Firm competencies on market entry success: Evidence from a high-tech industry in an emerging market

This study explores the effects of three firm competencies, namely, business network, new product development (NPD), and marketing management on market entry success of a high-tech industry in an emerging market. Business network encompasses research and development (R&D) partnership, inter-organizational network, and government relationship (guanxi). NPD consists of R&D capability and product process innovation, while marketing management encompasses distribution channel, promotion, branding, and information management. Using data from 55 biopharmaceutical multinational companies in China, this study applies structural equation modeling technique with confirmatory factor analysis for testing and estimating relationships. We find that only marketing directly influences entry success, whereas the other two yield indirect effects. Our study also suggests the critical role of business network as a prerequisite for entry process. Simultaneously, NPD serves as the driving force of marketing through the creation of product competitiveness.     

Using brand equity to counter outsourcing opportunism: A game theoretic approach

Outsourcing has long been touted as an avenue for companies to divest their non-core processes for cost and efficiency gains. However, outsourcing has since become so sophisticated that some companies are even outsourcing core functions such as engineering, marketing, and R&D and as a consequence, could be unknowingly nurturing its outsourcing partners as future competitors. Through formal game theoretic analysis, we show that in addition to learning, outsourcing firms could also make use of brand equity to safeguard themselves from the threat of potential market entry by their outsourcing suppliers when the outsourced component is a core competence, particularly when the rate of learning is at best moderate. In addition, we show that it may be optimal for outsourcing firms to adopt a make-and-buy strategy.     

Antecedents and financial impacts of building brand love

Brand love has garnered increasing interest among practitioners and scholars, but little is known about how marketing actions drive brand love, and whether and how brand love transmutes to firm profitability. Using longitudinal brand love data collected from more than 20,000 customers of 152 corporate brands and financial data of firms who own these brands during 2006–2017, the authors examine the antecedents and financial impacts of building brand love. The results show that advertising investments help firms build brand love with diminishing returns after reaching an optimal point, whereas R&D investments positively contribute to brand love. The analyses further show that although brand love does not affect firm profitability and market value in the short term, it increases firm profitability and market value in the long term. More important, the results indicate that the positive effect of brand love on firm performance is stronger for hedonic brands, for firms in product categories that matter greatly to consumers, and those operating in highly competitive markets. Overall, the findings have important implications for marketing theory and provide actionable insights for managers into how to build and manage brand love.     

Brand value creation: Analysis of the Interbrand-Business Week brand value rankings

Brand value has become an important corporate performance metric, as can be observed from the close following of the annual Top 100 Brand Values ranked by brand consultancy firm Interbrand and reported in Business Week. In this study, we employ a simultaneous equations model to examine the non-linear influence of lagged advertising, marketing promotions and R&D expenses on brand value after controlling for net income and lagged brand valuation. We infer that these lagged expenses yield diminishing returns to brand value. The effect of R&D expense is the weakest, possibly because it is confounded with the advertising and promotional effects. Differences across industry segments or country base are not statistically significant.     

Can locally-recruited R&D personnel significantly contribute to multinational subsidiary innovation in an emerging economy?

This paper assesses the role of locally-recruited R&D personnel relative to their expatriate counterparts as regards innovation in multinational subsidiaries in an emerging economy. Two hypotheses are developed based on a network approach to multinational enterprises in an emerging economy setting, and tested on a sample of 317 multinational subsidiaries in China. Our results indicate that locally-recruited R&D personnel have played a limited role in innovation within multinational subsidiaries. While making a marginally significant contribution to R&D output due to their direct supply of technological knowledge, locally-recruited R&D personnel are unable to translate subsidiary R&D expenditure into successful patent applications probably because of their lack of technology management skills. In comparison, R&D expatriates significantly contribute to multinational subsidiary R&R output in both dimensions.     

Goodwill Capital

The concept of goodwill or brand capital is commonly employed by analysts in business and marketing to measure the asset value of a company name or a brand name, and consequently among accountants and business analysts, but is seldom used by economists. The purpose of this article is to begin to develop the concept of goodwill capital by presenting an analysis of what it is and some estimates of its likely magnitudes. We define goodwill capital, like the capital arising from R&D and advertising, as a form of intangible asset, albeit one which cannot be readily related to past investments in R&D, advertising, and capital equipment. We compute estimates of goodwill capital by deducting measures of these other three forms of capital from a firm's market value. For many companies, goodwill capital turns out to be the largest of its four capital stocks. Roughly half of our estimates of goodwill capital turn out to be negative.     

The Effects of UK Pharmaceutical Policy on Government Drug Expenditure: Cost Control and Incentives for R&D

This paper investigates the impact of UK pharmaceutical policy on the level of NHS pharmaceutical expenditure. UK pharmaceutical policy is one which has managed to control costs, but at the same time, has not sacrificed the rewards for conducting long-term R&D in the UK. The analysis provides evidence that the government policies which encourage long-term R&D and the development of new drugs actually lead to lower overall pharmaceutical expenditure by the NHS. The reason for this is attributed to the savings associated with the replacement of new drugs for other less effective drugs. Additional results show that the UK receives positive spillovers from the R&D conducted by US firms and this R&D has a cost reducing impact on NHS pharmaceutical expenditure.     

Entrepreneurial types and economic growth

Most literature on economic growth focuses on expenditure in research and development (R&D) because of its ability to produce technological change. Models based on this principle, however, fail to account for the exceptional growth exhibited in recent year by country such as China where R&D expenditure is virtually non-existing and for the lack of growth observed in countries such as Japan where R&D expenditure is significant. We propose a model in which entrepreneurs may be research-based (those incurring R&D expenditure) or imitators (those not incurring R&D expenditure) and show that, when the returns to R&D expenditure are low, such as in many emerging economies, the presence of a high number of imitative entrepreneurs who increase competition and product supply is sufficient to generate economic growth regardless of the distribution of activity between research-based and imitative and in spite of low R&D expenditure.     

International Exploitation of Domestic R&D Exploration: New Insights from Russian Manufacturing Firms

In this paper, we approach R&D cooperation and international market expansion from an exploration-exploitation perspective and look how various domestic R&D partners affect international market expansion activities in Russian firms. Our findings, based on a data survey of 206 manufacturing companies, show that different partners affect differently when it comes to market expansion and that their effect depends on a number of things such as the proximity of the international market. Using the exploration-exploitation approach, we are able to explain the phenomenon in more detail and so contribute to the existing international business and innovation management literature.     

农产品渠道竞争力评价及实证研究

构建了基于整体渠道观的农产品渠道竞争力评价体系和基于熵权分析的评价模型,并以农业类9家上市公司为例进行了实证研究,结果表明,该评价体系和模型可以较科学地对农产品渠道竞争力进行评价,能为管理者在制定渠道政策时提供量化依据。另外,从整体上看,我国东部、南部省份企业的农产品渠道竞争力较强,而北部、西部和中部省份企业的农产品渠道竞争力较弱,东南省份农产品企业相对中西部来讲,在渠道管理、渠道建设、渠道运作等方面具有较强的比较优势,但各上市公司的渠道竞争力在不同指标上存在较大差别。     

Beyond Trade Costs: Firms’ Endogenous Access to International Markets

In this paper, we explore another factor besides trade costs that can affect firms’ exports: strategic interaction between firms in R&D investment. Three results can be highlighted. First, the volume of trade is higher in the presence of R&D than in the absence of it, given that R&D reduces marginal costs. Second, like with reductions in trade costs, international trade grows with increases in the return on R&D, since technological progress enhances firms’ competitiveness. Third, when firms differ in commitment power in R&D, the R&D leader plays strategically in R&D in order to become more competitive and to be more active in international markets than the R&D follower.     

The effectiveness of reward systems on innovative output: An empirical analysis

This study investigated the relationship of patent output to the reward systems for individual R&D scientists in high technology firms. A survey of technical managers in 57 Connecticut firms collected information on firm size, R&D expenditure, and the frequency of use of eighteen different reward systems. Using a regression model, patent output was found to be dependent on firm size, R&D expenditure, and on monetary and non-monetary reward systems, informal award programs and variable bonuses based on the issue of patents. When a subset of small firms was investigated separately, non-monetary rewards were shown to be ineffective. However, variable bonuses remained important to patent output and large sum reward payments ($50,000) also demonstrated a significant effect.     

Corporate motivation and performance in R&D alliances

In the face of the global challenges of rapid transitions in technologies and markets, R&D activity has become one of the main ways for companies to engage in innovation. In addition, minimizing transaction cost is no longer sufficient to ensure a company's survival; therefore, companies must investigate and acquire resources to facilitate innovation within the organization. This study investigates corporate motivation and the performance of R&D alliances among machinery manufacturers in Taiwan. To explore the relationships between motivation and performance, this study adopts two distinct but complementary perspectives on R&D alliances: transaction-cost economics (TCE) and resource-based theory (RBT). This study includes the administration of a survey to explore the issues of motivation of companies participating in R&D alliances, types of governance structure in alliances, relationships between governance structure and performance, and relationships between motivation and performance of an R&D alliance in Taiwan's machinery industry (the TMI). The results in this study assert that corporate motivation as derived from both TCE and RBT perspectives has a significant positive relationship with the performance of R&D alliances; however, the other moderating variables, such as types of governance structure and corporate attributes, do not have a significant impact on the performance of R&D alliances in the TMI.     

Technology strategy and new venture performance: A study of corporate-sponsored and independent biotechnology ventures

New ventures, companies eight years or younger, play a major role in the development of an emerging, high-technology industry. Corporate-sponsored new ventures (those supported by an established corporation) and independent ventures (those founded by independent entrepreneurs) frequently battle for industry leadership and financial success. Whereas both venture types use technology to achieve financial and market success, little is known about the differences in their technology strategies.Technology strategy is the plan that guides a new venture's decisions on the development and use of technological capabilities. This strategy covers six major areas. The first is selecting the pioneering posture, where a venture decides whether or not be among the industry's first companies to introduce new products (technologies) to the market. The second is determining the number of products to be introduced to the market. The third is choosing the extent of a venture's use of internal and external R&D sources. Internal sources usually refer to in-house R&D activities. External sources may include purchasing or licensing of technology from other companies, or joining strategic alliances to acquire that technology. The fourth is deciding the level of R&D spending. The fifth is selecting the combination (portfolio) of applied and basic research projects. Whereas basic R&D advances science, applied R&D leads to new products and technologies. The sixth, and final, dimension is the venture's use of patenting to protect any competitive advantages it might gain from its R&D activities.This article reports the results of a study that explored the differences in the technology strategies and performance of corporate and independent ventures. The biotechnology industry was chosen to test the study's hypotheses, using 112 ventures.Seven of the study's hypotheses focused on the potential variations in technology strategy between corporate and independent ventures. Independent ventures (IVs) were expected to surpass corporate ventures (CVs) in pioneering new products (technologies), using internal R&D, and emphasizing applied R&D. CVs were expected to surpass IVs in introducing new products, using external R&D sources, spending on R&D, and patenting. The study's remaining three hypotheses covered possible variations in new venture performance (NVP) and their sources.The results showed that IVs focused more on pioneering, pursued a more applied R&D portfolio, and emphasized internal R&D more than CVs. CVs utilized external technology sources, spent more heavily on R&D, stressed basic R&D, and used patenting more intensively than IVs. These results were consistent with the hypotheses. However, contrary to expectations, there were no significant differences between CVs and IVs in the frequency of new product introductions, probably because most ventures were at the invention, rather than the commercialization, stage.The results on the NVP of CVs and IVs were counter to expectations. IVs outperformed CVs, probably because of the high motivation of the IV owners who reaped the rewards of growth and profitability. Also, whereas CVs may have greater access to the resources of their sponsors, political conflicts and rigid corporate controls might have reduced their ability to achieve competitive advantages.The results also indicated that CVs and IVs appeared to gain competitive advantages from different technological choices. Pioneering, a focus on applied R&D, and extensive use of the internal R&D sources were also positively associated with the performance of IVs. Heavy R&D spending, the use of both internal and external R&D sources, frequent product introductions, and patenting were positively associated with the performance of CVs. Finding that technology strategies significantly impacted NVP should encourage executives to consider pursuing a formal technology strategy. Likewise, the finding that different dimensions of technology strategy influenced the performance of CVs and IVs in different ways has practical implications. CV managers can learn from their higher performing IV rivals. Also, because established companies frequently acquire IVs, information about their technology strategies can be valuable in assimilating the acquired ventures. Overall, the results show that technology strategy is an important factor in enhancing new venture performance.     

The impact of public R&D subsidy on small firm productivity: evidence from Korean SMEs

This paper explores the effects of R&D promotion policy on SME performance. We use a large panel data set on public R&D subsidies to Korean manufacturing firms. We control for counterfactual outcomes employing the DID (difference in differences) estimation procedure as well as for the endogeneity of the R&D investment and the R&D subsidy using the 2-stage Tobit/Logit DPD (dynamic panel data) procedure. We find significant evidence for positive effects of the public R&D subsidy on both the R&D expenditure and the value added productivity of Korean manufacturing SMEs. The policy thus appears to have been successful in fostering technological advancement and in promoting economic growth.     

The interplay of social influence and nature of fulfillment: Effects on consumer attitudes

Sales promotional activities account for a significant portion of the integrated marketing communications budget of most companies because brand managers realize the effectiveness of these activities in meeting certain marketing communication objectives. However, there are times when promotional plans backfire, and promotions go unfulfilled. Much of this is reported in the media, and these reports are likely to trigger discussions about the companies involved in the nonfulfillment. Although much research has focused on the impact of sales promotional activities on consumers' responses and attitudes, not much has focused on how nonfulfillment of promotional promises and social influence might operate to color consumers' perceptions of a company. This article reports on an experimental study that was conducted to investigate this issue. Results indicate significant effects of the nature of fulfillment on corporate credibility, brand attitude, and patronage intentions; significant social influence effects on brand attitude, patronage, and switching intentions; and an interaction effect of social influence and fulfillment on switching intentions. The implications for brand managers and marketing communications managers are discussed, and areas for future research are proposed. © 2004 Wiley Periodicals, Inc.     

Technical performance and firm size: Analysis of patents and publications of U.S. firms

This study focuses on the scientific output of firms of different sizes in different industries in the U.S. Both patents, and papers and publications are used as measures of technical output. Data from two samples of firms, one consisting of 225 large firms (annual sales at least $250 million and minimum annual R&D budget of $1 million) and the other consisting of 248 small and medium sized firms (annual sales between $10 to $200 million and annual R&D budget at least $10 thousand) have been presented here. The study shows that determinants of R&D expenditure are different in firms of different sizes. For the large firms, R&D expenditure depends on net income as well as its size, measured in terms of annual sales. For small size firms, R&D expenditure is closely related with sales, rather than the net income. For large firms, R&D expenditure is related to both sales and income, the latter being more important than the former. The two output measures, patents and papers are correlated, but the correlation is not a very strong one for small firms. Patent and papers are correlated significantly with both R&D expenditure as well as annual sales. The firm's growth is not linked with patents. On the contrary, there is a negative relationship between patent and R&D growth and patent and income growth in the case of small firms. Papers are not linked with growth variables for small firms. Finally, this study confirms the hypothesis that small firms are more productive in innovation than the large firms. Small firms are more efficient than their larger competitors in terms of patents and papers per million dollars of R&D expenditure.     

Uncertainties,Imitative Behaviours and Foreign R&D Location: Explaining the Over-concentration of Foreign R&D in Beijing and Shanghai within China

This study examines the location of foreign research and development (R&D) establishments in China and reveals that such facilities are overly concentrated in Shanghai and Beijing, the two first- tier cities. We argue that the spatial concentration of R&D in Shanghai and Beijing is more intense than what can be expected based on the spatial concentration of foreign investment, science and technology resources and general economic activities. The spatial concentration is also greater than what is observed in more developed countries. This degree of concentration cannot be convincingly explained by the conventional, rational choice model that relies mostly upon factors such as market size, labour costs and infrastructure, among others. Our analysis suggests that site location decisions are also the product of imitative behaviours among decision makers faced with uncertainties and multiple risks, particularly in a transitional economy such as China's. We further discuss the implications for second-tier cities in competition for foreign R&D investment, suggesting that these cities should aggressively market their cities to foreign investors in order to reduce the perceived risks undermining their ability to attract R&D. We also speculate that as foreign investors become more knowledgeable about the rest of China, more companies will begin to establish R&D facilities in such second-tier cities.     

Evaluating and Managing Brand Repurchase Across Multiple Geographic Retail Markets

Many companies manage their business on a geographic basis and evaluate marketing metrics and managers correspondingly. Here, using a multi-level dataset from the U.S. retail gasoline industry, we demonstrate inherent differences in the levels of brand repurchase across territories. Furthermore, we show that the effects of factors that may improve repurchase—customer satisfaction and customers’ relational investments—are moderated by market share at the territorial level. Relational investments have relatively more effect on repurchase in territories where a brand's market share is higher, while customer satisfaction has relatively more effect in territories where a brand's market share is lower. These findings imply that one size does not fit all for either evaluating or managing brand performance at a territorial level.     

Executive compensation incentives,risk level and corporate innovation

This paper explores the innovation of Chinese listed companies from the perspectives of CEOs' compensation and corporate risk. We find that executives' salary can effectively promote firms' investment in research and development (R&D), while equity compensation failed to promote corporate R&D investment. Besides, the level of corporate risk has a mediating effect between executives' salary and corporate R&D investment. However, corporate risk level has a moderating effect between equity compensation and corporate R&D investment. When the level of risk is higher than a certain level, the negative impact of executives' equity compensation on innovation input becomes more obvious.