R&D subsidiary isolation in knowledge-intensive industries: evidence from Austria

We investigate R&D subsidiary isolation within Multinational Corporations (MNCs) competing in knowledge-intensive industries. For such MNCs, accessing knowledge and nurturing the innovative potential of R&D subsidiaries is vital for on-going competitiveness. This, according to conventional thinking, requires integration of the subsidiary within the host country as well as internally within the MNC. Recent studies have shown, however, that overseas subsidiaries can become isolated (i.e., losing requisite integration), even in high-technology sectors. We tackle this issue by focusing on organizational factors at corporate and subsidiary levels that have the potential to explain subsidiary isolation. We analyze a sample of 45 foreign-owned Austrian subsidiaries undertaking R&D in knowledge-intensive industries using a combination of questionnaire and secondary data. The results suggest that parent and subsidiary experience, the degree of early-stage research conducted by the subsidiary and the use of training and rotation practices by the subsidiary, all act to counter isolation. Interestingly, we find that proximity between parent and R&D subsidiary does not play a significant role in predicting isolation. We also show how these factors influence communication frequency between the R&D subsidiary and various actors within the internal and the external networks in different ways.     

Sector innovation capacity determinants: modelling and empirical evidence from Spain

Studies about the variables that determine the ability to innovate at sectoral level are scarce and present a series of limitations. This paper tries to bridge this gap by building a model of sector innovation capacity based upon existing approaches related to the study of sectoral innovation (lifecycles of industries, evolutionary theory and the sectoral innovation systems approach) and a model of determinants for national innovation capacity. The empirical analysis is based upon data from the Survey on Innovation of Firms for Spain and the methods used comprise the application of panel data, factor analysis and ordinary least squares regression analysis. The main findings of the paper are the confirmation of the relevance of all the variables in determining sector innovation capacity, the formulation of the sector innovation capacity determinants model, the consistency of the proposed model confirming both the validity and appropriateness of the variables identified and, therefore, the value of using the variety of approaches selected.     

Pioneering advantages in manufacturing and service industries: empirical evidence from nine countries

Although one might expect differences between manufacturing and service firms in pioneering advantages, the extent of these differences has not yet been investigated. This is the first cross‐national study that compares such differences in nine countries/regions: the United States, the United Kingdom, Germany, Japan, China, Taiwan, Hong Kong, South Korea, and Singapore. We develop several hypotheses concerning the perceptions of managers of manufacturing firms and service firms regarding the benefits and post‐entry risks of pioneering, and the cost and differentiation advantages accruing to the pioneering firm. We test the hypotheses with data from 2,419 firms representing all nine countries and both industrial sectors. We find that: (1) managers from all countries perceive pioneering to be associated with higher market share and/or profitability; (2) manufacturing firm managers perceive pioneering risks to be significantly more important than do service firm managers; (3) cost and differentiation advantages of pioneering are, for the most part, more significant to manufacturing than to service firm managers; (4) Western manufacturing firm managers perceive the cost advantages to be more important than Asian Pacific manufacturing firm managers. We conclude by presenting the managerial implications of our findings. Copyright © 1999 John Wiley & Sons, Ltd.     

First-mover advantages from pioneering new markets: A survey of empirical evidence

Market pioneers can develop first-mover advantages that span decades. The most general first-mover advantage that helps explain higher pioneer market share levels is a broad product line or brand proliferation. In markets for experience goods, pioneers tend to shape consumer tastes and preferences in favor of the pioneering brand. While the preliminary results vary by industry, they indicate that market pioneers donot tend to perish more often than later entrants. Accounting profits for market pioneers generally are lower in the first four years of operation, but higher thereafter. Overall, market pioneers follow innovative strategies that have high initial costs and risks, but yield high potential returns.     

Value creation potential of intellectual capital in biotechnology – empirical evidence from Finland

The objective of the study was to empirically verify impacts of intellectual capital (IC) to the anticipated future sales of small- and medium-sized companies within the biotechnology industry. The study creates and develops tools for the valuation of companies by relating the existing intangibles and the expected value creation of the companies in that industry displaying high growth prospects but long and insecure product development phases. Theoretically, IC is divided into the following three categories: human capital (HC), structural capital (SC), and relational capital (RC). In the empirical setting, survey data of small- and medium-sized Finnish biotechnology companies are used. In the econometric analyses, the interactions, or empirical co-variation, between the three categories of IC explain two-thirds of the variance in the anticipated future sales of the sample companies. Thus, it seems that a well-balanced combination of HC, SC, and RC implies value creation potential and high anticipated future sales.     

Transaction cost implication of private branding and empirical evidence

Branding and transaction cost economics represent two research streams that rarely cross paths in the literature. In this study, I explore the transaction cost implication of private branding, a practice whereby products supplied by unaffiliated manufacturers are sold under private brands owned by retailers. The main thesis is that private branding can preempt a special case of asset specificity called brand specificity, where retailers also invest in the marketing of an outsourced product, but subsequent reputation effects (positive or negative) are specific to the manufacturer who brands the product. Retailers, thus, will not be fully motivated to optimize their investment in product marketing unless they take over the branding right. With potential barriers to private branding being controlled, data obtained from a national chain reveal that the retailer deploys its marketing resources according to the branding status of a product, implying that private branding can deflect the transaction cost of solving the brand specificity problem. The results offer new theoretical insights into branding and transaction cost analysis. This efficiency‐based approach to private branding also provides practitioners with useful guidelines for crafting a branding strategy that will facilitate cooperation between manufacturers and retailers. Copyright © 2009 John Wiley & Sons, Ltd.     

Risk aversion and auction design: Theoretical and empirical evidence

Auctions are inherently risky: bidders face uncertainty about their prospects of winning and payments, while sellers are unsure about revenue and chances of a successful sale. Auction rules influence the allocation of risk among agents and the behavior of risk-averse bidders, leading to a breakdown of payoff and revenue equivalence and a heightened significance of auction design decisions by sellers. In this paper, we review the literature on risk aversion in auctions, with an emphasis on what can be learned about auction design from theoretical modeling and empirical studies. We survey theoretical results relating to the behavior of risk-averse agents in auctions, the comparison of standard auction formats in the presence of risk aversion and implications for auction design. We discuss standard and more recent approaches to identifying risk preferences in empirical studies and evidence for the significance of risk aversion in auction applications. Finally, we identify areas where existing evidence is relatively scant and ask what questions empirical research might ask given the theory and where further theoretical research may be beneficial given existing empirical results.     

Information and communications technology infrastructure and firm growth: An empirical study of China's cities

Despite the importance of information and communications technology (ICT), previous studies of the business value of information technology have yielded mixed results. This study provides new empirical evidence that demonstrates the impact of cities' ICT on firm performance. A series of panel datasets are assembled to measure the improvement of city's ICT infrastructure and the change of firm performance during the years 2001–2016 in China. The findings demonstrate that city's ICTs positively promoted firm performance, including financial profitability, marketing performance and innovation performance. Instrumental variables are employed to verify the positive impact of city's ICTs infrastructure on firm profitability. Taking advantage of an exogenous variation of telecommunications upgrade as a natural experiment, this study uses the difference-in-difference approach to establish causality between cities' ICT infrastructure and firm profitability. Mechanisms are explored, which shows that better labour quality, lower costs and higher transparency are the three possible channels through which ICTs influence firm profitability.     

Managerial perceptions of global pioneering advantage: Theoretical framework and empirical evidence in the U.S. and Korea

Managers form mental models of their business environment, and make strategic decisions based on these perceptions of reality. We study managerial perceptions of the competitive advantage gained by a pioneering firm. We expect that managers will make pioneering entry decisions based on their perceptions of pioneering advantages. Due to cross-national cultural and business environment differences, managers from different countries will employ different mental models and thus perceive the relative advantage of pioneering differently.Drawing from the literature on cultural influence on decision-making, we build a theoretical framework of perceived pioneering advantage in different cultural environments. From this framework, and from cultural differences that exist between the United States and South Korea, we derive hypotheses regarding expected cross-cultural perceptual differences. We test these hypotheses using samples of senior product managers from both countries. We find that some, but not all, of the principles of pioneering advantage empirically verified in North America are generalizable to the culturally-different South Korean business environment.     

Socioeconomic impacts of school feeding programmes: empirical evidence from a South Indian village

Tamil Nadu a poverty-stricken rural community in South India, funds a school feeding program with about 10% of the state budget. Comparisons of nutrition and literacy show that they are significantly related. No studies have yet been performed to analyse the effect of the feeding programs on aspects of a household's economic and social welfare. The feeding program in Tamil Nadu extends throughout the year, 7 days a week. It provides not only a reason for children to attend school, but also employment opportunities for those who wish to cook. 455 households were surveyed from 1 village using. A Gini coefficient of inequality to determine inequality levels of nutrition, food, and consumption expenditure. Sen's index of poverty was used to calculate the reduction in poverty levels. 3 household groups were defined: the agricultural labor, the silk weaver, and the cultivator. Linear program modelling utilized these 3 groups to study the total effect of nutrition on education. Linear regression was then used to determine the effect of the feeding program on participation in school. At the village level, a reduction of inequality in consumption and intake, an increase in energy intake, and a decrease in poverty level were found. In agricultural labor and silk weaver households, most of the money was spent on cereal food grains and children were mostly uneducated. If modelled to assume that children must be educated and are educated in schools providing food, results suggest that the increase in nutrition helps retain the children in the schools. Cultivator household response to the food programs was poor, since they usually have enough money to meet nutritional needs. Household income and school nutrition, but not adult literacy affect school participation. In general, nutrition offered in school caused a subsequent increase in household purchases of non-cereal items in the first 2 household types.     

Non-farm entrepreneurship in rural sub-Saharan Africa: New empirical evidence

We report on the prevalence and patterns of non-farm enterprises in six sub-Saharan African countries, and study their performance in terms of labor productivity, survival and exit, using the World Bank’s Living Standards Measurement Study - Integrated Surveys on Agriculture (LSMS-ISA). Rural households operate enterprises due to both push and pull factors and tend to do so predominantly in easy-to-enter activities, such as sales and trade, rather than in activities that require higher starting costs, such as transport services, or educational investment, such as professional services. Labor productivity differs widely: rural and female-headed enterprises, those located further away from population centers, and businesses that operate intermittently have lower levels of labor productivity compared to urban and male-owned enterprises, or enterprises that operate throughout the year. Finally, rural enterprises exit the market primarily due to a lack of profitability or finance, and due to idiosyncratic shocks.     

Current and future European regulation of electronic communications: A critical assessment

The current European regulation for electronic communications has been applicable since 2003 and is currently under a review that should lead to new rules applicable by 2010. This paper aims to assess the implementation of the current regulation and the proposals for reform tabled by the European Commission. It is argued that those proposals go in the right direction but should go further. First, the regulatory framework should clearly state that the objectives of regulators are to maximise the long-term welfare of European citizens. Secondly, the main body of economic regulation—the so-called Significant Market Power regime—should be based on a strong test aiming to identify structural market problems that cannot be efficiently dealt with by competition law. Thirdly, possible remedies applicable by the regulators should include structural and technological components, provided that a strict cost benefit analysis is undertaken. Fourthly, the institutional design should be improved by better aligning the incentives of the National Regulatory Authorities with the dynamic nature of the markets, by improving the checks and balances (in particular those provided by national courts and European Commission), and by improving coordination amongst the institutions (the national regulators and the national Courts).     

Technological sovereignty of the EU in advanced 5G mobile communications: An empirical approach

Two key issues within the debate around ‘technological sovereignty’ in the European Union are (i) access by countries and firms to enabling and emerging technologies and (ii) how strategic dependencies can be managed in order to preserve competitive positions in global value chains. In this paper, we present and discuss a multidimensional synthetic metric – the Technological Sovereignty Index (TSI) – to provide a global measure that captures the degree of exposure to specific technologies by a country (or group of countries) as well as the vulnerabilities that may be present. The paper validates the TSI by examining the EU's position (until 2021) within the global value chain of advanced 5G mobile communications, focusing on the hardware and component segments. Our findings reveal a weak degree of technological sovereignty due to (i) the shortage of specialized human capital in the EU and (ii) outsourcing trends in the relevant segments; however, untapped capabilities may exist that could partially offset strategic shortcomings.     

Me and you and everyone we know: An empirical analysis of local network effects in mobile communications

This paper investigates the importance that consumers assign to local network effects, i.e. the extent to which they take account of their contacts’ mobile operators when choosing a provider for themselves. The authors identify individual characteristics that affect the importance consumers attach to local network effects. The study relies on a survey of 193 Italian students. The results show that consumers are highly heterogeneous with respect to the importance they give to the operators chosen by their friends/family members in choosing which provider to use. This heterogeneity is associated with individual innovativeness and patterns of mobile phone usage. For instance, consumers who are more interested in local network effects are typically more-aware users, who use voice services quite intensively. These consumers, who pay attention to local network effects, spend comparatively little proportional to the intensity of their mobile usage.     

Cable TV in Austria. Between telecommunications and broadcasting

In this paper the development of the Austrian cable television (CATV) sector is discussed, focusing on its delicate interconnections with telecommunications and broadcasting, the blurring borderlines and resulting regulatory problems. The policy network is identified and recent changes in the CATV policy and strategy are highlighted, In particular, developments towards a stronger convergence within the electronic communications sector. The case study illustrates peculiarities and shortcomings of Austrian media and communications policies on the way toward a future-oriented information infrastructure.     

Plant variety protection in developing countries. A report from the field

The establishment of intellectual property rights (IPRs) for plant varieties has caused considerable controversy, but there is relatively little empirical evidence on performance and options in developing countries. This paper summarizes the results of a recent five-country study, concentrating on the conduct of plant variety protection (PVP) regimes. It examines PVP in the context of other mechanisms that provide incentives for plant breeding. It discusses the principal options available to developing countries and examines the ability of PVP to offer protection from competing firms and from on-farm seed saving. It also looks at the administrative and management requirements of PVP regimes. Although the paper does not discuss patent protection for biotechnology it examines the IPR requirements for the introduction of transgenic varieties. Developing countries need to establish an appropriate PVP system, but PVP should be seen as part of a broader strategy for seed system development.     

Bankruptcy as a deliberate strategy: Theoretical considerations and empirical evidence

Bankruptcy and bankruptcy reorganizations have been identified as remedies for financial distress, but there is little agreement on their value to firms, managers, and the general economy. This paper provides a brief review of proposed bankruptcy strategies and some alternative views about their costs and benefits followed by an empirical study of the outcomes of 73 bankruptcies and subsequent reorganization efforts. The evidence suggests that there are few successful reorganizations, bankruptcy is a costly response to financial distress, and managerial choice in bankrupt firms is highly constrained by forces external to the firm. The diversity of stakeholder interests limits the value of global judgements about success or failure of bankruptcy strategies. Firm size dominates all other factors in predicting success in completing the reorganization process. Delayed filings primarily reflect failed efforts to avoid bankruptcy, not deliberate strategies. Reasons for the use of bankruptcy in spite of its high costs are discussed.     

Alternative regulation and the efficiency of local exchange carriers: evidence from the Ameritech states

This paper examines growth in total factor productivity (TFP) before and after the implementation of alternative regulatory schemes for Ameritech operating companies. A model of TFP growth developed by the FCC is used. Results indicate that the introduction of price cap and incentive regulation leads to statistically significant increases in TFP growth. Results indicate that regulators may need to increase current productivity offsets to achieve a more equitable sharing of productivity gains between shareholders and ratepayers.     

Food demand studies in Sub-Saharan Africa: a survey of empirical evidence

The recent empirical food demand studies on Sub-Saharan Africa show significant advances in demand specification and methodology, especially in the application of less restrictive and theoretically consistent flexible functional forms. The findings to date establish some broad patterns on effect of income, household demography and life cycle, location, and prices on food demand patterns. However, the numerical values of the demand estimates are less generalizable because of an insufficient number of data points to separate the true demand component from other confounding factors, which are linked to differences in modeling and estimation of demand relations. The priority for future research is to generate sufficiently detailed demand estimates that have a high utility for disaggregated policy analysis, but are based on a theoretically consistent and comparable methodology.     

The drop and collect survey among industrial populations: theory and empirical evidence

This paper examines the effectiveness of drop-and-collect-survey (DCS) method in improving response rates among organisations. It proposes a theory for its effectiveness and advances a number of propositions relating to its usage among organisations. Subsequent analyses, using empirical evidence from two separate DCS-based studies in Nigeria and Germany, suggest that the DCS results in significantly higher response rates among organisational respondents compared to mail questionnaires. These improved response rates are more likely to be achieved among smaller organisations and through direct, face to face, contact with the target key informant. Combining DCS with prenotification showed only a small, but positive effect. Support was also found for the hypothesised greater effectiveness of the DCS among high-technology firms relative to their low-technology counterparts. Based on the proposed theory and the empirical findings, a DCS decision and implementation framework is presented and directions for future research suggested.