Input specificity and global sourcing

This paper identifies a new industry-equilibrium channel through which a firm’s productivity affects its organizational choice. In a two-country model with firm heterogeneity and incomplete contracts, we show that the degree of input specificity and the hold-up friction in an outsourcing relation become a function of the final good firm’s productivity when inputs are not completely specific. We examine the implications for the equilibrium international sorting pattern of firms.     

The Business Model and Firm Performance: The Case of Russian Food Service Ventures

Using a unique methodology for capturing the business model and drawing comparisons across larger samples of firms, we investigate the relationship between business model design and firm performance in a Russian context. The evolution of the business model concept and its components is reviewed. Empirical research was conducted on the basis of a cross‐sectional survey of firms in the food service industry. A typology of seven business models in this industry is produced, and linkages are established between model type and company performance.     

Duration of Rent Extraction and the Entry Mode Decision of Multinational Enterprises

The prior literature is ambiguous about the effects of stronger intellectual property rights (IPR) on the choice of a multinational firm's mode of entry into foreign markets. However, available indexes of IPR protection exist only at the country level and do not identify interindustry variation in the ability to extract rents through exclusive rights and other factors. The authors introduce this dimension and compute a parameter that reflects the relative length of time that positive profits may be earned in various industries. Estimation results find that strengthening IPR would reduce exporting in all industries in the sample. However, it would raise (reduce) foreign direct investment, relative to licensing, in industries with shorter (longer) rent‐extraction times.     

The decision to first enter the public bond market: The role of firm reputation,funding choices,and bank relationships

This paper uses survival analysis to investigate the timing of a firm’s decision to issue for the first time in the public bond market. We find that firms that are more creditworthy and have higher demand for external funds issue their first public bond earlier. We also find that issuing private bonds or taking out syndicated loans is associated with a faster entry to the public bond market. According to our results, the relationships that firms develop with investment banks in connection with their private bond issues and syndicated loans further speed up their entry to the public bond market. Finally, we find that a firm’s reputation has a “U-shaped” effect on the timing of a firm’s bond IPO. Consistent with Diamond’s reputational theory, firms that establish a track record of high creditworthiness as well as those that establish a track record of low creditworthiness enter the public bond market earlier than firms with intermediate reputation.     

Do banks price their informational monopoly?

Theory suggests that banks’ private information lets them hold up borrowers for higher interest rates. Since new information about a firm is revealed at the time of its bond IPO, it follows that banks will be forced to adjust their loan interest rates downwards after firms undertake their bond IPO. We test this hypothesis and find that firms are able to borrow at lower interest rates after their bond IPO. Importantly, firms that get their first credit rating at the time of their bond IPO benefit from larger interest rate savings than those that already had a credit rating. These findings provide support for the hypothesis that banks price their informational monopoly. We also find that it is costly for firms to enter the public bond market.     

Computing welfare losses from data under imperfect competition with heterogeneous goods

We study the percentage of welfare losses (PWL) yielded by imperfect competition under product differentiation. When demand is linear, even if prices, outputs, costs and the number of firms can be observed, PWL is arbitrary in both Cournot and Bertrand equilibria. If in addition the elasticity of demand (resp. cross elasticity of demand) is known, we can calculate PWL in a Cournot (resp. Bertrand) equilibrium. When demand is isoelastic and there are many firms, PWL can be computed from prices, outputs, costs and the number of firms. We find that price–marginal cost margins and demand elasticities may influence PWL in a counterintuitive way. We also provide conditions under which PWL increases or decreases with concentration.     

New Venture Internationalization from an Emergent Market: Unexpected Findings from Russia

This article offers new insights on determinants of degree and scope of new venture internationalization from emerging markets. We set our study by development of a theoretical framework and hypothesis integrating entrepreneur-, firm-, industry-, and institutional factors to be tested in the Russian empirical context. The results indicate that institutional factors have the strongest relationship with the degree and scope of internationalization in Russian NVs. However, contrary to our expectations and existing literature, entrepreneur-, firm-, and industry-related factors are not associated with new venture internationalization. These unexpected findings have motivated us to implement the second round of empirical research using qualitative approach. As an outcome, we were able to explain the underlying forces behind the inconsistencies in the survey results and to develop four puzzles that provide a foundation for the theoretical extension of new venture internationalization from emerging markets.     

Youth entrepreneurship in emerging economies: can family support help navigate institutional voids?

Abstract

Institutional voids plague entrepreneurship in emerging economies. In this paper, we investigate how the social structure of the family can enable young entrepreneurs to navigate the institutional voids and progress through the venturing process. Findings suggest that both institutional voids and family support have a significant effect on startup activities, and that family financial support helps absorb the negative influence of capital market voids. Our study begins to explain the relationship between institutional voids and family support, thereby contributing to the ongoing development of institutional theory in an emerging economy context and to the literature on family influences on entrepreneurship.     

The export technology content, learning by doing and specialization in foreign trade

We examine empirically whether countries with relatively little production and export experience specialize in the production and export of more standardized and lower-technology products, and those with more production experience produce and export more recently developed and higher-technology products. Using panel data covering 127 countries and the period between 1970 and 1997, we find that export experience does help to account for the variation in export content. Exporting experience influences a country's export mix more than its production experience, suggesting that there may be a trade-induced component of learning by doing in foreign trade specialization.