Insecure Advantage? Markets for Technology and the Value of Resources for Entrepreneurial Ventures

We study how the impact of capabilities for performance is contingent upon the environment. Using a novel dataset of information security start‐ups, we study how markets for technology change the relative impact of technology and marketing capabilities on performance. Since internal technical effort enables firms to generate technology inputs instead of acquiring them from the market (substitute), a greater supply of technology diminishes the importance of technical ability as a source of competitive advantage. Moreover, since marketing capability complements technology inputs, a greater supply of technology enhances the impact of marketing capability on performance. Copyright © 2011 John Wiley & Sons, Ltd.     

Determinants of the allocative,cost and scope efficiencies of Indian banks

ABSTRACT

This study aims to investigate the impact of competition on determinants of allocative, scope and cost efficiencies of Indian scheduled commercial banks (SCBs). Specifically, the study, analyzes the impact of the second round of licensing on the efficiency of Indian SCBs. This is the first paper to measure scope efficiency of Indian banks and analyze its determinants. A two-stage analysis is performed on a balanced panel dataset of Indian SCBs for the period 1999–2016. In the first stage, the allocative, cost and scope efficiencies for each bank are estimated following the data envelopment analysis approach. In the second stage, internal determinants of the stated efficiency measures are estimated following the system of the generalized method of moments approach. The findings suggest that competition has not resulted in enhancing the efficiency of Indian SCBs. Among factors that can influence efficiency, it is seen that size does matter. Larger banks can enhance the efficiency of SCBs. It is also seen that having more foreign banks improves the overall efficiency of SCBs. However, before embarking on further rounds of licensing, the study posits that market-driven correction to succeed, it is imperative to address sunspots in the form of investor or borrower repression.     

On accounting’s twenty-first century challenge: evidence on the relation between intangible assets and audit fees

Review of Quantitative Finance and Accounting - We inform the policy debate arising from the dramatic shift in US firms’ balance sheets towards intangible assets that has created a challenge...     

Paradoxes of paradigm shift: Indian engagement with liberalization and globalization

India is regarded as one of the most important emerging powers. It has impressive growth rates, which seem to have their basis in the recent policies of liberalization, privatization and globalization (LPG). In spite of apparent success, a number of problems are associated with India's emergence. Supporters of LPG point to four structural bottlenecks: (i) energy, (ii) employment, (iii) education and (iv) environment. Critics, on the other hand, raise the issues of (i) a negative type of development involving pampering of corporates and marginalization of agriculturists and the unorganized sector and (ii) a deepening of disparities and divides due to the uneven impact of growth. The paper discusses these problems and draws a preliminary conclusion.     

Does experience imply learning?

Research summary : Research traditionally uses experiential learning arguments to explain the existence of a positive relationship between repetition of an activity and performance. We propose an additional interpretation of this relationship in the context of discrete corporate development activities. We argue that firms choose to repeat successful activities, thereby accumulating high experience with them. Data on 437 aircraft projects introduced through three governance modes show that the positive performance effect of the firm's experience with the focal mode becomes insignificant after accounting for experience endogeneity. We suggest that in a general case, experience with corporate development activities may be tinged with both learning and selection effects. Therefore, omitting to account for experience endogeneity may lead to incorrect conclusions from an “empirically observed” positive experience–performance relationship. Managerial summary : This paper emphasizes that firms generally choose to undertake the corporate development activities (new product introductions, diversification moves, international expansions, alliances, acquisitions, etc.) with which they have been the most successful in the past and that they expect to be the most successful in the future. Hence, if a firm possesses certain capabilities, it will repeatedly engage in certain activities corresponding to those capabilities, thereby simultaneously achieving high levels of activity experience as well as superior activity performance. This view suggests that an “empirically observed” positive experience–performance relationship may not be due solely to learning‐based enhanced capabilities but may also be driven by astute self‐selection. Overall, we provide a new interpretation of the relationship between experience and performance in the context of infrequent, heterogeneous, and causally‐ambiguous corporate development activities. Copyright © 2015 John Wiley & Sons, Ltd.     

Failure prevention and management in business incubation: practices towards a scalable business model

How support systems such as a business incubator deal with failure, a common phenomenon in new venture creation, is less understood. Employing a value creation perspective helps us to understand failure, the inability of an entrepreneurial team to build a scalable business model. Based on case studies at nine Swedish business incubators, we develop a dynamic process model towards understanding failure prevention and management in business incubation. We find business incubation practices towards failure prevention and management to be a mix of predictive and non-predictive strategies. These practices could help prevent and mitigate failure at personal, organisational and social levels towards value creation for the startups and their stakeholders and channel the effects of failure towards social benefit.     

Bitcoin and entrepreneurship: breaking the network effect

This paper explores the question of whether the market process is capable of bringing about a spontaneous monetary switch to a new currency in the presence of strong network effects of the incumbent currency as well as the absence of contingencies such as extreme inflation or political instability. It does so by examining current happenings around Bitcoin. It finds that two mechanisms stand out: the coordinating efforts of the profit-maximizing entrepreneur as well as the ability to use the old and the new currency simultaneously. Specifically, it finds that marginal decisions made by rational agents merely seeking to maximize net private benefit irrespective of the network effect, be it entrepreneurs or users of the new currency, are capable of setting in motion a switch to a new currency. Whether or not these mechanisms play out fully in the case of Bitcoin still remains to be seen.     

Dynamic capabilities through continuous improvement infrastructure

We examine the content of continuous improvement strategies and identify infrastructure decision areas that are important for continuous improvement initiatives. We present a framework of infrastructure based on the idea that continuous improvement can serve as a dynamic capability when it includes a comprehensive organizational context. Further, we study continuous improvement initiatives in five companies to investigate the practices used by them in each of the decision areas of our framework. This research adds to the conceptual understanding of continuous improvement and results in grounded propositions about critical areas of infrastructure for continuous improvement.     

Institutional trading and stock resiliency: Evidence from the 2007–2009 financial crisis

We examine the impact of institutional trading on stock resiliency during the financial crisis of 2007–2009. We show that buy-side institutions have different exposure to liquidity factors based on their trading style. Liquidity supplying institutions absorb the long-term order imbalances in the market and are critical to recovery patterns after a liquidity shock. We show that these liquidity suppliers withdraw from risky securities during the crisis and their participation does not recover for an extended period of time. The illiquidity of specific stocks is significantly affected by institutional trading patterns; participation by liquidity supplying institutions can ameliorate illiquidity, while participation by liquidity demanding institutions can exacerbate illiquidity. Our results provide guidance on why some stocks take longer to recover in a crisis.