Marketing cost differentials,economics of scale,and the competitiveness of small-country producers

The paper examines the effect of marketing cost differentials on the ability of small countries to compete with large-country producers in goods manufactured under economies of scale. It is shown that the mere presence of scale economies does not necessarily retard the performance of small-country producers unless export marketing costs exceed domestic marketing costs. When economies of scale and positive differences between export and domestic marketing costs are simultaneously present, small countries with potentially more efficient producers may be unable to export to large countries served by less efficient local producers. Furthermore, the latter may end up exporting to the former. The policy implications is that subsidization of exports in conjunction with restrictions on domestic prices enhances national welfare.     

A taxonomy of small- and medium-sized international family firms

This study develops a taxonomy of small- and medium-sized family firms that internationalise and discusses the different configurations of these firms based on firm culture (in terms of organisational orientations), firm strategy (in terms of differentiation, cost leadership and marketing standardisation) and firm structure (in terms of integration, centralisation and specialisation). Although the literature on international family firms has highlighted the significant role of organisational culture in firm internationalisation, the strategies and structures of international family firms and their consequences for performance have been disregarded. To examine the interplay of international family firm culture, strategy and structure, we employ a quantitative taxonomic approach that is rooted in configurational theory, analysing 504 Germany-based small- and medium-sized family firms. Different combinations of strategy, structure and culture result in different configurations of family firms and different levels of non-domestic performance. In considering these configurations, we aim to determine which combinations of strategies, structures and firm orientations are primarily applied by international family firms and whether these organisational configurations are successful. Our empirical findings suggest that there are four groups of firms: Domestic-Focussed Traditionalists, Global Standardisers, Multinational Adapters and Transnational Entrepreneurs. These configurations are clearly distinctive in terms of their structure, orientations and performance but differ less in terms of their strategies. Superior international (i.e. non-domestic) performance tends to be driven by a decentralised entrepreneurial approach.     

Strategic responses to fuel cell hype and disappointment

This article investigates the interplay of expectation dynamics and innovation processes at the level of organizations and at the innovation system level. We examine how different kinds of organizations contributed and responded to a recent hype and disappointment cycle in the field of stationary fuel cells. Among others, we trace how innovation and discourse activities changed and we explain the observed differences in strategic responses. We show that the sensitivity of organizations to expectation dynamics depends on at least three factors: the strategic embedding of the new technology, the organization's dependence on external legitimacy and its role in the innovation system. Moreover, we show that – in their aggregation – strategic responses affected the level of the technological innovation system as well. Not only did the pace and direction of innovation activities change, but structures such as actor constellations and institutions were also modified. Our study thus provides insights into the interplay of expectation and innovation dynamics, which is important for our understanding of larger transformation processes, e.g. toward more sustainable modes of energy supply.     

ARAB-ISRAELI POTENTIAL TRADE: THE ROLE OF INPUT SHARING

In this article we sought to develop a methodology for estimating the level and composition of potential trade between Israel and its Arab neighbors. The need for such a methodology derives from the fact that the existing trade of these countries with the rest of the world constitutes an insufficient basis for predicting bilateral trade patterns between them. Trade based on input sharing can be an important source of ''new trade'' that is, trade that is not necessarily related to goods and services currently traded by the countries in question. New trade based on input sharing pertains to the imports by Arab countries of inputs in which Israel has a proven comparative advantage, and to imports by Israel of inputs produced in Arab countries in which the latter have a proven comparative advantage. It stands to reason that branches characterized by comparative advantage in the exporting country can improve the competitive position of the import ing country, when incorporated in the latter's final products. The analysis confirms that in agricultural produce, food products, and certain sub-branches of the textiles and clothing industry, Jordan, Syria, and Egypt all appear to be potential suppliers to Israel. Inter alia, the results show that the Israeli import potential of inputs from Jordan appears to be both larger and more evenly distributed among the different branches than the import potential from Syria and even from Egypt. This finding does not accord with expectations in view of the fact that Jordan has a smaller population and a lower gross domestic product than either Egypt or Syria. Jordan stands out in that its construction industry, including ceramic products, nonmetallic minerals, and structural metals, are also potential suppliers. The methodology developed in this article specifically concerns potential trade between Israel and its Arab neighbors. It can be usefully employed in other situations where trade between pairs of countries is either nonexistent or severely distorted by political or other factors. Examples which come to mind include trade between countries which in the past belonged to the Soviet bloc, or trade between these countries and the rest of the world. In such cases it is improper to base one's trade predictions on the countries' existing trading patterns. New trade, which can be very substantial, and which may have a very different composition from current trade of the parties concerned, must be added to the equation. The methodology demonstrated in this article can be easily adapted for this purpose.     

Integrating soft factors into the assessment of cooperative relationships between firms: accounting for reputation and ethical values

Alliances and other forms of cooperation between firms often promise great benefits, for example, by the exchange of knowledge or co‐specialization of resources. At the same time, the necessary actions to realize these benefits can augment vulnerability to opportunistic behaviour of partners. In addition to formal contracts to mitigate the resulting behavioural uncertainties, often, mechanisms, such as reputation or ethical values, are suggested as important supplements. However, when it comes to assessment of a specific cooperation opportunity, it is difficult to account systematically for the economic consequences of these ‘softer factors’. Therefore, this paper aims to surpass mere financial analysis of chance and risk and to integrate systematically both reputation and ethical values into an economic assessment of cooperative relationships. For this purpose, we develop a theoretical framework that is based on a simple‐decision model to account for reputation and ethical values of potential partners as drivers of behavioural uncertainty reduction. We also discuss how this framework can be used to assess cooperative relationships and illustrate these ideas with reference to the inter‐organizational accounting practices of a large drugstore chain and its suppliers.     

Challenges for land system science

While considerable progress has been made in understanding land use change, land system science continues to face a number of grand challenges. This paper discusses these challenges with a focus on empirical land system studies, land system modelling and the analysis of future visions of land system change. Contemporary landscapes are contingent outcomes of past and present patterns, processes and decisions. Thus, empirical analysis of past and present land-use change has an important role in providing insights into the socio-economic and ecological processes that shape land use transitions. This is especially important with respect to gradual versus rapid land system dynamics and in understanding changes in land use intensity. Combining the strengths of empirical analysis with multi-scale modelling will lead to new insights into the processes driving land system change. New modelling methods that combine complex systems thinking at a local level with macro-level economic analysis of the land system would reconcile the multi-scale dynamics currently encapsulated in bottom-up and top-down modelling approaches. Developments in land use futures analysis could focus on integrating explorative scenarios that reflect possible outcomes with normative visions that identify desired outcomes. Such an approach would benefit from the broad and in-depth involvement of stakeholders in order to link scientific findings to political and societal decision-making culminating in a set of key choices and consequences. Land system models have an important role in supporting future land use policy, but model outputs require scientific interpretation rather than being presented as predictions. The future of land system science is strongly dependent on the research community's capacity to bring together the elements of research discussed in the paper, via empirical data collection and analysis of observed processes, computer simulation across scale levels and futures analysis of alternative, normative visions through stakeholder engagement.     

How Do Investors' Expectations Drive Asset Prices?

Based on an extension of the process of investors' expectations to stochastic volatility we derive asset price processes in a general continuous time pricing kernel framework. Our analysis suggests that stochastic volatility of asset price processes results from the fact that investors do not know the risk of an asset and therefore the volatility of the process of their expectations is stochastic, too. Furthermore, our model is consistent with empirical studies reporting negative correlation between asset prices and their volatility as well as significant variations in the Sharpe ratio.