Learning about foreign markets: A study of Czech SMEs

Drawing on the organizational learning literature, our study examines the role of foreign market knowledge and firm emphasis on technological innovation in the internationalization of small, entrepreneurial firms in the Czech Republic. It is based on a sample of 168 SMEs representing a broad range of manufacturing industries that were founded after the fall of communism and as the Czech economy was transitioning to a more market-based economy. Findings indicate that emphasis on technological innovation is associated with greater acquisition of foreign market knowledge. In addition, our results indicate that emphasis on technological innovation directly and indirectly influences the performance of such SMEs in international markets. Our findings also suggest that foreign market knowledge partially mediates the relationship between firm emphasis on technological innovation and international performance. Implications of our findings from the perspective of theory and practice are discussed.     

A critique of Porter＇s cost leadership and differentiation strategies

Porter identifies high market share with cost leadership, citing GM as a successful practitioner of this strategy. However, GM became a market share leader in the American automobile industry due to a strategy of market segmentation, differentiation and a broad scope shaped during the 1920s. Porter argues that cost leadership and differentiation offer an equally viable path to competitive success. Nevertheless, a differentiation strategy based on superior quality compared to competition is more profitable than cost leadership strategy. It can lead a business to become a market share leader, and consequently even a low-cost leader. Research indicates that differentiation and cost leadership can co-exist. However, Porter insists that each generic strategy requires a different culture and a totally different philosophy. The problem is that Porter＇s generic strategies are too broad. It is not his logic that is flawed, but his basic premise that prescribes cost leadership strategy as the only route to market share leadership, and presents a narrow view of differentiation with a unique product--sold at a premium price--on the one hand, and a ＂standard, or no-frills＂ product on the other. Mintzburg （1988） says Porter＇s cost leadership strategy should be called ＂price differentiation＂： a strategy that is based on a lower price than that of the competition. He suggests that business strategy has two dimensions： differentiation and scope. Thus, setting scope aside, competitive strategy has only one component： differentiation. So, the key question is not whether to differentiate, but how？ First, make customer-perceived quality as the foundation of competitive strategy because it is far more critical to long-term success than any other factor. Second, serve the middle class by competing in the mid-price segment, offering better quality than the competition at a somewhat higher price. It is this path that can lead to market share leadership--a strategy that can be both profitable--and sustainable.     

Volume contents

Volume Contents

Volume contents     

Negotiation processes,Evolutionary Systems Design,and NEGOTIATOR

A negotiation accord is often the result of an intense, laborious, and evolutionary negotiation process. During this process, disputing parties are confronted with goal, judgment, and outcome conflict. This article demonstrates the utility of a conflict resolution framework—Evolutionary Systems Design (ESD)—by using a Negotiation Support System. ESD seeks to guide negotiators to move their individual goals and judgments in such a way as to enhance the chance of achieving a common solution. As illustrated by the use of NEGOTIATOR, a multiattribute utility negotiation support system, we argue that computer mediation can prove to be an effective means to implement the ESD framework.     

Modeling and supporting task-oriented group processes: Purposeful complex adaptive systems and Evolutionary Systems Design

Evolutionary Systems Design (ESD) is a universal general problem solving, formal modeling, design framework for purposeful complex adaptive systems (PCAS) and processes, i.e., task-oriented group processes. These processes constitute policy making, group decision, negotiation, and multiagent problem solving with human and/or artificial agents. ESD is also a framework for computer group support systems (GSS) that support these processes. The ESD general framework can be applied to define and solve specific problems. In this article the ESD framework is presented and illustrated by example. The article provides background for ESD computer implementations discussed in two other related articles (Lewis and Shakun 1996; Bui and Shakun 1996).     

Is Marriage Poisonous? Are Relationships Taxing? An Analysis of the Male Marital Wage Differential in Denmark

Differences in the pattern of marriage, cohabitation, childbirth, and intrahousehold specialization between the United States and Denmark, as well as a rich, register-based panel sample of about 35,000 young Danish men, are exploited to shed light on the nature of the male marital wage differential. The results indicate that failing to control for cohabitation can seriously bias estimates of the marital wage differential, that marriage is a more selective state than cohabitation, and that specialization may explain some of the marital wage differential in the United States but not in Denmark. In Denmark, by contrast, there is evidence that fatherhood has a significant impact on earnings.     

CHAOTIC DYNAMICS OF FINANCING INVESTMENT

The paper introduces the financial sector in a standard multiplier‐accelerator framework by incorporating financial variables in the investment function. The resultant equation is similar in form to that of a logistic map, and hence behaves unpredictably under certain values of the parameters. Since monetary authorities have a large influence on many of these parameters, monetary policies are effective in both controlling investment and preventing or postponing a financial crisis. The monetary authorities, however, are also keen to play an additional role of keeping the system predictable. Under certain conditions, there could be a conflict between these two objectives—of preventing a financial crisis and keeping the system predictable.     

Executive compensation and internal capital market efficiency

We document that chief executive officer (CEO) incentive compensation plays an important role in determining internal capital market (ICM) allocation efficiency. Our results suggest that CEO equity-based compensation can be effective in ameliorating inefficiencies in internal capital allocation decisions. We find that while stock grants play an important role in motivating CEOs to make more efficient internal capital allocation decisions, there is surprisingly no discernible influence of stock options. Our analysis supports the view that private benefits derived by managers are increasing in internal capital misallocation. We also document a strong positive link between CEO incentive compensation and excess value of diversified firms suggesting that the diversification discount can be ameliorated with CEO incentive compensation. The study contributes to the ICM literature and the literature on conglomerate diversification discount.