Heterogeneity of plural forms: A revised transaction cost approach

Strategies pushing firms to adopt plural forms and the heterogeneity of solutions they endorse have attracted increasing attention. This paper proposes a theoretical framework that combines asset specificity and uncertainty to explain why there are plural forms and focuses on the key role of uncertainty, within a given range of asset specificity, to predict what and when specific types of plural forms should be observed. Propositions derived from this model are tested on an extensive set of cases from the agribusiness sector. The empirical richness of these cases allows going beyond the existing literature, which has essentially focused on franchising.     

Growth and innovation during economic shocks: A case study for characterising growing small firms

Why do some firms successfully grow while others are severely affected by economic shocks? Does innovation play any role in this? By adopting a multi-theoretical approach, this study explores the characteristics of firms that grew during the Great Recession (2008–2009). The data were collected from 12 small firms located in Finland, Ireland and the UK. Furthermore, this study elaborates the entrepreneurship and management literature by characterising the firms that thrived during the recession. The findings reveal the uniform characteristics of four grower types: gazelles, high relative growers, high absolute growers and high growers of both. It can be concluded that there are more homogeneous characteristics within the grower profiles than across the profiles, suggesting that firms growing during the Great Recession comprise an internally heterogeneous group of businesses. We found that innovation is the only common characteristic of firms that grew during these economic shocks.     

IMPACT ON FIRMS OF THE USE OF KNOWLEDGE EXTERNAL SOURCES: A SYSTEMATIC REVIEW OF THE LITERATURE

This study summarizes the main conclusions from a systematic review of the empirical literature regarding the impact on firms of the use of knowledge external sources (universities, research institutes and knowledge intensive business services). With the aim to organize the literature, we classify the different works according to the research question addressed: (i) which firms use knowledge external sources?; (ii) Do firms using knowledge external sources achieve better results?; And (iii) which firms benefit the most from using knowledge external sources? Stylized facts are that larger, more R&D intensive and high tech firms are more likely to use knowledge external sources and that use of knowledge external sources is associated to firms higher technical results. Less attention has been paid to the third question and evidence is not conclusive. Several recommendations for future research emerge. First, to take in greater consideration methodological issues so that potential biases in the results caused by sample selection and endogeneity are handled properly. Second, to pay more attention to heterogeneous outcomes. Third, to use continuous indicators of depth and breadth of links allowing for non‐linear relationships and fourth, to extend evidence for developing countries and service industries.     

THE IMPACT OF THE AFFILIATION OF VENTURE CAPITAL FIRMS: A SURVEY

The aim of this paper is to review the theoretical and empirical literature on the impact of the affiliation of venture capital (VC) firms with a particular focus on the differences between Europe and the US. A main characteristic of VC firms is their high level of involvement in the management of funded firms. However, the VC industry is composed of heterogeneous actors. The literature has studied to a great degree the independent funds that dominate the US market. Yet, there also exist VC funds affiliated with banks or with industrial firm, which can benefit from synergies with their parent corporation. Several studies have highlighted significant differences between these types of VC firms.     

Seizing the Ethical High Ground: Ethical Reputation Building in Corrupt Environments

We study how ethical behaviour by firms leads to ethical reputation building. Based on our in‐depth studies of two firms in India and Zimbabwe that resisted corruption and survived for extended time periods, we propose that in addition to behaving ethically, firms need to elicit favourable responses from a critical mass of stakeholders from both strong and weak tie networks in order for their ethical reputations to diffuse quickly and widely. We find that the strength of stakeholder responses to ethical behaviour is moderated by firm level and contextual factors: high status affiliations, industry characteristics, the nature of corruption resisted, the presence of a plural press, the potential for collective action, and the presence of an independent judiciary. These antecedents also influence the pattern of stakeholder resource commitments that firms are able to enjoy as a result of having built ethical reputations.     

Consultation and communication in family businesses in Great Britain

Nationally representative data on family businesses are available in the 1998 Workplace Employee Relations Survey, alongside comparable information for other types of firms. We use these data to compare differences in the use of different consultation and communication procedures. We cover such practices as the use of direct communication schemes (e.g. briefings; the provision of information on financial performance to the workforce) as opposed to indirect methods such as the use of joint consultative committees. There is an a priori expectation in the literature that family-owned businesses are either more likely to use direct forms of communication (vis-à-vis indirect forms) or that they will not be involved in direct communication or consultation with their employees, and we test this using multivariate techniques. Finally, we consider whether the type of consultation/communication structure matters in terms of establishment performance, and what differences exist with respect to family-owned businesses. In particular, this paper tests if those firms that consult directly with staff, as opposed to those that consult through joint consultative committees or trade unions, have higher productivity and/or other measures of performance. Concurrently we test whether there are separate ‘family business’ effects or whether it is generally establishment size that ‘matters’, by estimating a model for family-owned and non-family-owned establishments. In general, our results show that not only do family-owned establishments have lower levels of communication and consultation, but, when the latter is present, this does not generally translate into greater economic benefits (as is the case in non-family-owned firms).     

TIMELY MANAGEMENT CHANGES AS AN ELEMENT OF ORGANIZATIONAL STRATEGY

This article uses the results of empirical research into the factors determining the differential success of firms in dealing with severe conditions at the industry level. A matched pairs comparison of successful and unsuccessful firms under these conditions reveals very different patterns of strategic measures taken. One of the significant differences is that the successful firms make changes in the management area very early, while the unsuccessful firms make them very late. the results are used for a theoretical reflection focusing on the following two questions: (1) Are organizations basically inert of adaptive? and (2) What is management's role in organizational change? the central theme of the discussion is that in the literature too little attention is paid to timely management changes as an element of organizational change strategies.     

RISE OF THE FIDUCIARY STATE: A SURVEY OF SOVEREIGN WEALTH FUND RESEARCH

We survey the literature documenting the rise of sovereign wealth funds (SWFs), which, with assets under management of over $5.4 trillion at year‐end 2014, are a major force in global finance. Research papers have analyzed the evolution of SWFs from stabilization funds to stand‐alone wealth management funds; we both survey this research and show that more than 25 countries have launched or proposed new SWFs since January 2008. The most salient and controversial feature of SWFs is that they are state‐owned; we survey the existing literature on state ownership and discuss what this predicts about the efficiency and beneficence of government control of SWF assets. We discuss the documented importance of SWF funding sources (oil sales revenues versus excess reserves from export earnings) and survey the normative literature describing how SWFs should allocate funds. We then summarize the empirical literature studying how SWFs actually do allocate funds—across asset classes, geographically, and across industries. We document that most SWF equity investments in publicly traded firms involve cross‐border purchases of sizeable minority stakes (median around 20%) in target firms, with a strong preference for investments in the financial sector. Next, we assess empirical studies examining the impact of SWF stock investments on target firm financial and operating performance, and find universal support for a positive announcement period stock price increase of 1–3%. This, however, is significantly lower than the 5% abnormal return documented for stock purchases by comparable privately owned financial investors in recent studies, indicating a “sovereign wealth fund discount.” We conclude by summarizing the lessons of SWF research and pointing out unresolved issues.     

What is the environmental performance of firms overseas? An empirical investigation of the global gold mining industry

Using a large plant level data set, this paper carries out an econometric analysis of the environmental performance of multinational firms in the gold mining industry worldwide. The aim of the analysis is to determine if, by looking at the actual environmental performance of firms (as opposed to inferring such behavior from location decisions), we can shed any light on important questions in the literature on firm location decisions: Do pollution havens exist in the gold mining industry? Do foreign controlled gold mines perform environmentally worse or better than their domestic counterparts? We develop different ways of measuring environmental performance within the context of a Bayesian stochastic production frontier approach. In particular, we derive different ways of measuring technical and environmental efficiency. When we implement these methods in our empirical work, we find that results are robust across different models and ways of measuring efficiency. We find that gold mines exhibit a wide range of environmental efficiencies; some are clearly more efficient than others. However, and most importantly for our questions, we find that this variation in efficiencies cannot be systematically related to mine characteristics such as whether they are foreign or domestically controlled or whether they are located in developed versus developing countries.     

The Development of Organizational Social Capital: Attributes of Family Firms*

abstract We develop and extend social capital theory by exploring the creation of organizational social capital within a highly pervasive, yet often overlooked organizational form: family firms. We argue that family firms are unique in that, although they work as a single entity, at least two forms of social capital coexist: the family's and the firm's. We investigate mechanisms that link a family's social capital to the creation of the family firm's social capital and examine how factors underlying the family's social capital affect this creation. Moreover, we identify contingency dimensions that affect these relationships and the potential risks associated with family social capital. Finally, we suggest these insights are generalizable to several other types of organizations with similar characteristics.     

Collusionby Asymmetrically Informed Firms

We analyze the implementation problem faced by firms when trying to collude in the face of asymmetric information about costs. Assuming that transfer payments are possible, we examine the incentive compatibility and individual rationality constraints that must be satisfied by any cartel agreement. Two scenarios are considered. Firms may or may not withdraw from the agreement after each firm's costs become known. If no withdrawal is possible, we find that the monopoly rule is implementable when weak types of individual rationality constraints are required. This contrasts with some results in the literature. If withdrawal is possible, we find a potential conflict between different forms of individual rationality constraints, in particular, between interim and ex post constraints. This conflict disappears in industries with a large number of firms.     

Firm Recruitment Behaviour: Sequential or Non‐sequential Search?

In the extensive job search literature, studies assume either sequential or non‐sequential search. This article introduces a novel method to test the hypothesis that firms search sequentially based on the relationship between the number of rejected job applicants and the number of filled vacancies. We distinguish between ten different search methods. For most search methods, including methods that rely on social networks and temporary help agencies, we find that sequential search cannot be rejected. However, when firms use advertising or public/private employment agencies, sequential search is rejected. Hence, we find that both forms of search are relevant for our understanding of the labour market. Further, the form of search is closely related to the search method used.     

The Role of Alliance Network Redundancy in the Creation of Core and Non-core Technologies

This paper studies the effect of a focal firm, and its partners' local alliance actions, on the creation of technological innovations by the former. More specifically, we study how two types of redundancy in a focal firm's ego network affect its ability to create new technologies in its technology core areas (exploitation) and/or non-core areas (exploration). We analyse this empirically in three different industry settings: chemicals, motor vehicles, and pharmaceuticals. One of our key findings is that individual firms can indeed boost both types of innovative output by shaping the degree of redundancy in their local alliance network, but that the way in which this should be done differs between the creation of core and non-core technologies. Next, we find that it is very useful to unpack the rather abstract notion of redundancy into more specific types of redundancy in ego networks. Overall, these findings reflect an action-oriented view on the role of individual firms in collaborative networks, which may complement the dominant view in the alliance literature emphasizing the role of the overall network structure and firms' network position within it.     

ECONOMETRIC MODELS OF ASYMMETRIC PRICE TRANSMISSION

Abstract In this paper, we review the existing empirical literature on price asymmetries in commodities, providing a way to classify and compare different studies that are highly heterogeneous in terms of econometric models, type of asymmetries and empirical findings. Relative to the previous literature, this paper is novel in several respects. First, it presents a detailed and updated survey of the existing empirical contributions on price asymmetries in the transmission mechanism linking input prices to output prices. Second, this paper presents an extension of the traditional distinction between long‐run and short‐run asymmetries to new categories of asymmetries, such as: contemporaneous impact, distributed lag effect, cumulated impact, reaction time, equilibrium and momentum equilibrium adjustment path, regime effect, regime equilibrium adjustment path. Each empirical study is then critically discussed in the light of this new classification of asymmetries. Third, this paper evaluates the relative merits of the most popular econometric models for price asymmetries, namely autoregressive distributed lags, partial adjustments, error correction models, regime switching and vector autoregressive models. Finally, we use the meta‐regression analysis to investigate whether the results of asymmetry tests are not model‐invariant and find which additional factors systematically influence the rejection of the null hypothesis of symmetric price adjustment. The main results of our survey can be summarized as follows: (i) each econometric model is specialized to capture a subset of asymmetries; (ii) each asymmetry is better investigated by a subset of econometric models; (iii) the general significance of the F test for asymmetric price transmission depends mainly on characteristics of the data, dynamic specification of the econometric model, and market characteristics. Overall, our empirical findings confirm that asymmetry, in all its forms, is very likely to occur in a wide range of markets and econometric models.     

Sketching Out a Model of Innovation,Face-to-face Interaction and Economic Geography

Abstract

This paper investigates the links between face-to-face interaction, the promotion of innovation, and the location behaviour of innovative firms. While face-to-face contact is an essential feature of most innovation behaviour, the importance of the frequency of face-to-face contact for innovation varies significantly according to different firm types. We therefore construct a simple optimization model in order to examine the relationship between the frequency of face-to-face interaction, the costs of land use, and the location of innovative firms. This allows us to distinguish between the types of firms which will be clustered together in space in order to foster innovation, from those innovating firms which will be more geographically dispersed. It will be seen that the model produces theoretical results which are largely consistent with both orthodox neo-classical urban economic models of location and also with much of the theoretical and empirical literature on the geography of innovation. Importantly, however, many aspects of the location of innovative firms which cannot be predicted on the basis of orthodox urban economic models are captured by this model.     

THE RESURGENCE OF INVENTORY RESEARCH: WHAT HAVE WE LEARNED?

Abstract. Recent empirical and theoretical research on business inventories is surveyed and critically evaluated. While most inventory research has had macroeconomic motivations, we focus on its microtheoretic basis and on potential conflicts between theory and evidence. The paper asks two principal questions. First, how can inventories, which are allegedly used by firms to stabilize production, nonetheless be a destabilizing factor at the macroeconomic level? Second, why, if firms are following the production-smoothing model, is production more variable than sales in many industries? We suggest that the so-called (S,s) model may help answer both questions.     

Equilibrium Principal‐Agent Contracts: Competition and R&D Incentives

We analyze competition between firms engaged in R&D activities and market competition to study the choice of the incentive contracts for managers with hidden productivity. Oligopolistic screening requires extra effort/investment from the most productive managers: under additional assumptions on the hazard rate of the distribution of types we obtain no distortion in the middle rather than at the top. The equilibrium contracts are characterized by effort differentials between (any) two types always increasing with the number of firms, suggesting a positive relation between competition and high‐powered incentives. An inverted U curve between competition and absolute investments can emerge for the most productive managers.     

On technological change, transfer and business characteristics: Some inferences from twelve case studies emanating from the national engineering laboratory

This paper examines two vital issues associated with technology transfer; what types of firms most rapidly adopt new technologies and what types of market structures and demand conditions are most conducive to technical change? The analysis is effected via the cases of twelve firms associated with the National Engineering Laboratory (NEL) whose contribution as an innovation facilitator was seen to vary from case to case. The bulk of the cases seem to support Schmookler's (1967) view that innovation is stimulated by perceived profits. The firms in the sample were tending to operate in rivalrous supply conditions and were engaged in innovation with a view to either maintaining market share or gaining a competitive advantage.     

Why should I share my knowledge? A multiple foci of commitment perspective

Knowledge‐intensive firms need to leverage their individual knowledge assets via knowledge sharing to create collective knowledge resources. This process is, however, in the control of the knowledge worker. We explore this personal and emotive quality of knowledge sharing by asking: ‘How does employee commitment impact on knowledge sharing?’ We study professional service firms operating in cross‐boundary environments and examine the impact of commitment to the organisation, profession, team and client on knowledge sharing. The article contributes directly to our understanding of the interrelationship between (a) the types and foci of commitment and (b) bidirectional knowledge sharing.