Firm innovativeness and business performance: The joint moderating effects of market turbulence and competition

To clarify the nature of the effect of firm innovativeness on business performance, this study draws on contingency theory and an interactional perspective to develop a conceptual framework to investigate how the interaction between market turbulence and competitive intensity moderates the relationship between firm innovativeness and business performance. This study used survey data from a sample of 154 high-tech manufacturing firms in Taiwan and employed hierarchical moderated regression analysis to test the hypotheses developed. The results reveal that the effect of firm innovativeness on business performance varies across the different configurations of market turbulence and competitive intensity. Specifically, the performance effect of firm innovativeness is most positive under high market turbulence and high competitive intensity; the performance effect is least positive under low market turbulence and low competitive intensity. However, the performance benefits of firm innovativeness fail to materialize under low market turbulence and high competitive intensity. Overall, these findings highlight that market turbulence and competition jointly influence the direction and strength of the performance effect of firm innovativeness. This study advances firm innovativeness research by identifying the configurational market conditions that augment or limit the value of firm innovativeness.     

The effects of standardization process on competition: An event study of the standardization process in the US cable modem market

This paper assesses the effect of standardization on competition in the US cable modem market. The standardization process in this market has involved two competing standardization groups, a commercial consortium (Multimedia Cable Network System Partners Ltd) and an official organization (the Institute of Electrical and Electronics Engineers working group IEEE 802.14). In such circumstances, standardization related activities might affect competition both within a standardization group and between standards. The paper distinguishes between these effects based on firms’ membership in standardization groups, and uses event study methodology to assess the effects of standardization activities on competition as perceived by investors. The results imply that not all consortium-led standardization activities were perceived to increase inter-firm competition.     

Telecommunications market structure in the USA: The effects of deregulation and divestiture

AT&T divestiture of its 22 operating companies in January 1984 ended the world's largest vertically integrated channel of telecommunications distribution. At the same time, customer premise equipment sales were deregulated in the USA by the FCC. This article explores the background policies which led to the changes, and examines the marketing opportunities which have arisen, together with likely future structural changes. The author concludes that the network will become more competitive and more responsive to customers' unique equipment needs.     

The benefits and potential costs of a digital economy

Computerisation, or more generally, digitisation, of an economy has brought about substantial benefits. It has greatly increased productivity. It has significantly advanced both the pace and the scope of economic globalisation and international division of labour. However, digitisation can also enable, through the collection and assembly of individual-consumer-specific information, price discrimination by a seller of a product, which results in the consumer surplus of the buyer being appropriated. Moreover, the widespread use of email and other message application platforms operated by profit-making private enterprises also facilitates the collection and assembly of vast amounts of individual-consumer-specific private information without the explicit and specific consent of the individual consumer, information which can be used to his or her detriment. Possible remedial measures are proposed.     

The digital divide problem: An economic interpretation of the Japanese experience

This study presents an economic analysis of Japan's attempt to address the geographical digital divide problem for broadband and mobile telephone services. To receive broadband service local inhabitants make voluntary contributions, which are matched by a municipal subsidy. The approach is effective in terms of economic efficiency and equity. Importantly, as fixed broadband service is provided locally the benefits are limited to local inhabitants. By contrast, mobile service is provided via a spectrum user fee system. That is, for mobile telecommunication services, no universal service fund exists. The underlying rationale is that subscribers are beneficiaries and commercial decision-making should be left to mobile operators.     

The degree of competition in the advertising industry

After a merger wave began among advertising agencies in the late 1960's, the Federal Trade Commission investigated the anticompetitive effects of the mergers and concluded that the industry would remain competitive. In this paper, we employ a method suggested by Bresnahan to investigate the issue of competition in the advertising industry. The method uses industry-level data over the period 1972–87 to consider the determinants of supply and demand for advertising messages and to calculate the degree of market power on the supply side of the market. Statistical results support the hypothesis that the industry was competitive over this period.We thank Robert Coen of McCann-Erickson, Inc., for providing data on advertising costs and expenditures and W. Bradford Todd of the Richards Group for information about the industry. Lacy Glenn Thomas directed us to McCann-Erickson. We also thank James C. Murdoch, two anonymous referees, and the Editor, William G. Shepherd. Pornpong Sumanun provided research assistance. The usual disclaimer applies.     

The predictive validity of the Karnani and Wernerfelt model of multipoint competition

This study is the first to examine the predictive validity of the Karnani and Wernerfelt theoretical model. We developed measures for four variables, and explored whether they successfully operationalized the dimensions in the theoretical model. The model proposed four response strategies, and six were observed in the data. Incumbent firms most frequently did not respond at all to another firm's entry, even though a counterattack response was predicted by the model. Since the independent variables did not predict responses as proposed by the model, exploratory analyses identified “best” predictors of responses.     

Environmental variation,strategic change and firm performance: A study of railroad deregulation

Concepts from the literature on the relationship between environmental variation and strategic change are used to analyze the effects of deregulation on strategic management in the railroad industry. Specific hypotheses are presented about the impact of regulation and change in regulation on strategy, strategic change and performance. A survey of experts identified the strategies of 27 railroads prior to and after deregulation. Five different railroad strategies and five different kinds of strategic changes are identified and described. Results suggest that most firms changed their strategies in response to environmental variation, and that those that did change their strategics out-performed those that did not. Among the strategic changes, those involving innovation and contingency strategies were found to be the most profitable. Other empirical results are presented and discussed.     

The tribal digital divide: Extent and Explanations

This paper documents home Internet access, types of Internet access, connection speeds, and prices for basic home Internet in tribal areas of the United States. We find that the share of households with Internet access is 21 percentage points lower in tribal areas than in neighboring non-tribal areas. When compared to these non-tribal areas, download speeds, whether measured using fixed or mobile broadband networks, are approximately 75% slower in tribal areas, while the lowest price for basic Internet services in tribal areas is 11% higher. Regression techniques reveal that traditional cost factors such as terrain and population density fully explain the price gap but account for only a fraction of the tribal differences in Internet access and connection speeds. Income differences are strong predictors of Internet access but do not affect connection speeds. A sizable amount of the variation in the access and home connection gap between tribal and non-tribal is left unexplained. We conclude with a discussion of how federal broadband programs have penetrated Indian Country, how tribal-specific factors are related to the variation in Internet access within Indian Country, and the potential policy implications of our findings.     

The influence of digital divide frames on legislative passage and partisan sponsorship: A content analysis of digital equity legislation in the U.S. from 1990 to 2020

Government funding is essential for digital equity. Scholarship on policies to improve internet access often examines the funding mechanisms behind subsidies, or the quality and reach of services provided. However, a better understanding of the issues and constituencies to receive government support to date may help digital equity activists more strategically lobby for new digital divide policies in the future. To do this, we take a macro-level approach to Van Dijk's resources and appropriation theory and examine how the framing of all digital divide–related U.S. Congressional legislation introduced between 1990 and 2020 may be associated with a bill's passage or the political party of its sponsor. Content analysis revealed that bills highlighting privacy literacy programs, educational outcomes, and corporate transparency were more likely to be passed into legislation. Bills sponsored by Republicans were 422% more likely of being passed into legislation. Certain frames were also associated with partisan sponsorship: Republican-sponsored bills were more often framed around deregulation, privacy programs, corporate transparency, and rural access, whereas Democrat-sponsored bills were more often framed around digital skills such as digital literacy and educational outcomes. Findings serve as a historical record of digital equity priorities in the U.S. and highlight possible strategies for future policy design.     

Platforms,systems competition,and innovation: Reassessing the foundations of communications policy

Focusing on the effects of policy on investment and innovation this paper examines whether the conceptual foundations of sector regulation are aligned with the current technological and economic conditions of advanced communications. One conclusion is that the prevailing theories and practices are only adequate if the policy challenge can be reasonably approximated as a static or steady-state problem but they may have serious shortcomings if this is not possible. The article proceeds with a review and critical examination of two approaches that could augment or possibly replace the traditional approach under conditions of dynamic competition—the theory of platform markets and systems approaches. Both frameworks model aspects of competition in interconnected systems in more detail and offer novel insights to inform communications policy in an era of continuous change. Nonetheless, important theoretical and implementation gaps remain that will require additional efforts by researchers and practitioners.     

The multidimensional effect of financial development on trade in Africa: The role of the digital economy

The issue of how financial development affects international trade has gained much attention in the literature, both theoretical and empirical, without investigating the various transmission channels of financial development on international trade. Significantly, how the digital economy modulates the effects of financial development on trade remains unexplored. Our study addresses these research gaps using panel data from 47 African economies spanning 1990 to 2019. Our findings based on the dynamic system GMM approach show that the direct impacts of financial development and the digital economy have been crucial in driving international trade in Africa in the short and long runs. Second, in the short and long runs, the digital economy serves as a vital channel through which financial development has the most significant impact on trade in Africa. Third, the robustness checks by excluding countries endowed with natural resources in Africa provide robust evidence that digital technology and finance matter for trade. Further, the study discloses an important novelty in that the marginal effects on trade increase when financial development in Africa interacts with the digital economy. In light of these findings, we conclude that policy reforms should focus on policies that encourage the development of the digital economy and its use in the financial sector in Africa.     

Economic growth and broadband access: The European urban-rural digital divide

This paper estimates the regional effects of high-speed broadband coverage on economic growth in a panel of 1348 regions across all European Union Member States between 2011 and 2018. We distinguish between different connectivity speed levels by aggregating the available regional data across all existing broadband technologies, and investigate how regional differences in the contribution of broadband coverage to real economic growth can quantitatively explain the persistence of the European urban-rural digital divide. In order to make our results robust to endogeneity and disaggregated data availability issues, we employ a bootstrap-based bias correction for the dynamic fixed effects estimator. We find that expansions in the provision of lower-speed broadband access accelerated annual per capita growth in both urban and rural regions through diminishing returns to scale, but that the effects were weaker in those regions characterized by larger ruralization. High-speed broadband coverage, on the contrary, could only be significantly related to rural economic growth and had no impact within their urban counterparts. We find evidence that the costs of these high-speed rural connectivity expansions had not yet been offset, but that they exhibit increasing returns to scale with cut-off levels nearing full coverage. These results indicate that the high-speed digital expansion of rural Europe is a potential gamechanger for further rural development policies through its role as a general-purpose infrastructure, and consequently argue in favour of increased efforts to close the urban-rural digital gap.     

A structural analysis of business-to-business digital markets

Digital markets allow sellers and buyers to conduct transactions electronically and are becoming major driving forces in business-to-business e-commerce. This article explores the theoretical and managerial foundations of digital markets. This study first investigates the structure and components of digital markets. A comprehensive sample of 196 digital markets is then examined to uncover the structural dimensions and success factors of digital markets. The findings of this study provide important managerial insights into various issues that are pertinent to the functioning of digital markets, such as how the nature of founding companies may affect the dominant function chosen for a digital market and what factors may affect the market-making mechanisms used by the digital markets.     

Strategy in the telecommunications market: The effects of liberalization and competition

This article identifies some of the ways in which firms in the telecommunications industry have attempted to cope with deregulation, drawing upon the experience already evident since liberalization began a few years ago. The author argues that certain types of market conditions provide particular problems for firms, to which they must respond if they are to remain prosperous. A matrix describing four market types is offered as a facsimile of the competitive conditions now found in the telecommunications industry, and examples are given from the UK. Economic, technological and political factors affect the strategic behaviour which firms must follow, but in different ways and at different times.     

Selection of standards for digital television: The battle for Latin America

This paper analyses the implementation of Terrestrial Digital Technology (TDT) standards in Latin America. The analysis suggests that while some governments have chosen the standard attending to their industrial objectives, others have been influenced by the relevance of network externalities and scale economies and by the political and commercial relationship with their neighbours. The discussion about the technical characteristics of the systems was only relevant in the first years of the process, when the leading countries of the region had still not made their selection. Brazil decided to create its own version of the Japanese ISDB standard in 2006, and in the following years it has persuaded a significant part of the continent to choose it. Another block of countries has adopted the US ATSC standard. The most prominent case is that of Mexico, which has a preferential access to the US market. Only three countries have chosen the European DVB standard, the most widely used standard in the world. Colombia has tried to lead its introduction in the continent, but the results so far have been meagre.     

The gap not only closes: Resistance and reverse shifts in the digital divide in Russia

The reduction of the digital divide due to the availability of the Internet and the improvement of skills is accompanied by reverse and resistance trends associated with the influence of socio-demographic and economic characteristics of users. In this paper, we estimate the volume and dynamics of the digital divide in access and use of the Internet in Russia by key social groups according to a longitudinal survey for 2008–2018. We found that along with the reducing of the digital divide, its gaps still remain. The greatest polarization is associated with the income, age, and type of residence of the respondents. The most vulnerable social groups on access to ICTs and Internet use are the low-income, the elderly, citizens with disabilities, and those living in rural areas. The reverse shifts in the digital divide were recorded mainly in relation to the Internet usage by age between the middle-age and youth and by gender. In addition, we pointed out the most resistance social groups to reduce the digital divide in the period under review, in particular, by income and type of residence of the respondents. The findings contribute to an understanding of the dynamics and social consequences of the digital divide and can be taken into account in social policy and measures.     

Conceptualizing digital and physical connectivity: The position of European cities in Internet backbone and air traffic flows

‘Digital’ telecommunication flows and ‘physical’ corporeal flows provide researchers with comprehensive indicators of the economic interactions between cities. However, previous research drawing on telecommunication-based measures of inter-urban connectivity has been hampered by inadequate conceptualizations and data. This paper draws on this observation to devise a new approach for measuring inter-urban connectivity based on a city’s insertion in Internet backbone networks. The straightforward example of air transport flows is thereby used to outline this approach. To investigate telecommunication and air passenger flows, use is made of European statistics on Internet eXchange Points and the MIDT airline database respectively. The approach is illustrated through a systematic comparison of the position of European cities in both types of networks. It is found that European cities assume largely similar hierarchical levels in terms of digital and physical information flows, albeit that the digital connectivity of centrally located European cities is often somewhat higher than that of peripheral cities with a similar levels of physical connectivity.     

Corporate diversification: the impact of foreign competition,industry globalization,and product diversification

The globalization of markets and industries has fundamentally changed the competitive conditions facing firms. Yet, how globalization has influenced the international diversification strategies of firms is an issue largely overlooked in both the strategic management and international business literatures. This paper develops a theoretical framework to understand how industry globalization, foreign competition, and firm product diversification may influence a firm's choice of its degree and scope of international diversification. Utilizing a panel dataset of U.S. manufacturing firms for the period 1987–99, we provide the first empirical evidence that industry globalization and foreign-based competition are statistically significant factors explaining the degree and scope of international diversification by U.S. firms. Copyright © 2007 John Wiley & Sons, Ltd.