Informative Externalities and Pricing in Regulated Multiproduct Industries

This paper addresses the issue of how to organise a two-product industry with interdependent demands when the regulator cannot observe the demand level of the goods produced. Two industry structures are compared: a multiproduct monopoly, in which an informed firm produces both goods, and a differentiated duopoly, where two firms control one good each but the level of demand is known by one firm only. Focusing on the informative costs of regulation, the paper shows that, if goods are substitutes, the regulator may achieve a better performance through integration of production. With complements, instead, decentralisation tends to be preferred.     

Advertising, Its Determinants, and Market Structure

This study derives a formal model of firm advertising behavior and applies it to the industry level to figure out the relationship between advertising and market structure. The firm advertising model shows that both consumer preference andfirm-specific advertising competence jointly determineprofit-maximizing advertising intensity. At the industry level, advertising intensity is represented multiplicatively by consumer preference and a measure of market structure, which reflects the joint distribution of the levels of advertising competence and market shares among firms. The new market structure measure suggests that those single-dimensional measures of market structure such as seller concentration and the Herfindahl index are inadequate in explaining interindustry differences in advertising intensity, and that the long-debated advertising-concentration relationship differs depending primarily on the appropriability of advertising. An empirical analysis of 426 five-digit Korean manufacturing industries shows that an inverted U-shaped relationship between the Herfindahl index and industry advertising intensity is observed for consumer goods industries but a lazy J-shaped relationship for producer goods industries.     

The incentives for cost reduction in a differentiated industry

This paper investigates how the incentives for cost reduction in a differentiated industry depend upon the degree of product substitutability. When goods are imperfect substitutes, both Cournot and Bertrand competition result in underinvestment in the sense that a social planner would be willing to pay more for a given cost reduction than a profit-maximizing firm. Overinvestment may occur when the goods are sufficiently close substitutes. Similarly, Cournot competition provides a stronger incentive to innovate than Bertrand competition if the degree of substitutability is low, and a weaker incentive if this degree is high.     

Firm size, web site content, and financial performance in the transportation industry

The transportation industry has been revolutionized by the World Wide Web with the Internet rapidly emerging as the optimal medium for the exchange of information between shippers and carriers throughout the supply chain. Despite this, many motor carrier firms may still not be placing enough emphasis on the Internet. Recent empirical research studies suggest that Internet utilization in the supply chain is significantly influenced by firm size. This study analyzes the informational and interactive content of the Top 100 U.S. motor carrier firms' web sites to examine the relationship between firm size and Internet utilization. In addition, as there is little research that assesses the payoff in terms of benefits for firms that place more emphasis on the Internet for commercial activity, secondary financial data are used to evaluate the association between Internet utilization and firm financial performance in the transportation industry.     

A Stackelberg model of pricing of complementary goods under information asymmetry

We consider a duopoly market where two separate firms offer complementary goods in a leader–follower type move. Each firm has private forecast information about the uncertain market demand and decides whether to share it with the other firm. We show that information sharing would benefit the leader firm but hurt the follower firm as well as the total system if the follower firm shares information unconditionally. We then devise a “simple to implement” information sharing scheme under which both firms and the total system are better off. We also provide several interesting managerial insights and establish the robustness of the model in managing a supply chain through our analytical and simulation results.     

The effects of management inertia on the supply chain performance of produce-to-stock firms

This article examines the impact of inertia on the management of the firm's supply chain operations and the effects it can have on a produce-to-stock firm's ability to respond to external market pressure and develop corrective strategies. The research methodology used is based on earlier Catastrophe Modeling that looked at inertia in organizational design, competitive pressure, and competitive response. The model demonstrates how latent variables, such as customer pressure and supply chain inertia can influence a finished goods supply chain management's response under various conditions. The model was tested and validated using questionnaire data gathered from a sample of members of the Council of Logistics Management. The model was used to estimate individual finished goods firm inertia response estimates. We incorporate these estimates in a brief examination of three produce-to-stock firms from the sample to give readers an idea of the usefulness of the approach in examining supply chain inertia.     

An Attention‐Based View of Family Firm Adaptation to Discontinuous Technological Change: Exploring the Role of Family CEOs' Noneconomic Goals

Recent studies show that managerial attention is a particularly important precursor of established firms' responses to discontinuous technological change. However, little is known about the factors that shape managerial attention‐response patterns. Our qualitative study investigates how the attention of family firm chief executive officers (CEOs) to discontinuous technological shifts, the interpretation and decision‐making processes associated with these changes, and ultimately organizations' responses are affected by CEOs' noneconomic goals. Based on seven longitudinal case studies in the German consumer goods industry, the paper induces a process model that extends the findings of the literature on the attention‐based view and helps to explain heterogeneity in family firms' adaptation to discontinuous technological change. This study shows that the family CEO's specific noneconomic goals—such as power and control, transgenerational value, the maintenance of family reputation, the continuance of personal ties, or personal affect associated with the family business—determine whether the CEO assesses an emerging technology as relevant enough to warrant a reaction from the firm. Moreover, the family CEO's noneconomic goals constrain the set of considered responses. The outcome of this sensemaking process determines the organization's response. For instance, in the specific context of this study, the goal of “family power and control” entailed an immediate interpretation of the focal trend as important for maintaining influence, and resulted in an unconstrained set of responses and, ultimately, high innovation in the new domain. Over time, family CEOs might reevaluate the emerging trend based on their goals and adapt organizational moves accordingly. The paper identifies and discusses how ambiguities and dilemmas may arise during this process. Our findings contribute to the literature on adaptation to discontinuous technological change and to family firm research.     

SURVIVAL AND GROWTH IN RETAIL AND SERVICE INDUSTRIES: EVIDENCE FROM FRANCHISED CHAINS*

Using data on franchised chains, which are the type of single‐product entities emphasized in industry dynamics models, we show that age and size affect growth and survival even after controlling for chain characteristics and unobserved chain‐specific efficiency. This implies that age and size affect firm growth and survival for reasons other than those emphasized in learning‐type models. We also find that several chain characteristics affect growth and survival directly, and thus controlling for firm characteristics is important. Finally, we find that chain size increases rather than decreases exit among young chains, and chains converge in size over time.     

Micro-dispersion of performance across industry lines

Classical industrial organization suggests that profitability differences are caused by industry-specific factors. Revisionist and managerial approaches, however, are stressing the predominant importance of firm-specific factors. Empirical evidence is more pronounced for firm-related factors, but recent inquiry also found support for the superiority of industry effects. The present paper examines the discriminating power of the industry variable to separate a German firm sample into homogeneous industry subgroups. The finding is that the industry does not have a significant influence on the dispersion of firm profit rates. Thus, the firm-effect approach to profitability is corroborated.     

高管特征、企业异质性与企业技术创新绩效——来自风电产业上市公司的经验数据

技术创新是解决目前风电产业产能过剩、缺乏核心技术发展瓶颈的重要路径,最新文献已经发现高管特征和企业异质性对企业技术创新绩效的影响,但研究结论尚存在分歧。本文以沪深两市风电产业上市公司为研究对象进行实证研究发现：高管持股和女性高管对风电企业技术创新绩效具有显著的促进作用;国有风电企业和省会城市风电企业的技术创新优势会因内部治理结构短板而丧失。将企业异质性作为调节变量进一步研究发现,国有企业中高管持股和女性高管对风电企业技术创新绩效的正向影响更加显著;区位在省会企业中高管持股和女性高管对风电企业技术创新绩效的正向影响更加显著。     

A cross-cultural comparison of the network capability development of entrepreneurial firms

The business-to-business network literature has made interesting and insightful contributions in relation to networks as a core trajectory for external resource acquisition for the small, entrepreneurial firm. Using the micro-brewing industry in Ireland and Belgium as an empirical base, the purpose of this paper is to extend this research through examining the relationship between national culture and the development of network capability in an entrepreneurial context. Findings from in-depth interviews with fourteen firms, and analysed in light of Hofstede's five dimensions illustrate that culture matters. Low power distance facilitated network capability development through wider network engagement. High masculinity and individualism negatively impacted network capability development as evidenced by a lack of experience in interaction, a desire for control and independence and minimal information sharing. Strong uncertainty avoidance scores allowed for joint problem-solving and industry cooperation whereas a short-term orientation led to more transaction-based exchange within the value chain. The core contribution of this paper stems from it being the first rigorous investigation regarding how national culture impacts network capability development in a business-to-business network context.     

Power and firm profitability in supply chains: french manufacturing industry in 1993

The paper examines the relationships between the power of suppliers and buyers and the profitability of sellers who are situated in supply chains between both sets of firms. A review of the literature on power in exchange relations shows there are several power concepts which may have a different impact on seller profitability and whose impact possibly can offset each other. This may be the source of the conflicting evidence on this topic. A failure to distinguish among the concepts may also lead to an underestimation of industry effects relative to resource effects as drivers of firm profitability. The paper uses a new data base of the Banque de France on French manufacturing industry. The anlayses examine whether different power concepts may be empirically identified and what their relationships are with seller profitability. The findings point to the existence of multiple power concepts and indicate that, in the sample, industry effects are more important than firm effects (as measured by relative market share) in explaining seller profitability. The findings also suggest that buyer power explains a much larger percentage of the variance in seller profitability than supplier power. © 1998 John Wiley & Sons, Ltd.     

An analysis of production cost inefficiency

This research empirically investigates the presence of production cost inefficiencies associated with non-optimal operating conditions. A model is developed which allows for the possibility that firms might be temporally constrained in their production decisions due to a quasi-fixed capital stock. The context of the study is the household goods motor carrier industry in the post-deregulatory period. The analysis employs a technique capable of quantifying excess per unit costs and decomposing this magnitude according to its determinants. Specifically, it identifies and measures three types of inefficiency at the firm level: short-run capital inefficiency, capital-induced variable input inefficiency, and X-inefficiency.     

Breakeven Time on New Product Launches: An Investigation of the Drivers and Impact on Firm Performance

The ability to break even faster on new product projects is becoming increasingly critical for firms in fast‐moving industries where continually reinvesting in research and development efforts matters greatly for survival. However, most research to date has focused on studying the impact of two primary innovation outcomes: sales and profits. The exclusive emphasis on sales and profit may be warranted for certain types of goods such as durable goods, but when examining the effects of new products in fast‐moving consumer goods or in the entrepreneurial sphere, where cash to cash matters greatly for survival, it is critical for both researchers and practitioners to not only consider the profits and sales generated by the new product but also the time to breakeven. This paper develops a theoretical framework using the competency‐based literature to examine the effects of innovation drivers (customer idea source, speed to market, product quality, and product newness) on breakeven time (BET) and project profits, and their subsequent impact on firm performance. A three‐stage least square estimation method was employed using longitudinal data on 945 new product development projects and launches in the morning (breakfast) foods category. The results clearly pinpoint that for successful product innovation, managers need to consider the time taken to breakeven on new product development. Specifically, the results demonstrate that speed to market and product quality shorten BET, but customer idea source extends BET. Second, the analysis also empirically demonstrates that BET is an equally effective predictor of firm performance as project profits in the short run, but significantly a stronger predictor of firm performance in the long run (t + four years), suggesting that BET should be regarded as a superior leading indicator of firm performance versus product profitability for fast‐moving consumer goods segment. This is an important finding that suggests firms that recoup their cash investments more quickly experience greater short‐term and significantly more long‐term success.     

Efficient versus Responsive Supply Chain Choice: An Empirical Examination of Influential Factors

Contemporary strategies in operations management suggest that successful firms align supply chain assets with product demand characteristics in order to exploit the profit potential of product lines fully. However, observation suggests that supply chain assets often are longer lived than product line decisions. This suggests that alignment between supply chain assets and demand characteristics is most likely to occur at the time of initial market entry. This article examines the association between product demand characteristics and the initial investment in a supply chain at the time of market entry. We characterize supply chains as responsive or efficient. A responsive supply chain is distinguished by short production lead‐times, low set‐up costs, and small batch sizes that allow the responsive firm to adapt quickly to market demand, but often at a higher unit cost. An efficient supply chain is distinguished by longer production lead‐times, high set‐up costs, and larger batch sizes that allow the efficient firm to produce at a low unit cost, but often at the expense of market responsiveness. We hypothesize that a firm's choice of responsive supply chain will be associated with lower industry growth rates, higher contribution margins, higher product variety, and higher demand or technological uncertainty. We further hypothesize that interactions among these variables either can reinforce or can temper the main effects. We report that lower industry growth rates are associated with responsive market entry, but this effect is offset if growth occurs during periods of high variety and high demand uncertainty. We report that higher contribution margins are associated with responsive market entry and that this effect is more pronounced when occurring with periods of high variety. Finally, we report that responsive market entry also is correlated positively with higher technological demand uncertainty. These results are found using data from the North American mountain bike industry.     

Matching vertical integration strategies to competitive conditions

This paper contrasts the vertical integration strategies of 192 firms in the presence of diverse environmental and strategic forces to suggest how successful uses of vertical integration differ from less successful ones. Briefly, firms which did not use vertical integration as effectively transferred more goods and services internally, and they did so more often under adverse industry conditions. A frequent error was to undertake more integrated activities in-house and engage in longer chains of processing from ultra-raw materials to finished goods. Ironically, many of the vertically integrated firms that suffered adversity possessed the bargaining power needed to contract advantageously for goods or services, but accepted an overly risky ownership position unnecessarily by producing them, instead.     

供应链管理模式下服装类产品的库存策略

库存管理是众多企业面临的一个重大问题,它对企业的生存及发展有着重要的影响。服装类产品由于生命周期短的特殊性,导致其库存管理的难度较大。通过分析服装类产品的特点、库存所处的位置、库存存在的影响及产生原因,提出建立以整个供应链为整体的库存管理策略,通过行业信息一体化、产业集群、供应商管理库存和共同配送,深入挖掘供应链的潜在能量,增强企业的竞争力。     

The effects of the chief technology officer and firm and industry R&D intensity on organizational performance

Between 1993 and 2013 the number and power of CTOs increased; as indicated in the percentage of firms with CTOs, their increasing presence on boards, their compensation relative to their CEOs, and compensation relative to other highly compensated executives. Firms which pursue an aggressive technology strategy (powerful CTO, high R&D spending) in industries in which technology is a critical contingency have well above normal market adjusted returns while those which pursue that strategy in industries in which technology is not critical have well below normal returns. These results empirically confirm longstanding, untested assumptions in the field of technology management. Moreover, the effect of R&D expenditures on firm performance is contingent on the degree to which technology is a critical contingency in the industry and on the power of the firm's CTO. These findings may explain the mixed results of past studies of the effects of R&D expenditure on firm performance. A model which integrates its own insights with those of earlier work on CTOs, R&D expenditures, firm strategy, and firm power dynamics is presented and supported.     

Types of R&D Collaborations and Process Innovation: The Benefit of Collaborating Upstream in the Knowledge Chain

This paper explains how research and development (R&D) collaborations impact process innovation; given the differences in innovation mechanisms, prior insights from studies of product innovation do not necessarily apply to process innovation. Extending the knowledge‐based view of the firm, this paper classifies four types of R&D collaborations—with universities, suppliers, competitors, and customers—in terms of two knowledge dimensions: position in the knowledge chain and contextual knowledge distance. Position in the knowledge chain is the position of the R&D collaboration partner in the knowledge chain of the industry—the input–output sequence of activities that result in the transformation of raw materials into products that are used by end customers. Based on this knowledge chain, this paper considers universities and suppliers as upstream R&D collaborators, and competitors and customers as downstream R&D collaborators. Contextual knowledge distance is the difference in industry‐related contexts of operation of the R&D collaboration partners and the firm. Based on this, this paper views R&D collaborators that are suppliers and competitors as having low contextual knowledge distance to the firm, and R&D collaborators that are customers and universities as having high contextual knowledge distance to the firm. Using this classification, this paper proposes a ranking of R&D collaborations in terms of their impact on process innovation: R&D collaborations with suppliers have the highest impact, followed by R&D collaborations with universities, then R&D collaborations with competitors, and finally R&D collaborations with customers. These arguments are tested on a four‐year panel of 781 manufacturing firms. The results of the analyses indicate that R&D collaborations with suppliers and universities appear to have a positive impact on process innovation, R&D collaborations with customers appear to have no impact, and R&D collaborations with competitors appear to have a negative impact. As a consequence, the main driver of the impact of R&D collaborations on process innovation appears to be position in the knowledge chain rather than contextual knowledge distance. These novel ideas and findings contribute to the literature on process innovation. Even though process innovation tends to be internal and tacit to the firm, it can still benefit from external R&D collaborations; this paper is the first to analyze this relationship and provide a theoretical framework for understanding why this would be the case. This study also has important managerial implications. It suggests that managers need to be careful in choosing the partners for their firms' R&D collaborations. Engaging in R&D collaborations with universities and suppliers appears to be helpful for process innovation, whereas conducting R&D collaborations with competitors may potentially harm process innovation.     

Is performance driven by industry‐ or firm‐specific factors? A reply to McNamara,Aime, and Vaaler

We revisit the questions of identification of outlying firms within industries and their impact on the relative importance of firm‐ and industry‐specific factors for firm performance. In response to McNamara, Aime and Valler (2005), we argue that the key results in Hawawini, Subramnian and Verdin (2003) are insensitive to the varying methods used to identify firm outliers. Further, we argue that conducting tests on industry outliers are inconsistent to what is indicated by theory and past empirical results on the relative importance of firm and industry effects to firm performance. Firm effects may matter most for outperforming and underpeforming firms, while industry effects may be at least as important to firms ‘stuck in the middle’. Copyright © 2005 John Wiley & Sons, Ltd.