Foreign Direct Investment across China: what should we learn from spatial dependences? By Nasser Ary Tanimoune; Cécile Batisse; Mary-Françoise Renard
  8. Outsourcing Failure and Reintegration: The Influence of Contractual and External Factors By Cabral , Sandro; Quelin, Bertrand V.; Maia , Walmir

  1. By: Philip Amison; David Bailey
    Abstract: This paper explores the links between open innovation and the emergence of a phoenix industry – the low carbon vehicles sector - in the UK’s traditional automotive heartland, focusing on the West Midlands region. It highlights three major factors in driving the development of this ‘phoenix’ industry at a regional level. Firstly, it highlights the role of ‘open innovation’ approaches in driving the sector, for example noting that smaller firms can sometimes innovate more quickly/more cheaply than the major auto firms; the increased interaction across technologies, up and down supply chains and between larger and smaller firms. In so doing, it also notes the role of hybrid firms providing services, plus prototyping/low volume manufacturing (largely in niche vehicles) and the transferability of these competences across industrial sectors. Secondly, it points to the role of historic (and relatively immobile) investments in the region, for example the past/ongoing importance of established mass producers, the depth of skills and experience in suppliers and in the local workforce; and cross-overs with the overlapping motorsport cluster. Finally, it stresses the role of public-private sector cooperation, such as: the establishment of the Automotive Council UK and its work in developing technology roadmaps, informing regulation, and supporting development of the UK supply chain (a type of industrial policy as a discovery process and in line with ‘smart specialisation’ principles); the R&D funding programmes developed with industry input; and the earlier role of the Regional Development Agency. Overall, it points to the possibilities of building smart specialisation strategies and industrial policies which are aligned with ‘high-road strategies’.
    Keywords: Clusters, ecological innovation, high road strategy, industrial policy, innovation policy, new technologies, post-industrialisation
    JEL: O3 O31 O32 O33
    Date: 2013–11
  2. By: Phil Cooke
    Abstract: This paper marks a departure in seeking to develop the conceptual and practical apparatus of a regional innovation system (RIS) for science & technology-disadvantaged regions. It is empirically based and builds on insights about the limitations of STI (The Science-Technology-Innovation Approach, which is Linear, Specialist, Exclusive, Explicit/Codified, Global) and the strengths of DUI (The Doing-Using-Interacting Approach, which is Interactive, Diversified, Inclusive, Implicit, Regional/Local). DUI is highly compatible with Schumpeterian understanding that the core process of innovation is 'knowledge recombination'. From an evolutionary economic geography perspective, which is taken in the paper, this raises interesting issues for the economics of knowledge. First it underlines the need to pay serious attention to questions of the 'proximity' imperative, suggesting not that knowledge is easily appropriable for ('open') innovation but that it may be excessively difficult to identify because it lies hidden in possibly neighbouring - but different - industries and firms. Thus, second, it makes the notion of 'knowledge spillovers' problematic because the spillovers may not be forthcoming at all or may come in unrecognisable forms. Hence, third, this means that firms likely need more than usual RIS intermediation (including knowledge demonstration and transfer services) to avoid market failures of innovation. Assistance with identification of ‘modular’ policy elements is only one of the services required for DUI product, process and policy innovation. The complexity theory notion of 'transversality' has been advanced to capture the 'emergence' of novelty out of contexts of difference, unifying a solution to the three conceptual problem-issues raised in the paper.
    Date: 2013–10
  3. By: Navas, Antonio (Department of Economics); Sala, Davide (Department of Business and Economics)
    Abstract: Recent studies have concluded that R&D grants can induce firms to export and that exporting and innovating can be complementary activities at the firm level. Yet the trade literature has paid little attention to the scope of innovation policy as a stimulus to both trade and innovation. To investigate this question we rely on a general work-horse model of trade and firm heterogeneity with firm investments in R&D activities. The multiplicity of equilibria together with the interplay of innovation and trade policies uncover novel results. In particular, we show that the effects of either policy depend on the degree of protectionism in a country. Therefore, countries can respond differently to the same policy, and similarly to different policies. In such a context, different governments may face different degrees of freedom regarding how to achieve a given target. This finding leads us to discuss the issue of policy coordination.
    Keywords: Innovation; innovation policy; heterogeneous firms; technology adoption; trade policy
    JEL: F12 F13 F15 O32
    Date: 2013–11–04
  4. By: Mircea Epure
    Abstract: We use best practice benchmarking rationales to propose a dynamic research design that accounts for the endogenous components of across-firms heterogeneous routines to study changes in performance and their link to organizational knowledge investments. We thus contribute to the operationalization of management theoretical frameworks based on resources and routines. The research design employs frontier measures that provide industry-level benchmarking in organizational settings, and proposes some new indicators for firm-level strategic benchmarking. A profit-oriented analysis of the U.S. technology industry during 2000-2011 illustrates the usefulness of our design. Findings reveal that industry revival following economic distress comes along with wider gaps between best and worst performers. Second stage analyses show that increasing intangibles stocks is positively associated with fixed target benchmarking, while enhancing R&D spending is linked to local frontier progress. The discussion develops managerial interpretations of the benchmarking measures that are suitable for control mechanisms and reward systems.
    Keywords: benchmarking, routines, organizational knowledge, frontier analysis, managerial accounting
    JEL: M1 M4 M41 D2 M0
    Date: 2013–10
  5. By: Pamela Bombarda (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise)
    Abstract: This paper examines how market-access strategies, via exports and FDI, respond to changes in the level of integration. Empirical evidence shows that both firm exports and multinational activity are affected by trade-liberalization episodes. We account for the strong positive correlation between exports and FDI by developing a general-equilibrium model featuring firm heterogeneity, trade and FDI with final and intermediate products. Different geographical spaces are considered to quantify the effect of a preferential trade agreement (PTA) on supply-mode decisions, for both partner and excluded countries. The model sheds new light on the mechanisms through which geography reshapes the concentration of economic activities both inside and outside the PTA area.
    Keywords: Heterogeneous firms; PTA; Spatial networks; Intra-firm trade
    Date: 2013–10–27
  6. By: Shyti , Anisa
    Abstract: Entrepreneurship studies have attributed to over-confidence decisions to start a new venture. Many decision situations, through which over-confidence is measured, entail some degrees of uncertainty, (e.g., related to own skill or to competition). The aspect of uncertainty is largely neglected in over-confidence studies or entrepreneurial research. Both uncertainty and over-confidence influence individuals’ likelihood perceptions. Nevertheless, these two aspects are seldom jointly investigated, and the little evidence provides inconclusive results. In this study, we experimentally investigate how uncertainty, as a property of the situation, and over-confidence, as a characteristic of decision makers’ beliefs, influence choice behavior. Our findings with Executive MBA participants show that over-confident decision makers choose less uncertain options for low likelihood outcomes and more uncertain options for high likelihood outcomes, contrary to neutral confidence decision makers, whose choices are in line with standard Prospect Theory predictions
    Keywords: entrepreneurship; ambiguity attitudes; decision making; over-con fidence
    JEL: D80 D81 L26
    Date: 2013–05–21
  7. By: Nasser Ary Tanimoune (School of International Development and Global Studies, University of Ottawa (Canada) - School of International Development and Global Studies, University of Ottawa (Canada) - School of International Development and Global Studies - University of Ottawa (Canada)); Cécile Batisse (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Mary-Françoise Renard (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: The paper investigates the importance of spatial dependences on Foreign Direct Investment (FDI) localization across Chinese provinces over the 1992-2009. Based on exploratory spatial data analysis, spatial sigma-convergence and spatial Durbin specifications, we present a much clearer picture of FDI dispersion and spatial convergence across China by highlighting the spillover effects of FDI localization in Chinese provinces and regions. Our results are threefold. First, FDI convergence is more pronounced compared to the Central region, whereas the dispersion is greater when the Coastal and the Western regions are taken as reference points. Second, at the province level, FDI localization seems to present a substitutable configuration. Third, when controlling for the spatial distribution of FDI at the level of regions, it seems, conversely, that the FDI localization presents a complementary configuration. The finding resulting from the opposing configurations of the FDI localizations observed at the region and province levels seems to argue in favor of promoting FDI attractiveness policies based on regional complementarities.
    Keywords: China;Convergence;FDI;spatial panel data;spatial Durbin model
    Date: 2013–10–31
  8. By: Cabral , Sandro; Quelin, Bertrand V.; Maia , Walmir
    Abstract: This paper discusses the reasons that drive organizations to interrupt outsourcing, reverse their previous decision, and then reintegrate activities formerly delegated to providers. Contractual approaches, mainly derived from Transaction Costs Economics, offer some plausible explanations for reintegration originating from outsourcing failure. These explanations are mainly related to asset specificity, poor contractual design, and deficient monitoring. The study of a real case of outsourcing interruption in industrial maintenance illustrates these different factors. However, some other determinants might complement the contractual and strategic background, namely bandwagon behavior and institutional pressure exerted by external actors. Finally, we propose an integrative framework that combines micro- and macro-levels of organizational analysis. We argue that some existing complementarities between the different theories we use here can shed some light on real organizational problems. Besides the implications for theory, our work can help managers to understand the dynamics of organizational boundaries, thus allowing them to make better choices in both outsourcing and reintegration decisions.
    Keywords: outsourcing; contractual approach; transaction cost economics; reintegration; failure
    JEL: G00
    Date: 2013–06–01

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