Parametric and Nonparametric Approaches to Benchmarking the Regulated Firm

Rewarding regulated firms based on their relative performance requires benchmarks that reflect how performance is affected by regulation. This paper demonstrates how parametric and nonparametric efficiency measures can be employed to produce benchmarks that account for the effects of regulation. We apply measurement techniques to an eleven-year panel of 20 U.S. interstate natural gas transmission companies and use our benchmarking measures to distinguish firms that perform well owing to a superior management of technology from firms that perform well owing to the effective management of the regulatory mechanism.     

Strategic groupings as competitive benchmarks for formulating future competitive strategy: A modelling approach

Previous studies on strategic groups have examined issues such as the identification of strategic groups, the relationship between strategic groups structure and industry performance, and the movement of strategic groups over time. In contrast to previous studies, this paper uses the analytical concepts of game theory to explore the question of what strategic groups will exist in the future. These benchmark (future) strategic groups represent long-run strategic positions available within an industry and thus reference points for firms in developing sustainable competitive strategies. The benchmark strategic groups are discussed and comments are offered to illustrate how firms can use the benchmark information to redirect their strategic positions in order to survive and remain competitive in the long run.     

A Metafrontier Production Function for Estimation of Technical Efficiencies and Technology Gaps for Firms Operating Under Different Technologies

This paper presents a metafrontier production function model for firms in different groups having different technologies. The metafrontier model enables the calculation of comparable technical efficiencies for firms operating under different technologies. The model also enables the technology gaps to be estimated for firms under different technologies relative to the potential technology available to the industry as a whole. The metafrontier model is applied in the analysis of panel data on garment firms in five different regions of Indonesia, assuming that the regional stochastic frontier production function models have technical inefficiency effects with the time-varying structure proposed by Battese and Coelli (1992).     

Strategic Motives For International Alliance Formation*

This paper considers the strategic motivation for international alliance formation for a sample of UK firms with partners in western Europe, the United States and Japan. the relative importance of a set of strategic motives is identified and related to extant theory. A parsimonious set of strategic motives for the sample studied is provided by means of factor analysis. the paper identifies the main strategic motives for alliance formation by UK firms as intrinsically linked to the market and geographical expansion of the firm and that the main strategic motives are underpinned by the theories of strategic positioning and organizational learning. This study also finds that some of the often suggested motives for alliance formation found in the literature, in particular aspects of risk reduction associated with new projects, appear not to be particularly important motivating factors. Hypotheses are tested on the relationship between the relative importance of individual strategic motives and a number of characteristics of the sample - contractual form of the alliance, relative partner size, primary geographical location of the venture, industry of the alliance and partner nationality. Implications of the findings for future theorizing on alliances and their motives is identified.     

Environmental sustainability engagement of firms: The roles of social capital,resources, and managerial entrepreneurial orientation of small and medium enterprises in Vietnam

How firms in transition economies demonstrate their strategic engagement in sustainable environmental management given their limited resources and capabilities is less understood in the literature. This study explores how small and medium enterprises (SMEs) in Vietnam, an exemplar of a country in transition from a closed and socialist economy to an open and liberal market, draw on their external social capital to access critical resources that are leveraged by the entrepreneurial orientation or capabilities of the firms' top management towards engagement in business-wide environmentally sustainable practices. Drawing on a database of more than 2000 firms from a large-scale survey of firms in Vietnam, this study tests the relationships between two facets of social capital, environmental management resources and environmental sustainability engagement. This study further contends that managerial entrepreneurial orientation moderates by enhancing the strategic utilisation of resources to enable firms in Vietnam to engage in environmental sustainability. The results offer novel theoretical insights and timely managerial or practical implications as well as promising directions for future research on the resources, strategies and capabilities of firms in transition economies.     

Strategic groups: Untested assertions and research proposals

Strategic group theory has become a popular tool for analyzing competitive structure of industries. Indeed, testing for the existence of strategic groups, and the impact of strategic groups on a firm's performance, has become one of the dominant areas of empirical research in the strategic management literature. Unfortunately, the impact of this stream of research will be limited until some fundamental assertions in strategic groups theory are tested. Two of these assertions are: (1) that strategic groups exist and (2) that a firm's performance depends upon strategic group membership. These key assertions in strategic group theory remain untested for a variety of theoretical and empirical reasons. What needs to be done to test these assertions is discussed. Until these tests are complete, the contribution of the strategic groups concept will be unclear. If these tests do not build credibility for the concept of strategic groups, it may be necessary to abandon this concept and develop models where the strategically relevant attributes of firms are those that are idiosyncratic.     

The relationship between mixed strategies and strategic groups

This paper identifies a theoretical basis for the existence of strategic groups. We represent the competitive marketplace by means of a game-theoretic model and motivate the existence of markets wherein the only Nash solution may be in mixed strategies. Given deterministic behavior on the part of the firms, we interpret this solution in terms of a strategic groups equilibrium. The major implication of this analysis is that strategic groups can exist even if there is no inherent asymmetry (in terms of skills) between firms.     

Estimating Technological Change Using a Stochastic Frontier Production Function Framework: Evidence from U.S. Firm-Level Data

This paper presents a methodology for estimating an index of technological change using firm-level data in a stochastic frontier production function model that takes into account time-varying technical inefficiency. In contrast to the Solow divisia index approach, econometric estimation of the index with panel data allows the researcher to separate technical progress from the stochastic measurement error. Applying the econometric methodology to a panel of 908 publicly-traded U.S. firms from the COMPUSTAT database, we find evidence of a significant downturn in general technological change for the period, 1970– 1989, whereas the divisia index methodology applied to the same data shows stagnation. When the sample is divided into Manufacturing, Services, and Miscellaneous categories we find that estimates of technological change for the three groups display markedly different stochastic behavior and that the Services group is the source of the downturn.     

RECENT ADVANCES IN OLIGOPOLY THEORY FROM A GAME THEORY PERSPECTIVE

Abstract. This paper surveys the contribution that recent developments in game theory have made to the understanding of oligopoly theory. It is argued that conventional models suffer from the problem that there are a number of solution concepts offered with little guidance as to which should be selected, and this is related to the static nature of the models employed. One important development in game theory has been the analysis of repeated games, and when applied to oligopoly theory this suggests that outcomes may be more cooperative than conventional theory suggests. Related to this is the requirement that firms employ credible threats to punish cheating from cooperative outcomes, and the paper examines the extent to which imperfect information may restrict the scope of firms to employ such punishments. One way in which firms may seek to make threats credible is through strategic investments, for example in production capacity, and the paper explores how competition over price or output is integrated with competition over instruments for strategic investment.     

Allowing for inefficiency in parametric estimation of production functions for urban transit firms

Efficient versus inefficient observations are first identified and evaluated numerically by the nonparametric free disposal hull (FDH) method. Next, parametric production frontiers are obtained by means of estimating translog production functions through OLS applied to the subset of efficient observations only. Technical progress is included at both stages. Monthly data from three urban transit firms in Belgium, to which this two-stage technique is applied, show widely varying degrees of efficiency over time and across firms, and much less technical progress than standard (i.e., non frontier) econometric estimates suggest.     

Understanding the dynamics of global supply chain sustainability initiatives: The role of institutional distance from the buyer's perspective

Research points to sustainable supply chain management as a core strategic goal for most global firms. However, managers continue to struggle with implementing successful sustainability initiatives both internally and throughout their globally dispersed supply chains. Using grounded theory, our findings uncover a potential explanation for how firms manage sustainability initiatives in the context of global supply chain management, from a buyer's perspective. Institutional theory of the firm is applied to help explain the challenges of developing and implementing global supply chain sustainability-related initiatives within buyer-supplier relationships. Analysis of the data from qualitative interviews show that institutional distance is an influential factor that produces mixed effects on the global buyer-supplier relationships in our sample in the context of buyer and supplier strategic orientation toward sustainability. The findings can help guide managers when approaching sustainability-related initiatives in the context of global supply chains. Theoretical and managerial implications are discussed as well as areas for future research.     

Stochastic Frontiers and Asymmetric Information Models

This article is an attempt to shed light on the specification and identification of inefficiency in stochastic frontiers. We consider the case of a regulated firm or industry. Applying a simple principal-agent framework that accounts for informational asymmetries to this context, we derive the associated production and cost frontiers. Noticeably this approach yields a decomposition of inefficiency into two components: The first component is a pure random term while the second component depends on the unobservable actions taken by the agent (the firm). This result provides a theoretical foundation to the usual specification applied in the literature on stochastic frontiers. An application to a panel data set of French urban transport networks serves as an illustration.     

INDUSTRY AND STRATEGIC GROUP DYNAMICS: COMPETITIVE STRATEGY IN THE INSURANCE INDUSTRY, 1970–84

This article focuses upon dynamic aspects of strategic groups in the context of the US insurance industry from 1970–84. It examines the longitudinal structure of industry strategic groups and identifies the strategic patterns followed by these strategic groups over time. the mobility rates of firms between strategic groups are also assessed. It appears that three dominant groups are present throughout the period of the study while other group positions emerge and disappear over time. the evidence suggests that the quantum theory of strategic adaptation (i.e. dramatic and concerted change) satisfactorily models the processes of strategic group change. And, a low level of firm mobility is found to exist between strategic groups consistent with the presence of inertia and mobility barriers.     

Levels of strategic purchasing: Impact on supply integration and performance

The growing importance of supply chain management has led to an increasing recognition of the strategic role of purchasing, which has recently evolved and expanded from “buying” to “procurement” and “supply management”. In this study, we chart our sample firms’ advance in strategic purchasing, characterized by the strategic focus, strategic involvement of the purchasing function and the status and visibility of the purchasing professionals, into three stages.This study provides strong empirical support for the importance of strategic purchasing by showing that, by moving towards the more advanced stages, firms at the nascent stage of strategic purchasing can achieve better supply integration, a second-order construct composed of four facets of relational, process, information, and cross-organizational team integration. Our analyses further reveal that strategic purchasing can have a profound impact on supply chain performance for both buyer and supplier firms.     

A Quality Information Benchmarking Methodology: A US Banking Industry Empirical Study

Information is itself a product that customers and staff in any organization consume. Like any product the quality of information can be measured and compared in most industries. This paper presents an application of an information quality measuring methodology adapted and applied for the first time in the US banking industry. An empirical study is used to attest to the informational efficacy of the methodology. Results of the study reveal that the proposed methodology can be used to identify quality differences between differing banking institutions and differing dimensions of information quality as well as a quality benchmarking procedure.     

基于制度创新的旅游企业战略联盟优势——以广州岭南国际企业集团为例

基于制度创新和战略联盟理论,以广州岭南国际企业集团为例,研究了战略联盟作为制度创新的一种方式给联盟企业带来的优势.这些优势主要表现为提高联盟内企业的竞争力和在企业间进行资源共享与相互学习.     

IMPLEMENTING STRATEGIC MISSIONS: EFFECTIVE STRATEGIC, STRUCTURAL AND TACTICAL CHOICES

This article describes a study of the impact of strategic mission on the relationships between firm performance and selected strategic, structural, and tactical variables. Moderated regression analysis and subgroup analysis were used to analyse data collected from 91 advanced technology manufacturing companies. Results indicate that firms with build-oriented strategic missions, relative to those with more hold- and harvest-oriented strategic missions, performed better when they: (1) adopted entrepreneurial strategic postures; (2) had organic organization structures; (3) offered relatively low product prices; (4) employed relatively large sales forces; (5) offered relatively generous customer credit; and (6) offered relatively broad product lines. On the other hand, firms with hold- and harvest-oriented strategic missions, relative to those with more build-oriented strategic missions, performed better when they emphasized R&D activity geared toward the development and refinement of existing products. Strategic mission did not moderate the effectiveness of the firms’advertising expenditures or their new product development activity.     

The R&D Investment–Uncertainty Relationship: Do Strategic Rivalry and Firm Size Matter?

This paper uses a real options perspective to augment a standard research and development (R&D) investment model and implement a firm‐level empirical analysis to assess the practical significance of market uncertainty and its interactions with strategic rivalry and firm size. We use a measure of firm‐relevant market uncertainty along with panel data and find that firms invest less in current R&D as uncertainty about market returns increases. The effect of firm‐specific uncertainty on R&D investment is smaller in markets where strategic rivalry is likely to be more intense. Furthermore, holding access to financing constant, the effect of uncertainty on R&D investment is attenuated for large firms. Copyright © 2012 John Wiley & Sons, Ltd.     

Swedish BioTech SMEs: The veiled values in online networks

For many years, sociologists have conceptualized and debated the value of ‘social capital’, the resources embedded in an actor's social network. The notions of network organizations and strategic alliances have become important forms of entrepreneurial venture, yet often the value in these networks is veiled by network complexity. These associations of individuals and organizations are typically undocumented, difficult to identify by third parties, and even pass unrecognized by their constituent members. They consist of informal Internet networks that are extremely valuable because of the strategic social capital embedded in them.Drawing on social network theory, this paper outlines a methodology for viewing and valuing informal Internet networks, using small-to-medium sized enterprises in the Swedish biotechnology arena as a backdrop. It demonstrates that networks can be constructed from the links between the web sites of actor firms, and that it is possible to use social network theory to identify the most prominent actors. Then, using structural hole analysis, the entrepreneurial opportunities surrounding these actors can be unveiled.     

Emissions permit allocation and strategic firm behavior: Evidence from the oil sector in the European Union emissions trading scheme

With the growing urgency of climate change, governments around the world are increasingly implementing new regulations for greenhouse gases. This trend elevates the importance of examining how firms engage in strategic efforts to influence regulations before they are in place and how they respond once they are in effect (i.e., their ex‐ante and ex‐post strategic behavior). This paper examines the outcomes of such strategic efforts by multinational and domestic oil companies within the European Union emissions trading scheme. An analysis of a panel dataset of oil firms (2008–2012) shows that on average the outcome of ex‐ante strategies did not differ significantly between multinational companies (MNCs) and domestic firms. However, the findings indicate that among those firms that received positive net benefits from the new climate policy, domestic firms were able to maximize these benefits better than MNCs through their ex‐post strategies. In contrast, among the firms that faced net costs due to the policy, MNCs were able to minimize these costs better than domestic firms, ex‐post. This paper advances our understanding of whether and to what extent MNCs differ from domestic firms in their economic outcomes stemming from strategic behavior related to emissions trading. This question is especially pertinent for regulations related to climate change, which is one of humanity's grand challenges and has important consequences for our economic, social, and political systems.