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on Economics of Strategic Management |
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Issue of 2008‒07‒14
nine papers chosen by Joao Jose de Matos Ferreira University of the Beira Interior |
| By: | Alexander Coad |
| Abstract: | This paper is an empirical test of the hypothesis that the appropriateness of different business strategies is conditional on the firm's distance to the industry frontier. We use data on four 2-digit high-tech manufacturing industries in the US over the period 1972-1999, and apply semi-parametric quantile regressions to investigate the contribution of firm behavior to market value at various points of the conditional distribution of Tobin's q. Among our results, we observe that innovative activity, measured in terms of R&D expenditure or patents, has a strong positive association with market value at the upper quantiles (corresponding to the leader firms) whereas the innovative efforts of laggard firms are valued significantly less. Laggard firms, we suggest, should instead achieve productivity growth through efficient exploitation of existing technologies and imitation of industry leaders. Employment growth in leader firms is encouraged whereas growth of backward firms is not as well received on the stock market. |
| Keywords: | Distance to frontier, Strategy, Market value, Innovation, Firm Growth Length 37 pages |
| JEL: | D21 L21 L25 O31 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2008-07&r=cse |
| By: | Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Johansson, Dan (Ratio) |
| Abstract: | High-growth firms (HGFs) are critical for net job creation and economic growth. We analyze HGFs using the theory of competence blocs, linking firm growth to property rights and the interaction of complementary expertise. Specifically, we discuss how the institutional framework affects the prevalence and performance of HGFs. Firm growth is viewed as resulting from the perpetual discovery and use of productive knowledge. A key element in this process is the competence bloc, a nexus of economic actors with complementary competencies that are vital in order to generate and commercialize novel ideas. The institutional framework determines the incentives for these individuals to acquire and utilize knowledge. We identify a number of institutions that foster the emergence of competence blocs and the creation of HGFs. In particular, our analysis points to the pivotal roles played by tax structures, labor market regulation, and the contestability of currently closed service markets. Finally, we characterize institutions beneficial for sclerotic or dynamic capitalism, respectively, depending on whether they provide a favorable environment for the emergence of competence blocs and the creation of HGFs. |
| Keywords: | Competence bloc; Dynamic capitalism; Entrepreneurship; Flyers; Gazelles; High-growth firms; Industrial policy; Innovation; Institutions; Labor security; Product market regulations; Property rights; Sclerotic capitalism; Self-employment; Tax policy. |
| JEL: | H32 L25 M13 O31 P14 |
| Date: | 2008–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0123&r=cse |
| By: | TAKECHI Kazutaka |
| Abstract: | This paper investigates the determinants of international strategic alliances by pharmaceutical firms. When launching drugs onto the market, there are two choices: launching the drugs directly or forming marketing alliances including licensing agreements. Because these choices affect firm revenue structure and the international supply pattern of pharmaceuticals, the impact on world welfare is significant. We examine the determinants of supply mode choice (direct launch versus alliance) by Japanese pharmaceutical companies. Our estimation results reveal that in addition to firm heterogeneity, product - and market - specific determinants of strategic alliances are important: firms with smaller scope economies prefer alliances for drugs with less market potential when intellectual property rights protection (IPP) is strong. |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:08022&r=cse |
| By: | OKAZAKI Tetsuji |
| Abstract: | This paper explores the relationship between patterns of productivity growth and the development stage of an industry, using firm-level data on the cotton-spinning industry in Japan in the late-nineteenth century. It is found that patterns of productivity growth depend on the development stage of the industry. In the earlier stage of industrial development, the productivity growth of each firm, namely the within effect, was the sole major source of aggregate productivity growth. On the other hand, once the industry had matured, resource reallocation across firms became a major source of aggregate productivity growth, along with the within effect. This relationship between patterns of productivity growth and the development stage of an industry is considered to reflect the stage-dependent patterns of innovation and competition. |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:08021&r=cse |
| By: | Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich); Markus Lang (Institute for Strategy and Business Economics, University of Zurich); Martin Lutzenberger (Institute for Strategy and Business Economics, University of Zurich); Stephan Wagner (Chair of Logistics Management, Swiss Federal Institute of Technology Zurich) |
| Abstract: | This paper analyzes competitive strategies and the impending market entry of a new player in the German Business-to-Business (B2B) parcel market. Currently there a four large service providers in the German B2B parcel market. Each of these incumbent providers operates - albeit with varying degrees of automation - with a classical multi-hub-and-spoke network. The entrant plans to enter the B2B parcel market with a completely new parcel delivery system and network. Such operations shall enable the incumbent to offer new services to potential customers and realize lower costs and prices than the established .rms. We describe the market and contrast the incumbents’ and the entrant’s strategy and operations. We develop a game-theoretic Cournot model with economies of scale and different cost functions to analyze the effect of the entrant’s market entry on competition, market shares, prices, costs and profits. We present calibrated results illustrating the impact of market entry in various scenarios. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0084&r=cse |
| By: | Herings P. Jean-Jacques; Peeters Ronald; Yang Michael (METEOR) |
| Abstract: | In this paper, we consider the competition of providers of information products against P2P networks that offer illegal versions of the information products. Depending on the generic cost factor of downloading—incorporating factors including, among other things, the degree of legal enforcement of intellectual property rights—we find that the firm may employ pricing strategies to either deter the entry of a network or to accommodate it. In the latter case, we find that the equilibrium price moves in the opposite direction of the generic cost factor of downloading. This counter-intuitive result corresponds to a very subtle form of platform competition between the firm and the network. Furthermore, profits for the firm ambiguously decrease when the generic cost factor of downloading declines, whereas total welfare unambiguously increases. This implies that it may well be welfare enhancing to relax the legal enforcements of intellectual property rights. |
| Keywords: | Strategy; |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2008020&r=cse |
| By: | Michiel Bijlsma; Viktória Kocsis; Nelli Valmari |
| Abstract: | In most European broadband Internet markets local loop unbundling is mandated under a cost-based regulated access price. We construct a model for differentiated Cournot competition between service-based and infrastructure-based firms, out of which one infrastructure-based firm (the incumbent) supplies to the service-based firms. We seek for and compare the socially optimal and the incumbent’s profit maximizing access price in two scenarios: (i) service-based firms and incumbent supply homogeneous services (partial differentiation), and (ii) all services are horizontally differentiated (uniform differentiation). We show that in both cases the incumbent never forecloses service-based firms if infrastructure-based competition is present or if services are somewhat differentiated. Under uniform differentiation the welfare optimizing access price is below marginal cost, hence the incumbent subsidizes the production of service-based firms and makes zero profit. In the case of partial differentiation, the same result obtains when both markets are concentrated. However, if markets are not concentrated, the socially optimal access fee exceeds the marginal cost. |
| Keywords: | broadband Internet market; imperfect competition; product differentiation; access regulation |
| JEL: | L13 L51 L86 L96 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:106&r=cse |
| By: | Reardon, Thomas; Gulati, Ashok |
| Abstract: | "A “supermarket revolution” has been underway in developing countries since the early 1990s. Supermarkets (here referring to all modern retail, which includes chain stores of various formats such as supermarkets, hypermarkets, and convenience and neighborhood stores) have now gone well beyond the initial upper- and middle-class clientele in many countries to reach the mass market. Within the food system, the effects of this trend touch not only traditional retailers, but also the wholesale, processing, and farm sectors. The supermarket revolution is a “two-edged sword.” On the one hand, it can lower food prices for consumers and create opportunities for farmers and processors to gain access to quality-differentiated food markets and raise incomes. On the other hand, it can create challenges for small retailers, farmers, and processors who are not equipped to meet the new competition and requirements from supermarkets. Developing-country governments can put in place a number of policies to help both traditional retailers and small farmers pursue “competitiveness with inclusiveness” in the era of the supermarket revolution. Some countries are already taking such steps, and their experiences offer lessons for others." from Author's text |
| Keywords: | Supermarkets, Wholesalers, Modern retail, Small farmers, Traditional retail, Supply chains, Competitiveness, Inclusiveness, |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:polbrf:2&r=cse |
| By: | Sylvain Barde (Observatoire Français des Conjonctures Économiques) |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:0805&r=cse |