Spin‐outs: knowledge diffusion through employee mobility

In many industries, one important method of diffusion is through employee mobility: many of the entering firms are started by employees from incumbent firms using some of their former employer's technological know‐how. This article explores the effect of incorporating this mechanism in a general industry framework by allowing employees to imitate their employers' know‐how. The equilibrium is Pareto optimal because the employees “pay” for the possibility of learning their employers' know‐how. The model's implications are consistent with data from the rigid disk drive industry. These implications concern the effects of know‐how on firm formation and survival.     

Growth dynamics: the bidirectional relationship between interfirm collaboration and business sales in entrant and incumbent alliances

This paper demonstrates the existence of bidirectional relationships between interfirm collaboration and business sales. Controlling for factors that influence whether firms form collaborative relationships, the analysis shows that entry and post‐entry collaboration often contribute to superior performance, which in turn attracts more partners. However, the performance influences vary across types of collaborators and collaborations, with differences among entrant and incumbent partners, between marketing and R&D partnerships, by partner size, and across time. The empirical analysis examines businesses that operated in the U.S. hospital software systems industry between 1961 and 1991. Copyright © 2005 John Wiley & Sons, Ltd.     

Niche overlap and limiting similarity: an ecological approach to the theory of the firm

This paper suggests an approach, based upon an analogy with different species competing in the environment for fixed resources, to the question of why variety is such a persistent feature of free market economies. Attention is centred upon a market characterised by a group of consumers with a distribution of incomes, which leads to a continuum of demands for different output qualities. The identification of various sufficient conditions then allows the argument to proceed through a mathematical structure first outlined in the theoretical ecology literature, resulting in a precise prediction regarding the limit to similarity between firms. This results is then applied to the U.K. Supermarket industry in 1988, and is used to provide guidance to the state of competition within the industry in that year.     

Progress and success in the development of black-owned franchise units

One path to black entrepreneurship is via the franchise. This article analyzes the basic issues of progress and success in the development of black-owned franchise units, with a focus on the measurement and promotion of such progress and success. Existing measures and promotional efforts are evaluated, and the perspectives of both the franchisor and the franchisee are probed. Secondary sources of data are analyzed, as are a series of in-depth telephone interviews conducted with a sampling of top executives of both large and small franchisor companies and also with a variety of black owners of franchise units. Recommendations and conclusions, for both franchisors and franchisees, are presented.     

On the formation of interaction networks in social coordination games

There are many situations where two interacting individuals can benefit from coordinating their actions. We examine the endogenous choice of partners in such social coordination games and the implications for resulting play. We model the interaction pattern as a network where individuals periodically have the discretion to add or sever links to other players. With such endogenous interaction patterns we see multiple stochastically stable states of play, including some that involve play of equilibria in the coordination game that are neither efficient nor risk-dominant. Thus the endogenous network structure not only has implications for the interaction pattern that emerges, but it also has a significant impact on the play in the coordination game relative to what would arise if the same interaction network were exogenous.     

The expert system: constructing expertise in an IT/management consultancy

Despite widespread uncertainty, if not scepticism, about the precise nature of the expertise that consultants bring to bear in their client engagements, organisations continue to employ consultants in large numbers, especially in information technology-related projects. Drawing on a participant observation study of IT/management consultancy practice, this paper seeks to explore the different ways in which consultants are seen as experts in the light of the pressures of the consultancy market place. The ongoing construction of consultancy expertise through the interaction of consultants and their clients with an array of elements, including technical knowledge, skilled practice, individual and collective experience, and commercial interests is discussed. It is suggested that, rather than being a relatively-enduring property of individuals, based on their mastery of a body abstract knowledge or their skills at managing the perceptions of their clients, the precarious and multi-faceted character of their expertise means that consultants are continuously engaged in its active construction through their situated practice.     

On the Function Coefficient, Euler's Theorem, and Homogeneity in Production Theory

This paper makes three related points useful in teaching first-year graduate production theory. First, the local applicability of the classical function coefficient idea for short-run nonhomogeneous production technologies is shown for returns to scale, satisfaction of second-order and total conditions for profit maximization, and delineation of the economic region of production in factor space. Second, the general applicability of Euler's Theorem results to nonhomogeneous (variable-proportional-return) cases is developed. Lastly, it is shown that short-run, nonhomogeneous production/yield functions are fully consistent with long-run linear homogeneity.