Competing for government procurement contracts: The role of corporate social responsibility

Research Summary: This study examines whether corporate social responsibility (CSR) improves firms’ competitiveness in the market for government procurement contracts. To obtain exogenous variation in firms’ social engagement, I exploit a quasi‐natural experiment provided by the enactment of state‐level constituency statutes, which allow directors to consider stakeholders’ interests when making business decisions. Using constituency statutes as instrumental variable (IV) for CSR, I find that companies with higher CSR receive more procurement contracts. The effect is stronger for more complex contracts and in the early years of the government‐company relationship, suggesting that CSR helps mitigate information asymmetries by signaling trustworthiness. Moreover, the effect is stronger in competitive industries, indicating that CSR can serve as a differentiation strategy to compete against other bidders. Managerial Summary: This study examines how companies can strategically improve their competitiveness in the market for government procurement contracts—a market of economic importance (15–20% of GDP). It shows that companies with higher social and environmental performance (CSR) receive more procurement contracts. This effect is stronger for more complex contracts, in the early years of the government–company relationship, and in more competitive industries. These findings indicate that firms’ CSR can serve as a signaling and differentiation strategy that influences the purchasing decision of government agencies. Accordingly, managers operating in the business‐to‐government (B2G) sector could benefit from integrating social and environmental considerations into their strategic decision making.     

Outcome-based contracts as new business model: The role of partnership and value-driven relational assets

This paper investigates the new business model of outcome-based contracts where the firm is tasked to achieve outcomes of equipment as a service contract instead of the traditional maintenance, repair and overhaul activities (e.g., power-by-the-hour® engine service contract). Through a qualitative study of two outcome-based contracts between BAE Systems, MBDA and the UK Ministry of Defence, we derive three value drivers of information, material and people transformation. Mapping it with transaction cost literature we propose five relational assets based on the value drivers; three value-driven alignments and two partnership inputs. We then study the relationships between the relational assets and contract performance through a quantitative survey by applying the partial least square (PLS) method. Our study shows that behavioral and information alignments are important to achieve outcomes. However, material and equipment alignment (i.e., joint supply chain) does not have a significant effect on contract performance. In addition, perceived control and empowerment mediated the relationship between partnership inputs and value-driven alignments. Our study provides a more integrated view of how various theoretical management domains overlap in the understanding of business models, and contribute to the understanding of value drivers and partnership factors in achieving performance in outcome-based contracts.     

The licensing dilemma: understanding the determinants of the rate of technology licensing

The licensing of technology entails a trade‐off: licensing payments net of transaction costs (revenue effect) must be balanced against the lower price–cost margin and/or reduced market share implied by increased competition (profit dissipation effect) from the licensee. We argue that the presence of multiple technology holders, which compete in the market for technology, changes such a trade‐off and triggers more aggressive licensing behavior. To test our theory, we analyze technology licensing by large chemical firms during the period 1986–96 for 107 chemical products. We find that the rate of technology licensing displays an inverted U‐shaped relationship with the number of potential technology suppliers and is negatively related to the licensor's market share and to the degree of technology‐specific product differentiation. Copyright © 2006 John Wiley & Sons, Ltd.     

The effectiveness of temporary marginal cost subsidies

The principal aim of a marginal cost subsidy program is to accelerate improvements in economic performance that would occur anyway if anticipated changes in the relevant economic determinants were to realise. The potential effectiveness of such a program is studied in a framework that allows firms to have stochastic beliefs as to the timing of the change in the economic environment and the ending of the subsidy program. Because the subsidies are typically of a temporary nature and apply only to incremental changes, they create an incentive for firms to actually postpone changes in performance. Leaving the ending date unspecified at the time of implementation of the program may counteract this incentive and results in an early accelerative response. The improvement in economic performance near the specified termination date for a program with a known length, however, may well be more substantial.     

Engaging the inventor: exploring licensing strategies for university inventions and the role of latent knowledge

A significant portion of knowledge generated by university inventors remains latent (uncodified but codifiable), even though this information is valuable to firms that have licensed their inventions and famously strong incentives exist to disseminate academic findings widely. However, the licensee may access and exploit this latent knowledge by engaging the inventor during the development phase. This paper examines the hypothesis that licensing strategies that directly engage the inventor increase the likelihood and degree of commercialization success. While this may seem somewhat apparent, firms in the sample under investigation vary substantially in the degree to which they engage the inventor: one third of the sample does not engage the inventor at all. On the other hand, the hypothesis might seem surprising given the norms of open science under which university labs are expected to operate. Regression analyses based on a unique dataset of 124 license agreements associated with inventions from MIT support the hypothesis and generate results that are robust to a variety of controls. Copyright © 2005 John Wiley & Sons, Ltd.     

The impact of farm input subsidies on maize marketing in Malawi

This paper investigates the effects of subsidised fertilizer on marketing of maize in Malawi. It uses the nationally representative two-wave Integrated Household Panel Survey (IHPS) data of 2010 and 2013. The results suggest that subsidised fertilizer on average increases farmers’ maize market participation as sellers, total quantity of maize sold, and maize commercialisation. In addition, participation in subsidised fertilizer programme is found to increase the probability of farmers to be net sellers and increases net quantity of maize sold. However, the study finds no evidence of effect on net quantity of maize bought and on household maize self-sufficiency. These results suggest that the farm input subsidy programme has contributed toward an increased level of maize market supply engagement for small farmers and in this sense, the policy has the potential to provide the wider external benefits. Furthermore, the results have implication on the sustainability of the subsidy programme, policy formulation and design of programmes for the agricultural sector and small farmers in developing countries.     

14种情形可解除无期限劳动合同

国务院法近日公布了劳动合同法实施条例草案（以下简称草案）,并向社会各界广泛征求意见。草案共有45条,主要就劳动合同法贯彻实施中有关无固定期限劳动合同、经济补偿与赔偿金的关系、劳务派遣等方面的问题做了规定。此外,草案还对劳动关系的概念、劳动关系的中止、政府安置困难人员的公益性岗位的劳动合同等问题做了规定。公     

Urban food subsidies in the context of adjustment: The case of Zambia

One of the most complex policy issues facing many developing-country governments over the next decade, particularly in sub-Saharan Africa, concerns the problem of providing the impoverished sections of urban populations with adequate food at prices they can afford, while both meeting the fiscal requirements of adjustment programmes and promoting domestic agricultural production. The pressure to reduce urban food subsidies is in many cases already immense, and the implications for urban household food security are considerable. This article looks at recent Zambian experience, and suggests that new and more efficient ways of targeting subsidies may be required if levels of food consumption are not to deteriorate still further.     

Unionization structure, licensing and innovation

We show the effects of the unionization structure (viz., decentralized and centralized unions) on a firm's incentive for technology licensing and innovation. The incentive for technology licensing is stronger under decentralized unions. We identify circumstances under which the benefit from licensing creates a stronger incentive for innovation under decentralized unions. If the union's preference for employment is high, the benefit from licensing may create higher incentive for innovation under decentralized unions. However, if the union's preference for wage is high enough, the incentive for innovation is higher under a centralized union irrespective of licensing ex-post innovation. If the centralized union decides whether or not to supply workers to all firms, the possibility of higher innovation under decentralized unions increases. We further show that perfectly substitutable workers can be better off under decentralized unions if the labor productivity depends on the unionization structure, which occurs in our analysis when, e.g., licensing after innovation occurs only under decentralized unions or innovation (with no licensing) occurs only under a centralized union.     

Patent pools in 5G: The principles for facilitating pool licensing

Patent pools collect patents from multiple patentees and license them out as a package. They offer one-stop-shop licensing efficiencies, reduce transaction costs, and increase the predictability of the licensing environment for the benefit of innovation diffusion. However, pools failed to take off for previous cellular standards. This article analyses both retrospectively the reasons for such failures and prospectively what makes the 5G environment more conductive to pool formation and licensing. Avanci, a patent pool for licensing cellular standards in the Internet of Things (IoT), is a significant development but has limited licensing coverage so far. The article then recommends five policy principles to facilitate pool licensing in the IoT. They include recognising that only enough upstream SEP owners need to join the 5G pool to create a market signalling effect. Some vertically integrated SEP owners may remain outsiders, and some bilateral licensing may co-exist without damaging the pool's success. To encourage upstream SEP owners to join the pool, they should be allowed to set ‘high enough’ royalty rates and divide pools' royalties among members under value proportionality rules. 5G pools must also be flexible and adopt different licensing programs that consider the specificities of each IoT market. Finally, pool administrators should consult with IoT implementers before establishing licensing programs for them and have infringement legal standing if everything else fails. These principles would go a long way in spurring the broader use of 5G pool licensing for a more efficient, straightforward, and predictable IoT licensing environment.     

Vertical contracts in search markets

This paper studies a simple model to underline the importance of consumer search for understanding wholesale contracts between manufacturers and retailers. The model has one manufacturer and two retailers who compete in a homogeneous goods market where the wholesale contract is unobserved by consumers. If the manufacturer is in the position to offer two-part tariffs, the model without search either does not have an equilibrium wholesale contract (if retailers hold passive beliefs) due to the well-known opportunism problem or it is characterized by the absence of a fixed fee (when retailers hold symmetric beliefs). With consumer search, an equilibrium wholesale contract always exists (even if retailers hold passive beliefs) overcoming the opportunism problem and is always characterized by some fixed fee. If the manufacturer offers linear wholesale contracts, the differences between the models with and without consumer search are less pronounced, but remain even if the search cost vanishes. Thus, the vertical contracting literature cannot simply ignore search costs by saying that they are probably small and can therefore be neglected.     

Technology transfer issues in licensing pharmaceutical products

The discovery and development of a new therapeutic agent may take five to ten years, cost in excess of £90m with a significant risk of product failure, due either to lack of safety or efficacy. Pharmaceutical companies require a new product every three to five years in order to sustain growth. This need is often met by licensing a product from a competitor. The evaluation of a potential licensing opportunity is a complex task in technology transfer since firstly, the time frame for decision taking is markedly foreshortened compared with the usual time involved when developing a drug from within the company. In addition the therapeutic field may be unfamiliar to the company personnel. The evaluation process involves a parallel but closely linked activity involving pharmacologists, toxicologists, pharmacy, pharmaceutical physicians, strategic marketing, legal experts as well as representatives from the major territorial international markets. This paper attempts to identify some problems in technology transfer which include organisational, attitudinal and behavioural factors. Possible topics for future research are identified.     

Managing knowledge leakage in strategic alliances: The effects of trust and formal contracts

Although strategic alliances offer opportunities for knowledge sharing and leveraging, they also carry the risk of knowledge leakage to partner firms. In this study, we conceptualize the notion of knowledge leakage as a multidimensional construct and formalize its measurement. We examine the effects of two dominant governance mechanisms—trust (goodwill trust and competence trust) and formal contracts on knowledge leakage. A survey of 205 partnering firms in China indicates that goodwill trust has a U-shaped relationship with knowledge leakage, whereas competence trust has a negative impact. Moreover, goodwill trust and competence trust interact differently with formal contracts on knowledge leakage. This study offers important theoretical and managerial insights for firms to manage knowledge leakage in strategic alliances.     

On the duration of technology licensing

We model an innovator's choice of payment scheme and duration as a joint decision in a multi-period licensing game with potential future innovations and some irreversibility of technology transfer. We find that it may be optimal to license the innovation for less than the full length of the patent and that royalty contracts can be more profitable than fixed-fee licensing even in the absence of information asymmetry and risk aversion. Moreover, licensing contracts based on royalty have a longer duration than fixed-fee licenses and are more likely to be used in industries where innovations are frequent and intellectual property protection is weak. Our paper also highlights an important link between the study of technology licensing and the theory of durable goods.     

The ineffectiveness of R&D subsidies—An oligopoly theoretic insight

In several European countries, governments subsidise private firms in their product development. Existing empirical literature indicates that these subsidies do not have much impact on firms' R&D efforts. It is suggested that this inefficiency may reflect strategic, oligopolistic behaviour: not to apply for subsidies is a strategic commitment to non-aggressive behaviour. Firms may be willing to apply for subsidies mainly when they know they are not going to affect their R&D efforts significantly.     

RETRACTED: Integrated knowledge exploitation: The complementarity of product development and technology licensing

In light of increasing licensing, we challenge the common assumption that product development and technology licensing are substitutes. We develop a resource‐based framework, which distinguishes a firm's technological resource base and technology exploitation processes. We further combine survey, patent, and financial data of 228 medium‐sized and large industrial companies to examine the interactions of firms' product development processes and technology licensing processes in order to explain heterogeneity in new product revenues, licensing performance, and firm performance. The results underscore that product development, which indicates innovative capacity, and technology licensing, which indicates desorptive capacity, are complements rather than substitutes in integrated knowledge exploitation in medium‐sized and large firms. This complementarity is particularly pronounced in firms with an emphasis on cross‐licensing and with a strong patent portfolio. Copyright © 2012 John Wiley & Sons, Ltd.     

The effect of national culture on the choice between licensing and direct foreign investment

This paper argues that national differences in levels of trust impact perceptions of transactions costs and thereby influence the desirability of internalization and the choice of foreign market entry mode. The paper tests this framework on industry level data from the United States Commerce Department's Benchmark Survey of operations of U.S. -based manufacturing multinational corporations in 1977 and 1982, and shows that cultural differences in trust do influence perceptions of transaction costs and the preference for direct foreign investment across countries.