Bertrand oligopoly in a spatial context: The case of quantity independent transportation costs

The theory of spatial competition [for a review, see Gabszewicz and Thisse (1985)] is usually based on the assumption of transportation costs which are proportionate to distance and quantity. In reality, however, there exist frequently considerable economies of scale, especially with respect to the conveyed quantity of goods. A good case in point is transportation cost incurred by a consumer patronizing a shopping area. Cost economies of scale will in general influence consumers' optimal choice with respect to quantities and best market places. In the extreme, consumers' outlays on transportation can be considered independent of the purchased quantity, but approximately proportionate to distance. In the present paper, the impact of this assumption on spatial competition is analysed. It will be shown, that existence and uniqueness of spatial oligopolistic equilibrium is restored. Furthermore, due to some residual monopolistic power, prices do not converge to the perfectly competitive equilibrium prices when the distance between the firms shrinks to zero. In conclusion the model exhibits a fundamental difference in the market structure, when the spatial aspect is incorporated.     

Environmental policy and stable collusion: The case of a dynamic polluting oligopoly

We show that the imposition of a Markovian tax on emissions, that is, a tax rate which depends on the pollution stock, can induce stable cartelization in an oligopolistic polluting industry. This does not hold for a uniform tax. Thus, accounting for the feedback effect that exists within a dynamic framework, where pollution is allowed to accumulate into a stock over time, changes the result obtained within a static framework. Moreover, the cartel formation can diminish the welfare gain from environmental regulation such that welfare under environmental regulation and collusion of firms lies below that under a laissez-faire policy.     

Indirect taxation with shadow cost of public funds in mixed oligopoly

We adopt a mixed oligopoly model, where a state-owned welfare-maximizing public firm competes with a profit-maximizing private firm, to compare the welfare effects of the specific and ad valorem tax in the presence of the shadow cost of public funds. Following the assumption of most previous literature that total output is constant under specific and ad valorem taxation, we find that, when the shadow cost of public funds exists, the tax policy must be adjusted according to the privatization level of the public firm; if the privatization level is low (medium, high), the government needs to adopt ad valorem (specific, ad valorem) tax. Moreover, the private firm will earn a higher (lower) profit under ad valorem tax than under specific tax, if the public firm is not fully privatized and the shadow cost of public funds is high (low).     

Where process development begins: A multiple case study of front end activities in process firms

The front end phase of the new product development has been examined extensively, yet few if any studies have examined the front end phase of new process development. By means of a multiple case study of process firms, this article aims to bridge this knowledge gap. Our results show that substantial differences in front end activities exist between the product development and process development domains. We conceptualize the front end in process development to be an iterative trial-and-error process, dominated by activities such as idea generation and refinement, literature reviews, anticipation of end-product changes, and various forms of experiments in bench scale, lab scale, and full-scale production. In addition, we highlight key problems in the front end and managerial remedies for how to mitigate them. While these findings provide theoretical implications for research into product development, process development and production management, the findings are particularly relevant to process development managers, plant managers, and development engineers interested in increasing the efficiency of production processes.     

Evolutionary competition in a mixed market with socially concerned firms

In this paper we study an oligopoly market where profit-maximizing firms and socially concerned firms compete in quantities. Confronting remarks by Milton Friedman and Gary Becker, we are using an evolutionary setting to investigate the endogenous choice of the proper objective of business firms and the influence of product differentiation on the long run survival of firms which pursue non-profit motives. We find that firms which consider a combination of profit and consumer welfare can indeed have larger market shares and profits than their profit-maximizing rivals. One insight is that it might pay off for shareholders to consider stakeholder welfare, but that the level of social concern should not be too high. Based on a strategy׳s profitability, we consider asynchronous evolutionary updating with firms selecting Nash quantities or choosing best replies to the expected market quantity. Here we observe that the consumers׳ willingness to pay a price premium for products is crucial for the long run survival of socially concerned firms. Depending on the degrees of product differentiation and social concern, long run outcomes consist either of both types of firms or only one type of firm. If the firms׳ propensity to switch between a social or a profit-maximizing strategy is sufficiently large, steady states are unstable and even complicated dynamics can occur.     

Internationalization of private firms: environmental turbulence and organizational strategies and resources

Profiles of exporting and superior-performing private small and medium-sized enterprises (SMEs) are presented. Multivariate regression evidence suggests that SMEs focusing upon an offensive and market differentiation strategy of product/service protection is associated with the propensity and the intensity of exporting. Exporting SMEs are also associated with younger and manufacturing firms as well as firms with product or service quality and/or technology resources. The perceptions by SMEs of external environmental turbulence were not significantly associated with the exporting-dependent variables. Most notably, variables associated with exporting SMEs are not the same as those associated with superior firm performance. Moreover, exporting firms did not report superior levels of performance. Implications for policy-makers, practitioners and researchers are discussed.     

Beyond portfolio entrepreneurship: multiple income sources in small firms

The economic activities of entrepreneurs are not confined to the ownership of a single firm, but encompass income generation from a variety of sources including wage labour, non-earned income and profit from secondary business ventures. This paper investigates the multiple income sources of a sample of 18 561 business owners in the UK. A latent class analysis revealed seven different groups of entrepreneurs differentiated by their degree of engagement in enterprise ownership and income generation. The results demonstrate the importance of multiple income sources in smaller firms and challenge previous assumptions that portfolio activities are expedited solely as a profit maximization strategy by growth-seeking entrepreneurs. While some use portfolio activities for the purpose of wealth accumulation, others use them as a survival mechanism. The results also highlight time variations in the use of portfolio activities. For some business owners, they are a long-term and relatively stable strategy contributing towards either the economic survival of marginal ventures or the development of high growth enterprises. For others, they are a time-limited strategy facilitating business entry or exit.     

The adoption of outside boards by small private US firms

The research issue motivating the present study is concerned with why some small private firms adopt an ‘outside board’ (i.e. larger boards in which the majority of directors are neither managers of the firm nor relatives of the Chief Executive Officer (CEO)) and others do not. This issue is addressed by investigating whether differing contextual conditions distinguish adopters from non-adopters of outside boards. The authors consider the adoption of an outside board to be one part of a larger organizational life-cycle process in which organizations implement more ‘professional management’ structures and practices in response to their evolving internal and external contexts. The authors examine simultaneously three contextual pressures that commonly confront small private firms as they develop over time- firm growth and larger size, the succession of the CEO, and the diffusion of equity to individuals outside the firm- to determine which of these are salient in explaining the presence of an outside board. Logistic regression results (3070 respondents toa cross-industry mail survey) indicate that outside boards are more likely when more equity is held by individuals outside the firm, CEOs are older and CEOs do not intend to implement an intra-family transition of leadership. The results suggest that firms adopt outside boards primarily to satisfy the desires of external owners, and only secondarily for the service and resource benefits that outside directors provide.     

The relationship between private investors and small firms: an agency theory approach

Many small firms in Sweden are characterized by a lack of equity capital. For several years measures to increase the equity capital have been discussed. In this discussion the private investors' market has received virtually no attention. This study presents some preliminary results of the private investors in Sweden.

The research in small firms financing is characterized by a lack of theoretical framework. One basic assumption in the study is that agency theory can provide an essential framework to explain the interaction between the private investor and entrepreneur. Twenty-five hypotheses generated from agency theory are formulated and tested on 62 small unlisted firms in Sweden. Multiple regression analysis is used for the causal analyses.

The empirical results in the study show inter alia that the geographic distance and the private investor's knowledge about the portfolio firm's transformation process seem to be the most influential factors for determining the private investor's involvement in the portfolio firms. It is also interesting to notice that none of the variables, frequency of contacts and the private investor's operational work in the portfolio firm affect the performance of the firm. Contrary to conventional wisdom, private investors do not add value to their portfolio firms through their interaction with the entrepreneurs.

The theoretical conclusion is that agency theory does not provide any satisfactory framework to explain the private investor - entrepreneur relationship. Some of the basic assumptions in agency theory seem to be invalid. A model for the relationship between private investors and entrepreneurs is developed in which four interaction strategies are identified. The model gives implications on two levels: the portfolio level and the individual case level.     

Myth-busting and entrepreneurship policy: the case of high growth firms

Abstract

Promoting high growth firms (HGFs) has become a strong fixation within enterprise policy. This is a debate article seeking to examine and challenge the mythology perpetuated by policy makers and embedded within high growth entrepreneurship policy frameworks. Within the article we argue that a number of distinctive ‘myths’ have become deeply embedded within these policy frameworks. Such myths have been built on misconceived preconceptions of HGFs, which has resulted in policy-makers taking a myopic view of these firms. A key aim of the paper is to highlight how false perceptions of HGFs translate into inappropriate policy interventions. The paper challenges some of the most commonly held myths about these firms (that they are predominantly young, small, high-tech, VC-backed, university spin-outs, who grow in an orderly organic fashion, operating similarly irrespective of location) and identifies a clear mismatch between how policy makers perceive HGFs and what they actually look like in reality. Suggestions for the design of future policy approaches are forwarded.     

Item analysis of university-wide multiple choice objective examinations: the experience of a Nigerian private university

Teachers and Students worldwide often dance to the tune of tests and examinations. Assessments are powerful tools for catalyzing the achievement of educational goals, especially if done rightly. One of the tools for ‘doing it rightly’ is item analysis. The core objectives for this study, therefore, were: ascertaining the item difficulty and distractive indices of the university wide courses. A range of 112–1956 undergraduate students participated in this study. With the use of secondary data, the ex-post facto design was adopted for this project. In virtually all cases, majority of the items (ranging between 65% and 97% of the 70 items fielded in each course) did not meet psychometric standard in terms of difficulty and distractive indices and consequently needed to be moderated or deleted. Considering the importance of these courses, the need to apply item analyses when developing these tests was emphasized.     

Location decisions of high-technology firms: A case study

Forty-six firms in the Ann Arbor, Michigan area were surveyed to determine factors affecting their location decisions. These firms spanned the range of “high-technology,” including biomedical, computers, integrated manufacturing, optics, remote sensing, and others. The firms were generally small, rapidly growing, new companies with a large percentage of their personnel devoted to research and development activities. The majority of the firms were founded in the area, rather than attracted from the outside; most did not consider sites outside of the Ann Arbor area when choosing their current site. According to the survey, the perceived strengths of the Ann Arbor area are its universities, quality of life, transportation networks, and work force. On the negative side, state and local taxes are seen as the area's greatest weaknesses. The area's lack of venture capital, certain local government regulations, and the perceived unavailability of certain support services and facilities are also troublesome. This set of positive and negative factors demonstrates how high-technology firms are different from traditional manufacturing firms in their location decisions. Consequently, any economic development strategies generated with the goal of developing high-technology firms in mind must be carefully tailored to the specific characteristics and needs of those firms.     

-learning agents in a Cournot oligopoly model

Q-learning is a reinforcement learning model from the field of artificial intelligence. We study the use of Q-learning for modeling the learning behavior of firms in repeated Cournot oligopoly games. Based on computer simulations, we show that Q-learning firms generally learn to collude with each other, although full collusion usually does not emerge. We also present some analytical results. These results provide insight into the underlying mechanism that causes collusive behavior to emerge. Q-learning is one of the few learning models available that can explain the emergence of collusive behavior in settings in which there is no punishment mechanism and no possibility for explicit communication between firms.     

Tax avoidance in different firm types and the role of nonfamily involvement in private family firms

This study simultaneously distinguishes between private family firms, private nonfamily firms, public family firms, and public nonfamily firms. We show that private family firms avoid taxes less than public family firms and public nonfamily firms; however, we do not find a difference between private family firms and private nonfamily firms. Therefore, building on family firm heterogeneity, our results indicate that tax avoidance in private family firms differs depending on the involvement of nonfamily owners and/or managers. We find that private family firms that are wholly owned and managed by family members indeed avoid taxes less than private nonfamily firms.     

Generalization practices in qualitative research: a mixed methods case study

The purpose of this mixed methods case study was to examine the generalization practices in qualitative research published in a reputable qualitative journal. In order to accomplish this, all qualitative research articles published in Qualitative Report since its inception in 1990 (n =  273) were examined. A quantitative analysis of the all 125 empirical qualitative research articles revealed that a significant proportion (i.e., 29.6%) of studies involved generalizations beyond the underlying sample that were made inappropriately by the author(s). A qualitative analysis identified the types of over-generalizations that occurred, which included making general recommendations for future practice and providing general policy implications based only on a few cases. Thus, a significant proportion of articles published in Qualitative Report lack what we call interpretive consistency.     

Determinants of early internationalization of new firms: the case of Chile

The aim of this article is to analyze the factors related to the early internationalization of new firms in Chile. We grouped the internationalization driver factors into three categories: individual, organizational, and firm-environmental factors. Using a sample of 374 entrepreneurs from Global Entrepreneurship Monitor data and performing a logistic regression model, we found that owner-manager’ high educational levels, opportunity-oriented motivation, new technology use, and activities related to extractive sectors (e.g., farming, forestry, fishing, and mining) contribute to a higher likelihood of early firm internationalizing. The implications for theory and practice are discussed.     

Nash-equilibria in a heterogeneous oligopoly with fuzzy information

We consider a model of an oligopolistic market with heterogeneous firms and products where neither the cost nor the demand functions are common knowledge. Instead, each firm only has some vague ideas about the price strategies adopted by its competitors which is modelled by a fuzzy set. In analogy to the notion of an "equilibrium of actions and beliefs" we define and characterize a generalized Nash-equilibrium and show its existence under general conditions. Furthermore, the impact of the fuzzy information on the equilibrium outcome is analyzed by means of a comparative static analysis within a particular model framework.Received: 28 May 2002, Accepted: 25 December 2002, JEL Classification: D43, D80, L13We wish to thank Bernhard F. Arnold, the editor Murat Sertel , and two anonymous referees for helpful comments. Of course, we are responsible for all remaining errors.     

Structuration of precarious employment in economically constrained firms: the case of Dutch agriculture

Precarious employment practices such as short‐term contracts, low pay and lack of voice have undesired outcomes for workers, because these impede employees in their ethical rights to freedom, well‐being and equality. Still, precarious employment practice is common in sectors with restrained economic conditions, such as Dutch agriculture. However, in every restrained industry, examples of more socially responsible employment management are reported. The question why some firms develop more socially responsible employment systems when economic conditions predict the use of low cost, precarious employment systems is central in this article. Structuration theory provides a lens to understand how employers position their employment practice in the wider (institutionalised) social context. Insight in the reproduction circuits that link employers' actions with their social context (product, market, institutions and policies, demographics) can reveal where, at a sector level, change to avoid unethical employment practice could start.     

An empirical investigation of going private decisions of U.S. firms

According to many managers, the Sarbanes-Oxley Act of 2002 caused the costs of being public to increase. Subsequently, following the Act, many firms went private rather than incur the costs. We investigate the differences in the financial characteristics of firms that went private between 1998 and 2003 and a control sample of firms which went public and did not go private Our results indicate that there are differences in the two groups, as well as differences in firms that went private prior to and following Sarbanes-Oxley. Taken together, our results are indicative of going private to avoid the higher costs of being public post Sarbanes-Oxley.     

Foreign remedies for local difficulties: the case of three Scottish manufacturing firms

Literature on Japanese transplant manufacturing firms in the automotive sector often emphasise the importance placed on attitude as opposed to skills in the hiring decisions for line workers. In this paper, a case study of one second-tier components supplier for a major Japanese automotive assembler in the Midwestern United States provides the opinions of senior managers and human resource associates regarding recruitment and selection practices. In-depth interviews, carried out over a two-week period in August 2000, are used to develop an understanding of the recruitment and selection process for line workers as well as to investigate the desired skills and value of previous Japanese experience. Results of the case study analysis are compared with two models from the literature: (1) a model of recruitment and selection at Japanese automotive-related firms in Japan and (2) a model of recruitment and selection at Japanese transplant automotive-related firms abroad. Deviations from the two models point not to a new paradigm of ‘second-generation’ Japanese transplants – those that have moved into regions quite familiar with Japanese firms and related management and production methods – but rather to overall weaknesses in the stereotypical models. Managerial opinions within the case study firm place limited value on familiarity with a Japanese environment, considering such experience secondary to attitudes and work ethics that are in line with the philosophy of the case study firm.