The good,the bad,and the ugly: Technology transfer competence,rent-seeking,and bargaining power

In this paper, we explore the relationships between subsidiary technology transfer competence, bargaining power and rent-seeking. In the multinational corporation, technology transfer competence is generally perceived as something desirable. We connect this bright side of subsidiary-level processes to a potentially uglier and darker side of the organization, namely that subsidiaries gain bargaining power that is exercised for bad ends, i.e., rent-seeking. Using an empirical analysis that comprises intrafirm technology transfers, this paper finds that technology transfer competence leads to greater subsidiary bargaining power that in turn increases rent-seeking behavior; but this competence does not directly affect rent-seeking. We suggest that bargaining power offers a key explanation for rent-seeking. This paper advances the understanding of subsidiary sources of power within the multinational corporation and the organizational determinants of rent-seeking, which is relevant to theory development as well as to managers.     

The determinants of retailers' margin related bargaining power: evidence from the Irish food manufacturing industry

This paper investigates the determinants of retailers' margin related bargaining power in the context of food retailer-manufacturer relationships. The study is based on an empirical analysis of 97 trading relationships between Irish food manufacturers and their Irish and British retail customers. It complements earlier research, focused mainly on structural characteristics of the industries, by integrating product and relationship characteristics into the analysis. Using measures based on manufacturers' perceptions, the study finds that retailers' margin related power over food manufacturers is positively related to the importance of economies of scale in manufacturing, retail concentration and own brand penetration of the market. The results also show that retailers' margin related power increases as product shelf-life increases and as manufacturers' specific investments increase.     

Organizational culture,innovation, and performance: A test of Schein's model

Innovation is the key to organizational survival and therefore the study of processes that support innovation should be of interest to researchers and practitioners alike. Schein's multi-layered model of organizational culture offers a useful framework for thinking about processes that foster innovation. A defining characteristic of the model is the subtle but important distinctions between the varied “layers” of organizational culture (i.e., values and norms, artifacts and behaviors). The basic assumption of this study is that Schein's model offers a tractable explanation of cultural processes that support organizational innovation, especially in service firms. Despite the intuitive appeal and practical value of Schein's conceptual framework, empirical research in relation to the model is limited. This paper develops a rationale for an empirical model based on Schein's conceptual model; the study reports a test of an empirical model. Data collected from approximately 100 principals of law firms provides a suitable empirical context for a test of the model. The findings generally support the hypothesized relationships. A key result is how layers of organizational culture, particularly norms, artifacts, and innovative behaviors, partially mediate the effects of values that support innovation on measures of firm performance. The findings have implications for theory and practice, especially in relation to building an organizational culture within professional service firms that fosters innovative behavior.     

Trade policy-making in a model of legislative bargaining

In democracies, trade policy is the result of interactions among many agents with different agendas. In accordance with this observation, we construct a dynamic model of legislative trade policy-making in the realm of distributive politics. An economy consists of different sectors, each of which is concentrated in one or more electoral districts. Each district is represented by a legislator in the Congress. Legislative process is modeled as a multilateral sequential bargaining game à la Baron and Ferejohn (1989). Some surprising results emerge: bargaining can be welfare-worsening for all participants; legislators may vote for bills that make their constituents worse off; identical industries will receive very different levels of tariff. The results pose a challenge to empirical work, since equilibrium trade policy is a function not only of economic fundamentals but also of political variables at the time of congressional negotiations — some of them random realizations of mixed bargaining strategies.     

Friend or foe: Customer-supplier relationships and innovation

This study provides an empirical investigation of the impact of customer-supplier relationships on firm innovation in an interorganizational framework encompassing transaction cost economics, resource dependence theory, and the theory of incomplete contracts. Using a sample of U.S. firms for the period from 1980 to 2005, this study explores how customer concentration and customer bargaining power affect a supplier's process innovation and product innovation measured with R&D-to-assets ratio and patents (also citations), respectively. The findings imply that a concentrated customer base, which reflects a strong customer-supplier relationship as well as high switching costs, motivates suppliers to invest more in R&D and become more innovative. However, the evidence also suggests that strong customer bargaining power creates hold-up problems and forces suppliers to invest less in R&D and innovation. The results are robust to sophisticated econometric techniques that control for endogeneity and suggest heterogeneous effects of business partnerships on firm innovation.     

Has Globalisation Affected Collective Bargaining? An Empirical Test, 1980–2009

We investigate whether globalisation has affected the nature of collective bargaining in OECD and emerging countries. The main innovations over the existing empirical literature are (i) the consideration of three distinct aspects of collective bargaining (union density, decentralised bargaining and the extent of government intervention), (ii) the reliance on a sample with a larger cross‐sectional and time dimension (44 countries from 1980 to 2009), and (iii) the application of a more appropriate empirical methodology (dynamic panel data models). We find that globalisation, on average, depresses unionisation but neither affects the degree of decentralisation nor government intervention in collective bargaining. We also uncover significant heterogeneity effects, both across countries and over time.     

Effects of Exclusivity Agreements on Supplier's Control Over Marketing Channels

Abstract

This paper outlines an investigation aiming to increase knowledge of the effects of exclusivity agreements on marketing channels. We focus on one of the more relevant benefits of exclusivity for manufacturers mentioned in the marketing literature: control over resellers. We analyze the different ways these agreements could affect the manufacturer's control over the distribution channel and propose five hypotheses regarding the consequences of exclusive territories and exclusive dealing on the supplier's control. The empirical results provide strong support for the hypotheses regarding their effects on control through bargaining processes.     

Knowledge Synthesis and Innovative Logistics Processes: Enhancing Operational Flexibility and Performance

Research results are presented providing an empirical examination of the impact of knowledge synthesis and innovative logistics processes on operational flexibility. The research is theoretically grounded in the resource‐based view of the firm, augmented with the knowledge‐based view. Knowledge synthesis and innovative logistics processes are proposed as key resources in the development of an important logistics capability: operational flexibility. A structural model analysis of survey data collected from logistics executives supports the proposed relationships and indicates that innovative logistics processes can lead to greater operational flexibility. Operational flexibility is also shown to lead to higher levels of logistics performance.     

What matters in a price negotiation: Evidence from the U.S. auto retailing industry

While there is a great deal of theoretical and experimental literature on what factors affect bargaining outcomes, there is little empirical work based on data from real markets. In this paper we analyze negotiations for new cars, a $340 billion industry in the United States in 2010. Our results suggest that search costs, incomplete information, and bargaining disutility have an economically significant effect in real-world negotiations: we estimate that relative to an uninformed consumer, a consumer with basic information about the seller’s reservation price and his own outside options captures 15% of the average dealer margin from selling an automobile. We also find that a buyer’s search cost and bargaining disutility have significant effects on bargaining outcomes. Finally, our results show that while search is common, there remains a substantial group of consumers who do not engage in any of the search behaviors we measure. We hypothesize that these buyers are not aware of how easy and effective certain activities in improving negotiation outcomes can be.     

Investment Decisions,Debt Renegotiation Friction,and Agency Conflicts

This paper investigates how investment decisions are influenced by the possibility of debt renegotiation failure and shareholder–debtholder conflicts by extending the Sundaresan and Wang (2007) model. We find that the difference in investment thresholds due to agency conflicts decreases as shareholders’ bargaining power increases. We also show that as the probability of renegotiation friction is lower, the investment threshold is lower, which is consistent with the empirical result of Favara et al. (2017).     

Relationship-based product innovations: Evidence from the global supply chain

Global supply chains offer a range of expertise to suppliers interested in generating innovative new products through capitalizing on the closeness of their working relationships with other firms. However, current knowledge on whether and how relational capital between firms can be leveraged for innovation is equivocal, conceptualizing little of the underlying processes responsible for mobilizing relational capital, as well as yielding mostly contradictory empirical results. This study proposes and tests the intermediate mechanisms of proactive customer orientation and joint learning capability as two distinctive capabilities that may account for how relational capital drives relationship-based innovation. Our conceptual model posits that the relational capital–innovation link is neither simple nor direct. An empirical test on 204 Taiwanese suppliers demonstrates the complexity of the innovation generation process. Two pathways from relational capital to innovation are revealed: joint learning capability fully mediates the link, whereas the role of proactive customer orientation is moderated by aspects of the suppliers' ties to their international customers; our theory is thereby largely confirmed. Finally, implications for the theory and practice of innovation in global supply chain relationships are drawn.     

A resource-based analysis of sustainable competitive advantage in a global environment

The extant business literature on global competitive advantage has been dominated by a contingency-based approach, which advocates the attainment of fit between the firm's strategy, structures and processes and its competitive conditions. However, most support for this view has been anecdotal and rigorous empirical evidence has been lacking. This study adopts a more voluntaristic stance, and integrates perspectives from international business and strategic management to propose a resource-based model of global sustainable competitive advantage (GSCA). A series of hypotheses are presented on the nature of global resources and on the relationships between these resources and sustained superior performance. The model is tested on a sample of firms in the global automotive components industry with promising results. Conclusions are drawn and the implications for research and practice are outlined.     

Wage bargaining and multinational firms

We set up a general equilibrium model with heterogeneous firms to study the interaction between wage bargaining and foreign direct investment. Thereby, we highlight the incentives of firms to invest abroad in order to improve their bargaining position vis-á-vis local unions and we show how changes in the bargaining power of unions affect the share of multinational firms in an open economy. In addition, taking into account this relationship between wage bargaining and foreign direct investment, our analysis provides novel insights on how labor income and the unemployment rate adjust to economic integration and how changes in the bargaining power of unions affect these two labor market variables.     

Radius Restrictions on Retail Chains and the Similarity of Neighboring Shopping Centers

In Canada and the US, shopping center developers may impose ‘radius restrictions’ on tenants in their shopping centers, prohibiting tenants in a particular shopping center from opening another store within a certain radius. Whether a radius restriction is imposed on a chain will depend upon the relative bargaining positions of the chain and the developer. This paper presents an empirical analysis of regional shopping center composition in Canada, using variables that reflect the bargaining power of retail chains and shopping center developers. We find that large, well established, and growing chains are more likely to enter neighboring malls, consistent with the hypothesis that whether a chain enters neighboring malls depends upon its bargaining power. As well, we find that a chain is more likely to enter neighboring malls owned by large developers, consistent with large developers trying to keep retail chains out of the malls of small developers.     

The costs of governance in international companies

Using foreign direct investment as a governance mechanism has a cost side that goes beyond mere production and input costs. The governance costs of foreign operations are often vague and underestimated, and sometimes even ignored by companies entering a foreign market. The effects of these costs have also largely been neglected in former empirical research. This study examines the governance cost effects on foreign subsidiary performance. Using data from a survey of 160 Norwegian multinational companies the study shows that there are significant and negative relationships between bargaining, monitoring, and maladaptation costs and subsidiary performance. Conversely, costs incurred due to bonding activities are positively associated with performance. Overall, this study indicates that governance costs play a significant role in explaining the performance of foreign subsidiaries: close to 40% of the variation in performance can be attributed to such costs. Dealing with such costs is hence of utmost importance for the management of multinational companies.     

Negotiating a Stable Government: An Application of Bargaining Theory to a Coalition Formation Model

In this paper, we apply bargaining theory to a certain model of coalition formation. The notions of a feasible government and a stable government are central in the model considered. By a government, we mean a pair consisting of a majority coalition and a policy supported by this coalition. The aim of this paper is to establish which stable government should be created if more than one stable government exists or, in case there is no stable one, which feasible government should be formed if more than one feasible government exists. Several bargaining procedures leading to the choice of one stable (or feasible) government are proposed. We define bargaining games in which only parties belonging to at least one stable (or feasible) government bargain over the creation of a government. We consider different bargaining costs. We investigate subgame perfect equilibria of the bargaining games defined. It turns out that the prospects of a party depend on the procedure applied, and on the bargaining costs assumed. We also apply the coalition formation model to the Polish Parliament after the 2001 elections and apply the different bargaining games for the creation of a government to this example.     

Negotiating free trade

We develop a dynamic bargaining model in which a leading country endogenously decides whether to sequentially negotiate free trade agreements with subsets of countries or engage in simultaneous multilateral bargaining with all countries at once. We show how the structure of coalition externalities shapes the choice between sequential and multilateral bargaining, and we identify circumstances in which the grand coalition is the equilibrium outcome, leading to worldwide free trade. A model of international trade is then used to illustrate equilibrium outcomes and how they depend on the structure of trade and protection. Global free trade is not achieved when the political-economy motive for protection is sufficiently large. Furthermore, the model generates both “building bloc” and “stumbling bloc” effects of preferential trade agreements. In particular, we describe an equilibrium in which global free trade is attained only when preferential trade agreements are permitted to form (a building bloc effect), and an equilibrium in which global free trade is attained only when preferential trade agreements are forbidden (a stumbling bloc effect). The analysis identifies conditions under which each of these outcomes emerges.     

Supply Chain Integration and the SCOR Model

The Supply Chain Operations Reference (SCOR) model has been widely adopted in many companies. Anecdotal evidence and trade journals have reported significant improvements after firms have adopted the SCOR model. Although practitioners have been enthusiastic about implementing and using the SCOR model in their operations, the SCOR model has not been empirically validated. The purpose of this study is to empirically validate the SCOR model (i.e., test the structure of the SCOR model). Data from 125 North American manufacturing firms were collected. The results show that the relationships among the supply chain processes in the SCOR model are generally supported. The Plan process has significant positive influence on the Source, Make, and Deliver processes. The Source process has significant positive influence on the Make process and the Make process has significant positive influence on the Deliver process. The Source process mediates the impact of the Plan process on the Make process and the Make process mediates the impact of the Plan process on the Deliver process. The findings provide managers with empirical evidence that the SCOR model is in fact valid.     

Managing MNC-Government Negotiations in Saudi Arabia: The Key Role of Elites

This article explores the relationships between multinational corporations (MNCs) and a host country, in this case Saudi Arabia (the Kingdom). The interests of Saudi businesses and the political elite, along with the evolution of their relationship are surveyed. Furthermore, the validity of traditional and two-tier models of bargaining between MNCs and developing countries are assessed in the context of the Kingdom. It is argued that while both models may be useful, the two fail to capture the nature of MNCs-Saudi Arabia bargaining process. These two models are revised and enriched to adequately reflect the Kingdom's specific advantage, the nature of its national firms, and the unique relations it has with MNCs and their home countries. The study concludes that under current global political and economic conditions, the elite and MNCs interests appear to converge around business objectives.     

The bargaining relationship between foreign mnes and host governments in latin america

The relationship between international firms and national governments can usefully be understood in terms of bargaining theory. This article develops an explicit model of the bargaining relationship, using the level of regulation as a measure of bargaining power. The model is tested with data from a survey of multinational enterprise subsidiaries in seven Latin American countries. The evidence supports hypotheses that (1) firms are less regulated when they are technology-intensive, when they operate larger scale affiliates, and when they export more from the local affiliate; and (2) firms are more regulated when they operate in larger countries and when they have a larger local market share. These findings demonstrate the importance of the government—business relationship as a multidimensional process and offer support for the explicit framework employed here.