Complementarity, coordination and compatibility: The role of fixed costs in the economics of systems

We analyze industry equilibrium and incentive to compatibility when goods produced by different producers generate utility only when consumed as component parts of a system. We assume the presence of two systems, each composed of some basic component and a set of differentiated complementary products. The combination of complementarity between the two components of the system and of fixed costs in the production of the complementary product results in a form of network effect. We focus on the role played by the size of the fixed costs in the production of the complementary products in determining the size of this system effect and, by this means, the structure and types of equilibria that may be observed: monopolistic or duopolistic, symmetric or asymmetric. We also highlight the consequence of the same fixed costs for the private and social incentives to render the systems compatible.     

Mode of entry and ex-post performance

In this study I develop and empirically test hypotheses delineating how a set of industry- and firm-level factors are differentially associated with postentry performance of de novo and acquisitive entrants. First, I conceptualize structural entry barriers as sunk costs or irrecoverable investments that entrants must make in the entered industry to be competitive vis-à-vis incumbents. I then argue that de novo and acquisitive entrants differ in three important ways: (1) incremental vs. up-front sunk cost investments in overcoming impediments to entry; (2) increasing productive capacity vs. changing ownership in the entered industry; and (3) low vs. high costs of integration when realizing synergies with parent firms. I use the Trinet, FTC-ALB, and Compustat data bases to construct a sample comprising de novo and acquisitive entries made during the period 1980–82. Next, I evaluate postentry survival and growth between 1982 and 1986. Overall, empirical tests provided partial support for the hypotheses, and the explained variance in my models ranged from 17 percent to 37 percent. © 1998 John Wiley & Sons, Ltd.     

Firm and destination-specific export costs: The case of the Swedish food sector

This paper focuses on sunk export costs in the Swedish food and beverage sector. Its purpose is threefold. First, it investigates whether the estimation of the importance of sunk costs is sensitive to persistence bilateral (firm-destination) effects such as specific market knowledge compared to firm-specific effects such as managerial skills or product quality. Second, it analyses the effects of firm and market characteristics on firms’ export decisions. Third, it tests whether the importance of sunk costs varies with destination as well as firm characteristics. The main results are: (1) that firm-destination effects are more important than general, unobserved firm characteristics, (2) that more productive and larger firms are more likely to export and that firms’ expectations from exporting increase with market size and exchange rate stability, and (3) that the importance of sunk export costs varies with firm and market characteristics.     

Valorisation of a local asset: The case of olive oil on Lesvos Island,Greece

Agri-food products are more and more considered and treated as valuable local assets. The valorisation of such local assets is an issue of great importance, especially in disadvantaged areas. In this paper, the case of the olive oil of Lesvos Island in Greece is presented. We seek to analyse the supply chain and examine the benefits that are distributed to its various actors by comparing three different olive oil products: PGI, organic and conventional olive oil with the use of two dimensions: size of production and success of the producers. The data come from quantitative and qualitative research to different actors across the supply chain and from published and unpublished local and national sources. The findings indicate that olive farmers are “cut-off” from the benefits of the products to a great extent. Small bottlers are the ones that receive the most benefits, as they can ignore big retailers. Overall, the absence of consensus and common management between the different actors, along with a complex and very competitive international market create uneven impacts.     

Stock market surveillance and market performance: The case of Taiwan

In this paper we investigate the effect of warning announcements on the price behaviour of stocks. We also study the effects of various corrective treatments (trading halts, call trading and 100% payment/delivery with order) on the performance of stocks in the Taiwan stock market. It is found that warning announcements serve to improve the performance of stocks, except in the case of consecutive warnings. Generally speaking, the corrective measures taken after the consecutive warnings are able to reduce the volatility, the abnormal returns and the excess liquidity of the stocks.The authors are Professors from the National Sun Yat-sen University, and the Securities and Exchange Commission respectively.     

Group heterogeneity and cooperation on the geographical indication regulation: The case of the “Prosciutto di Parma” Consortium

This paper explores the impact of individual group members’ heterogeneous characteristics, resources and strategies on their level of cooperation on defining the future regulation of Geographical Indications (GIs). By following a “grounded theory” approach, this study combines qualitative evidence from an in-depth study on the “Prosciutto di Parma” Protected Designation of Origin (PDO) Consortium with quantitative evidence based on data collected from 94 Consortium members and analysed through path modelling. Results confirm that (1) “Prosciutto di Parma” Consortium members have highly and increasingly heterogeneous characteristics, assets and strategies and that (2) higher heterogeneity negatively affects members’ agreement on the future level of restrictiveness of “Prosciutto di Parma” PDO as GI and therefore the effectiveness of the collective action. Overall, these findings give light to another internal barrier that may threaten producers’ opportunity of profiting from the use of established and highly recognized GIs. Managerial and policy implications for both “Prosciutto di Parma” Consortium members and other groups governing established and highly recognized GIs are drawn.     

Technological capabilities and firm performance: The case of small manufacturing firms in Japan

The purpose of this study is to investigate the relationship between technological capabilities and firm performance. We divide technological capabilities into two types—refinement capability, which involves the improvement of the existing asset portfolio, and reconfiguration capability, which involves the restructuring of the asset portfolio through the integration of new assets. The results of an analysis of a sample of 302 small and medium-sized manufacturing firms in Japan suggest that refinement capability relates more positively to operational efficiency than does reconfiguration capability, and that reconfiguration capability relates more positively to strategic performance than does refinement capability. The results also suggest that firms with superior refinement capability tend to possess superior reconfiguration capability. Our findings show that both external and internal factors, such as technological volatility, inter-firm collaboration, and firm age and size, are significantly associated with the level of refinement and reconfiguration capabilities possessed by a firm.

Managerial ties,firm resources,and performance of cluster firms

Previous research has documented the relationship among managerial ties, firm resources, and performance in emerging economies such as China. While managerial ties may be embedded in a particular location, some of these ties may be non-location-bound. Therefore, for firms located within one geographically concentrated cluster, how do managerial ties and firm resources affect performance? Using data from 163 firms in two Chinese clusters, we demonstrate that managerial ties and firm resources—independently and in combination—help firms improve market performance. Results support the view that both network-centered strategies (utilizing managerial ties) and market-centered strategies (leveraging firm resources) are critical determinants of firm performance.     

Impact of standards adoption on healthcare transaction performance: The case of HIPAA

The Health Insurance Portability and Accountability Act (HIPAA) is a standard for the healthcare industry mandating, in part, use of the EDI X12 protocol set for data exchanges among industry members. The motivation underlying this change was the view that lack of a standard format for healthcare data created significant inefficiencies, resulting in increased costs within the industry. With regulators’ supposition that the standard would improve data exchange performance, we set out to determine the actual performance implications of HIPAA.Using data on transactions occurring over 106 months from 1998 to 2004, we study the impact of the HIPAA standardization requirement on transaction performance in the form of transaction delivery time and transaction quality measured as percentage errors. Performance is expected to deteriorate immediately following HIPAA compliance, due to system disruption, before a longer-term trend toward improved performance. Transaction performance immediately following HIPAA compliance shows deterioration in transaction delivery time, as expected, but a surprising improvement in transaction quality. The longer-term trends associated with HIPAA compliance for both transaction quality and transaction delivery time show that both are trending toward improvement. However, when we compare performance three, six, and 12 months before and after HIPAA compliance, we find that neither delivery time nor quality has improved. The implications for practice and theory are discussed.     

Reducing the level of switching costs in mobile communications: The case of Mobile Number Portability

Switching costs are one of the most important economic forces that affect market competition in mobile communications. Both theoretical and empirical studies have shown that switching costs reduce market competition leading to higher prices, lower product and service quality, and lower customer welfare. Given their negative consequences, national regulatory authorities have designed policies aimed at reducing switching costs and fostering competition. One of the most important of these, in the mobile communications industry, is mobile number portability (MNP). The aim of this paper is to investigate the effect of MNP on switching costs in mobile phone services. First, a hierarchical Bayes model is proposed to measure switching costs at the customer level and to investigate the impact of MNP on them. Second, this study examines the drivers of MNP adoption by customers using a binary logit specification. The results reveal that this regulatory policy has significantly reduced the cost of switching and that MNP adoption partially depends on customer-related variables.     

Search Cost and Price Dispersion in Vertically Related Markets: The Case of Bank Loans and Deposits

Using data on marginal interest rates of loan and deposit products by Spanish banks, we find that the level of interest rates on loans (deposits) across geographic markets decrease (increase) with the number of banks in each market, and that the level of interest rates on loans increases with the level of interest rates of deposits. We also find that the dispersion of interest rates of both loans and deposits increase with the number of banks. This evidence is interpreted as evidence of customer’s search costs in retail banking, consistent with predictions from the Carlson and McAfee (J Polit Econ 91:480–493, 1983) model of market competition with search costs.     

Examining sustainability performance in the supply chain: The case of the Greek dairy sector

This paper evaluates the sustainability performance of the Greek dairy chain and the performance of its individual members by using key indicators in relation to efficiency, flexibility, responsiveness and product quality. We assessed the importance of these indicators based on the relevant perceptions of key members of this chain. A structured questionnaire was developed where nineteen sustainability-related issues were examined. Two hundred and fifty three members of the Greek dairy supply chain responded including breeders, manufacturers, wholesalers, retailers and catering companies. Our findings illustrate the immediate need for improvement in many key sustainability performance indicators. They also show the critical role of large dairy manufacturers who are the “sustainability performance champions” in this chain and are the driving force for the implementation of many sustainability initiatives.     

信息技术、交易成本与激励:论经济组织形式的中间化

基于交易成本理论的分析框架难以对信息技术作用下的经济组织变革趋势作出很好的解释．本文融合了资源基础观的相关观点，建立了一个新的分析框架，比较全面地分析了企业、中间组织和市场这三种经济组织形式。进一步的，通过考察信息技术应用的相关影响，我们得出了信息时代经济组织形式趋于“中间化”的结论。     

The impact of market orientation on the development of relational capabilities and performance outcomes: The case of Russian industrial firms

The article investigates the role of market orientation as an antecedent for the development of relational capabilities and performance in Russian industrial firms. We test the direct role of different aspects of market orientation on business performance in comparison to an indirect and mediated influence via improving a firm's ability to become embedded in relational structures. The results of an empirical study demonstrate the differential impact of components of market orientation - customer orientation, competitor orientation, and interfunctional coordination - as direct and indirect antecedents of relational capabilities and thus subsequently of overall firm performance. It can be shown that in Russian industrial markets competitor orientation directly and positively impacts on performance, while the other two components of market orientation have only a mediated effect on performance via the development of relational capabilities.     

Network effects and competition: an empirical analysis of the home video game industry

Building on the resource‐based view of the firm, we advance the idea that a firm's customer network can be a strategic asset. We suggest that network effects are a function of network size (i.e., installed customer base) and network strength (i.e., the marginal impact of a unit increase in network size on demand). We empirically study these network effects in the 16‐bit home video game industry in which the dominant competitors were Nintendo and Sega. In the spirit of the new empirical IO framework, we estimate a structural econometric model assuming the data are equilibrium outcomes of the best fitting noncooperative game in price and advertising. After controlling for other effects, we find strong evidence that network effects are asymmetric between the competitors in the home video game industry. Specifically, we find that the firm with a smaller customer network (Nintendo) has higher network strength than the firm with the larger customer base (Sega). Thus, our results provide a possible explanation for this situation in which the firm with a smaller customer network (Nintendo) was able to overtake the sales of a firm with a larger network size (Sega). Copyright © 2002 John Wiley & Sons, Ltd.     

Technological and non-technological innovations,performance and propensity to innovate across industries: The case of an emerging economy

Innovation in a firm may be non-technological, such as organizational and marketing innovation, and technological, such as product and process innovation. The aim of this article is to explore how different types of innovation affect the innovation development of the firm across industries. We chose Chile as an emerging market context. Our results show that only product innovations affect significantly innovation performance across industries. However, different types of propensities to innovate are affected differently by technological and non-technological innovations. We discuss implications for managers and policy makers in emerging economies, in which data tends to be scarce to develop new policy models and increase the effect of non-technological innovation on innovative performance.     

Relationship-specific investments,social capital,and performance: The case of Korean exporter/foreign buyer relations

Relationship-specific investments are addressed as crucial factors for the successful management of the exporter–foreign buyer relationships. It is hypothesized that relationship-specific investments have a positive impact on social capital components such as trust and commitment, which in turn contribute to the relationship and business performance satisfaction between partners. On the basis of our analysis of the relationships between Korean exporters and their foreign buyers, the validity of the roles of relationship-specific investments and social capital are clearly demonstrated. The results provide us with a meaningful implication to the successful management of inter-firm relationships.     

Inward Investment and Host Country Market Structure: The Case of the U.K.

Multinational enterprises are seen as vehicles for theinternational transfer of investment capital,protecting and increasing profits by transferringownership advantages across national boundaries. Assuch, the argument often follows that foreign directinvestment then exacerbates the monopoly problem inhost countries, by increasing concentration andfacilitating collusion. This paper however reveals thereverse, that inward investment into the U.K. acts toreduce concentration at the industry level, byincreasing competitive pressures on domesticindustry.     

The impact of alternative operationalizations of industry structural elements on measures of performance for entrepreneurial manufacturing ventures

Using a sample of 115 manufacturing ventures, this study examined elements of industry structure which prior theory and research in the fields of industrial organization economics, strategic management, and entrepreneurship suggest are the most important structural characteristics of industries. Future researchers should carefully select the particular operationalization of industry structure as our research demonstrates that the influence of industry structural elements on measures of firm performance is strongly dependent upon the particular operationalization utilized. In addition, measures of industry structure were found to have a differential impact on alternative measures of firm performance, suggesting that different performance measures are not interchangeable proxies for one another. © 1998 John Wiley & Sons, Ltd.     

Meta-analyzing ownership concentration and firm performance in Asia: Towards a more fine-grained understanding

We present a meta-analysis of the relationship between concentrated ownership and firm financial performance in Asia. At the cross-national level of analysis, we find a small but significant positive association between both variables. This finding suggests that in regions with less than perfect legal protection of minority shareholders, ownership concentration is an efficient corporate governance strategy. Yet, a focus on this aggregate effect alone conceals the existence of true heterogeneity in the effect size distribution. We purposefully model this heterogeneity by exploring moderating effects at the levels of owner identity and national institutions. Regarding owner identity, we find that our focal relationship is stronger for foreign than for domestic owners, and that pure “market” investors outperform “stable” or “inside” owners whom are multiply tied to the firm. Regarding institutions, we find that a certain threshold level of institutional development is necessary to make concentrated ownership an effective corporate governance strategy. Yet we also find that strong legal protection of shareholders makes ownership concentration inconsequential and therefore redundant. Finally, in jurisdictions where owners can easily extract private benefits from the corporations they control, the focal relationship becomes weaker, presumably due to minority shareholder expropriation.