nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2017‒04‒23
eighteen papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Achieving Innovation Without Formal R&D: Philippine Case Study of Garment Firms By Rosellon, Maureen Ane D.; Del Prado, Fatima Lourdes E.
  2. Drivers of productivity in Vietnamese SMEs: The role of management standards and innovation By Elisa Calza; Micheline Goedhuys; Neda Trifkovic
  3. University location and city development: the effects of Victoria University on the Western Melbourne economy By John R. Madden
  4. The Succession and Business Transformation of Taiwanese SMEs to Reactivate the Entrepreneurial Spirit By Wei, Tsung-Che
  5. Structural Decisions of Multinationals in Regions with Weak Courts By Eugenia Bessonova; Gonchar Ksenia
  6. R&D heterogeneity and implications for growth By Sigurd Galaasen; Alfonso Irarrazabal
  7. Факторы конкурентоспособности предприятия в концепции М.Портера By Pashchenko, Margarita
  8. What determines misallocation in innovation? A study of regional innovation in China By Li, Hao-Ching; Lee, Wen-Chieh; Ko, Bo-Ting
  9. Lessons from the US: innovation policy By Geoffrey Owen
  10. Exploring the relationship between technological improvement and innovation diffusion: An empirical test By JongRoul Woo; Christopher L. Magee
  11. Uncertainty over Production Forecasts: Analysis using micro time-series data from manufacturing firms (Japanese) By ENDO Kazumi
  12. Are Competitors Forward Looking in Strategic Interactions? Evidence from the Field By Mario Lackner; Rudolf Winter-Ebmer; Uwe Sunde; Rudi Stracke
  13. Technology and Knowledge Transfers in Production Networks: Case Study on Philippine Food Manufacturing Firms By Rosellon, Maureen Ane D.; Del Prado, Fatima Lourdes E.
  14. Environmental Management Resources and Firm Value: Empirical evidence from Japanese listed manufacturing firms (Japanese) By EDAMURA Kazuma; MIYAGAWA Tsutomu; UCHIYAMA Katsuhisa
  15. The Roles of Social Infrastructure and Deregulation on Productivity Improvement through Resource Reallocation in the Japanese Regional Economies (Japanese) By MIYAGAWA Tsutomu; KAWAKAMI Kazuyasu; EDAMURA Kazuma
  16. Social networks, geographic proximity, and firm performance in Viet Nam By Emma Howard
  17. What Drives or Hinders Corporate Environmental Performance? Evidence from Japan (Japanese) By ENDO Kazumi
  18. Gender Differences in Interpersonal and Intrapersonal Competitive Behavior By Carpenter, Jeffrey P.; Frank, Rachel; Huet-Vaughn, Emiliano

  1. By: Rosellon, Maureen Ane D.; Del Prado, Fatima Lourdes E.
    Abstract: It is widely acknowledged that technological innovations that can come from research and development (R&D) are crucial to industry competitiveness and sustained economic growth. Although R&D remains to be the central focus of policymaking and research, not all firms can afford and do R&D activities. Non-R&D innovation, which is a common economic phenomenon, is often ignored in the policy research arena. Using three case studies, this paper attempts to address this gap. It describes how firms in low-technology sector adapt to fast-changing industry needs and respond to market demands, and generate products and services at a lower cost and within shorter cycle-times without the aid of a traditional R&D program. Findings indicate product or process upgrading even without the presence of a formal R&D unit is possible. To be able to carry out upgrading/innovation activities, it is necessary to hire the appropriate personnel that will undertake specific tasks in order to execute the product specifications required by the clients. Machinery/technology acquisition was also found to be indispensable, as it not only allows the firms to produce the required product but it also makes production cost efficient. Finally, the business strategy or decision of the owner/manager of the firm also plays an important role on the decision to innovate.
    Keywords: Philippines, innovation, non-R&D innovation, non-R&D activities, garments
    Date: 2017
  2. By: Elisa Calza; Micheline Goedhuys; Neda Trifkovic
    Abstract: Using a rich panel dataset of SMEs active in the manufacturing sector in Viet Nam, this paper investigates the drivers of firm productivity, focusing on the role played by international management standards certification. We develop and test the hypothesis that, controlling for technological innovation (product and process) and other variables related to technological capabilities, international standards are still conducive to higher productivity, through improved management practices associated with their adoption. In line with the requirement of continuous improvement implied by most international standards, the main findings show that the possession of an internationally recognized standard certificate leads to significant productivity premium. We further investigate the relationship between technological innovation and standard adoption. We find that the likelihood of certificate adoption is higher when firms implement technological innovations and that the effect of certification on productivity is particularly strong for firms with technological innovation.
    Date: 2017
  3. By: John R. Madden
    Abstract: Does the presence of a local university affect the economic development of an area within a large city? This paper focuses on the Western region of Melbourne, which accounts for 18 per cent of the city's population of 4.5 million. Only one of Melbourne's seven universities has located campuses in Western Melbourne, a region containing many areas of social disadvantage. The importance of the University to the region's economy in 2013 is analysed with the aid of a 6-region CGE model, four of the regions covering Greater Melbourne. The analysis is undertaken by simulating a counterfactual that there was no university in the region during the period 1992 to 2013. Under the counterfactual, students who in actuality had studied in Western Melbourne in the period are assumed to have either attended a university in another Melbourne region or forgone a university education. The simulation accounted for a relocation of both the University's demand-side impacts (operating expenditures and student living costs) and its supply-side impacts (knowledge effects). A particular feature of the analysis was the estimation of the interregional relocation of local productivity effects flowing in 2013 from returns to the stocks of human capital and research knowledge accumulated over the years from 1992. For the human capital effects this involved, for each Melbourne region, undertaking detailed estimates of changes in annual university completions, annual migration rates, labour force participation rates, interregional commuting and returns to university qualifications. Key assumptions related to the effects of university proximity on tertiary participation and of place of study on regional attachment. For local R&D effects, regional estimates were made of annual R&D expenditure, knowledge decay, returns to R&D expenditure and regional knowledge spillovers. The simulation results suggested that the presence of a university in Western Melbourne had a significant effect on the region's GDP, but due to interregional commuting the local university had a more muted effect on the real consumption of the region's households.
    Keywords: Regional development, higher education, spatial distribution of urban economic activity, regional CGE modelling
    JEL: D58 I23 I25 O15 O18 R12 R15
    Date: 2017–04
  4. By: Wei, Tsung-Che
    Abstract: Taiwanese SMEs (small and medium enterprises) have been the source of creativity and the key driving force of economic growth early on in the 1960s, key partners in supply chain and industry clusters later, and recently focal point of local economy, social value, and dreams for young generation. However, based on the “White Paper on Small and Medium Enterprises in Taiwan,†in recent five years, share of SMEs in existence over 20 years was in the range of 21% to 23%, far below the average 35% of large enterprises. This shows the business succession / transition remains a major challenge to SMEs as going concerns. Further, compared to large enterprises, SMEs in existence over 20 years suffered significant sales decline and “the crisis of the elderly age†as their firstgeneration entrepreneurs got into old age and lost their vitality and creativity. It has become an important issue for sustainable development of SMEs to reactivate the entrepreneurial spirit, combined with sound “second-generation succession†and business transformation strategy. In this paper, we use the two key factors of succession and business transformation to analyze how the Taiwanese SMEs to reactivate the entrepreneurial Spirit. The research results provide some policy implications for Succession and transformation of Taiwanese SMEs. These points are suggested as: (1) promote market-oriented business management courses in colleges and universities to cultivate curiosity and creative thinking of potential new generation of successors;(2) form professional succession team in response to new business opportunities; (3) integrate existing knowledge exchange platforms for succession to provide customized mechanisms of knowledge sharing and exchange services required for different types of succession; (4) provide succession planning adviser or match professional managers to succession needs for SMEs' sustainable development as going concerns; (5) encourage new generation successors of SMEs to obtain innovation awards that could reactivate the entrepreneurial spirit; (6) grasp the opportunity of succession and transformation to guide SMEs towards institutionalized management; (7) establish SME succession and transformation follow-up service mechanism linking research institutions, universities and private sector professional consulting companies to meet long term counseling needs for SME succession and transformation; (8) strengthen cross-industry cooperation mechanism for SMEs’ sustainable development in order to guide the SME succession and transformation toward the direction of “professionalism,†“branding,†and “internationalization.â€
    Keywords: Crisis of the Elderly Age with Taiwanese SMEs, succession, business transformation, second Entrepreneurial Spirit, Crisis of the Elderly Age with Taiwanese SMEs, succession, business transformation, second Entrepreneurial Spirit
    Date: 2017–02
  5. By: Eugenia Bessonova (National Research University Higher School of Economics); Gonchar Ksenia (National Research University Higher School of Economics)
    Abstract: We investigate the impact of court conditions on multinational decisions on entry, subsidiary size and entry mode across subnational regions in Russia. We apply the literature on heterogeneous firms and the institution-based view of investor behavior, which predict that higher institutional costs raise the size and productivity cut-off of start-up subsidiaries. Our empirical results based on microestablishment data of foreign-owned firms in Russia show that a weaker judicial framework and stronger political power of the local governor significantly de-stimulate entry. The majority of multinationals enter Russia, which is viewed as a high-risk country, through large and very large subsidiaries wholly owned by the foreign parents. Variation of the business strategies of multinationals between regions is largely explained by regional court conditions, as foreign investors adapt their strategic decisions to compensate court deficiencies by increasing the size of the subsidiary and acquiring local institutional knowledge through partnership with resident firms. We also find that structural adjustments to court risks are typical for horizontal investments, which only serve the host market
    Keywords: Multinational enterprise, foreign direct investment, production location decision, affiliate size decision, entry mode decision, institutions, Russia
    JEL: F10 F23 L22 R30
    Date: 2017
  6. By: Sigurd Galaasen; Alfonso Irarrazabal
    Abstract: This paper quantifies the determinants of R&D investment heterogeneity and its implications for growth. We estimate a Schumpeterian growth model with heterogeneous firms, à la Lentz and Mortensen (2008), in which firms differ with respect to innovation efficiency. Using observations on size, productivity, and R&D expenditures from a panel of Norwegian manufacturing firms we find that the model has a good fit to the data. In particular, it fits the distribution of R&D investment (mean, dispersion and skewness) as well as the negative correlation between research intensity and size. Moreover, the model generates firm-level investment responses to R&D subsidies that are in line with micro evidence from a natural experiment. The model estimates imply that a large part of aggregate productivity growth (72 percent) is the result of the market directing R&D resources to the more innovative firms. Finally, we study the link between firm heterogeneity and R&D subsidies, and show that the growth effects of subsidies depend crucially on how the policy influences the equilibrium distribution of firms. We address these questions by estimating an equilibrium model of firm-level innovation and growth. We adopt the micro-macro framework growth in Klette and Kortum (2004). Using observations on size, productivity and R&D expenditures from a panel of Norwegian manufacturing firms, we estimate an extended version of the Klette-Kortum model, developed in Lentz and Mortensen (2008). The model estimates imply that a large part of aggregate productivity growth (72 percent) is the result of the market directing R&D resources to the more innovative firms. Using the estimated model we also show that the growth effects of R&D subsidies depend crucially on how the policy influences the equilibrium distribution of firms.
    Keywords: Norway, Growth, General equilibrium modeling
    Date: 2016–07–04
  7. By: Pashchenko, Margarita
    Abstract: Article on the applicability of the concept of Michael Porter to analyze the competitiveness factors of the enterprise. The author examines the concept of "Factors of competitiveness of the enterprise". Special attention is paid to peculiarities of using the factor model of M. Porter and approaches in determining the mechanism of action of the external conditions.
    Keywords: company competitiveness, competitiveness factors, influence factors, system factors.
    JEL: M31
    Date: 2017
  8. By: Li, Hao-Ching; Lee, Wen-Chieh; Ko, Bo-Ting
    Abstract: This paper sounds an alarm about disparate efficiencies among China’s regions in the allocation of innovation inputs. A theoretical measure of misallocation is adopted to gauge the distortions that exacerbate the inefficiency of resource allocations across geographic innovation units; these units’ usage of innovative inputs reveals the level of misallocations prevalent within the Chinese economy. The measure of innovation misallocation is computed by utilizing a micro dataset based on information from the China Statistical Yearbook for Science and Technology (CSYST) from 1999 to 2012. In addition, this paper probes the factors that co-move with China’s innovation resource misallocations. We find that, although an advanced financial market is beneficial to innovation efficiency in China, both the government’s extensive development of transportation infrastructure and the preferential treatment given to state-owned enterprises (SOEs) and foreign-invested enterprises (FIEs) negatively correlate with innovation efficiency. We conclude that emerging economies that are experiencing R&D input expansion, such as China, should be cautious in ensuring efficient resource allocations.
    Keywords: Resource misallocation; Innovation efficiency; Financial market; Infrastructure investment; Preferential treatment
    JEL: O11 O32 O47
    Date: 2016–05–10
  9. By: Geoffrey Owen
    Abstract: A commentary by Sir Geoffrey Owen, Head of Industrial Policy at Policy Exchange and former Editor of the Financial Times. Sir Geoffrey examines the reasons for US leadership in two key sectors, information technology and biotechnology, highlighting the important role played by new entrepreneurial firms.
    JEL: R14 J01
    Date: 2017–03
  10. By: JongRoul Woo; Christopher L. Magee
    Abstract: It is now clear that different technological domains have significantly different rates of performance improvement. Theoretically, such differing rates should influence the relative rate of diffusion of the products since improvement in performance during the diffusion process increases the desirability of the product diffusing. However, there has not been a broad empirical attempt to examine this effect and to explain the underlying cause. Therefore, this paper reviews the theoretical basis and focuses upon empirical tests of this effect and its underlying cause. The results for 18 different diffusing products show the expected relationship-faster diffusion for more rapidly improving products- between technological improvement and diffusion with strong statistical significance. The empirical examination also demonstrates that performance improvement does not slow down in the latter parts of diffusion when penetration does slow down. This finding is also consistent with theories of diffusion based upon utility but not with ideas that explain performance increases as due to competition among firms.
    Date: 2017–04
  11. By: ENDO Kazumi
    Abstract: This study, using monthly micro data of manufacturing firms' forecasts and realized production quantity, presents new findings on uncertainty over production forecasts. This is the first empirical study employing monthly-frequency quantitative forecast data at the firm level. According to the analysis, forecast errors are quite heterogeneous among Japanese manufacturers. For example, some firms underpredict their production even when aggregated industry-level production is overpredicted. By firm characteristics, firms operating in information and communications technology (ICT)-related industries, firms producing investment goods, and smaller firms exhibit higher production uncertainty. The production uncertainty is greater in recessionary periods. The uncertainty measures calculated from firm-level data have a predictive power over macroeconomic fluctuations, which cannot be detected from the measures using publicly available aggregated data, suggesting the value of firm-level micro data. Finally, production uncertainty of Japanese manufacturing firms is strongly associated with global policy uncertainty as well as Japan's own economic policy uncertainty.
    Date: 2017–03
  12. By: Mario Lackner; Rudolf Winter-Ebmer; Uwe Sunde; Rudi Stracke
    Abstract: This paper investigates whether decision makers are forward looking in dynamic strategic interactions and incorporate variations of continuation values in their choices. Using data from professional and semi-professional basketball tournaments, we find that the expected relative strength of a team in future interactions indeed affects behavior in the present. The results also show that the response to changes in the continuation value is stronger if the structure of prizes is convex across stages, if the players are in a decisive game and if the prevalence of free riding within a team is low.
    Keywords: Promotion tournament; multistage contest; elimination; forward-looking behavior; heterogeneity
    JEL: M51 J33
    Date: 2015–11
  13. By: Rosellon, Maureen Ane D.; Del Prado, Fatima Lourdes E.
    Abstract: This paper investigates firm-to-firm technology and knowledge sharing in firms from the food manufacturing sector. Traditionally driven by secret recipes and family-grounded procedures, food processing firms are naturally unwilling and indisposed to embrace collaborative undertaking and develop external ties due to perceived risks of leakage of company specific assets. This paper attempts to document the practical experiences of two manufacturing firms and their views on sharing technology and knowledge to their partners in the production network.
    Keywords: Philippines, technology transfer, knowledge transfer, production networks, knowledge sharing, food manufacturing
    Date: 2017
  14. By: EDAMURA Kazuma; MIYAGAWA Tsutomu; UCHIYAMA Katsuhisa
    Abstract: This paper examines whether environmental related investment increases firm value by using the firm level panel data of the Survey of Research and Development, Development Bank of Japan Kigyo Zaimu Data Bank, and CSR Kigyo Soran. In the standard theory of the firm, environmental related investment does not increase firms' profits, but in recent research, it is shown that it could increase firm value in view of the benefits enjoyed by various stakeholders. Regarding the accumulation of investments as a valuable management resource, this paper considers the influence of environmental related investment accumulation on firm value. We test the relationship between research and development investment for environmental technology and investments for environmental protection and Tobin's q, return on assets (ROA), and return on equity (ROE). The estimation results show that environmental related investment increases firm value, and leads to accumulation of useful management resources. In addition, our results indicate that the combination of environmental related investment and active advertisement raises firm value.
    Date: 2017–03
  15. By: MIYAGAWA Tsutomu; KAWAKAMI Kazuyasu; EDAMURA Kazuma
    Abstract: Productivity growth in the aggregate economy can be broken down into two components: the weighted average of industry level productivity growth and productivity growth through resource reallocation between industries. Using the Regional-level Japan Industrial Productivity Database (R-JIP database), we examine the effects of the accumulation of social infrastructure and deregulation on the second component of productivity growth, namely, through resource reallocation, in the regional economies in Japan. Although we do not find positive contributions of social infrastructure to productivity improvement through capital movements, we find that the accumulation of social infrastructure contributed to productivity improvement through labor reallocation. In the 2000s, deregulation within special districts for structural reform contributed to productivity growth through labor reallocation. Our empirical studies imply that deregulation, rather than accumulation of social infrastructure, is the better tool for productivity improvement.
    Date: 2017–03
  16. By: Emma Howard
    Abstract: This paper uses panel data to assess the relative importance of social networks and geographic proximity to micro, small, and medium enterprises in Viet Nam. The results suggest that a larger social network, and hiring employees mainly through social networks, are both correlated with higher value added per worker. The number of government officials and civil servants in a firm’s network emerges as particularly important. When the quality of contacts is controlled for, firms with tighter social networks have, on average, higher value added per worker. The analysis of spatial networks reveals that firms with a lower percentage of customers and suppliers in the same district actually have higher value added per worker. The results suggest that for micro, small, and medium firms in Viet Nam, strong social networks are much more important than geographic proximity.
    Date: 2017
  17. By: ENDO Kazumi
    Abstract: This study examines determinants of corporate environmental performance (CEP), focusing on four factors: managerial quality, board structure, ownership structure, and family business. Using a unique dataset on management practices, I find that good management leads to green management. In addition, this study indicates that both board size and board composition are positively associated with CEP and confirms the advisory function of the board. While domestic blockholders exert a quiet diplomacy on firms' strategies, foreign blockholders, who are supposed to seek immediate returns, discourage proactive environmental practices. This study also shows that family businesses, which are characterized by owner-management, are not a significant predictor of CEP once the impacts of the above factors have been partialed out. The results suggest that directors are vulnerable to pressure from short-sighted investors, and that this pressure may drive out good management practices and endanger long-term profitability.
    Date: 2017–03
  18. By: Carpenter, Jeffrey P. (Middlebury College); Frank, Rachel (Yale Law School); Huet-Vaughn, Emiliano (Middlebury College)
    Abstract: Gender differences in competitive behavior have been well documented by economists and other social scientists; however, the bulk of the research addresses competition with others and excludes other economically relevant competition that may contribute to the gender pay gap. In this paper, we ask: How does gender affect how individuals react to competition against themselves? In a laboratory experiment in which some subjects compete against others and some compete against themselves, we find women select into intrapersonal competition at significantly higher rates than interpersonal competition, the first such findings. We find perseverance or "grit" to be a poor predictor of interpersonal competition selection, but find familial effects such as parent's education and number of brothers to be correlated with competition selection.
    Keywords: gender, competition, tournament, real effort, labor
    JEL: C92 J16 M52
    Date: 2017–03

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