Uncovering the hidden transaction costs of market power: A property rights approach to strategic positioning

A central construct in competitive strategy research is market power, the ability to raise price above marginal cost. Positioning research focuses on attempts to build, protect, and exercise market power. However, this approach contains hidden assumptions about transaction costs. Parties made worse off by the exercise of market power can negotiate, bargain, form coalitions, and otherwise contract around the focal firm's attempts to appropriate monopoly profits—depending on transaction costs. We build on property rights economics to explain how transaction costs affect positioning and offer propositions about successful positioning in an environment with transaction costs.     

How symmetrical assumptions advance strategic management research

We develop the case for symmetrical assumptions in strategic management theory. Assumptional symmetry obtains when assumptions made about certain actors and their interactions in one of the application domains of a theory are also made about this set of actors and their interactions in other application domains of the theory. We argue that assumptional symmetry leads to theoretical advancement by promoting the development of theory with greater falsifiability and stronger ontological grounding. Thus, strategic management theory may be advanced by systematically searching for asymmetrical assumptions in existing theory in order to identify the instances where new and useful insights can be derived from adopting symmetrical assumptions. Copyright © 2013 John Wiley & Sons, Ltd.     

Toward an Organizational Economics of Heterogeneous Capabilities

The notion of “capability” has long been influential in management research as an approach to address firm-level heterogeneity and heterogeneity in competitive outcomes. I discuss how recent advances in economics may allow for a more rigorous understanding and measurement of capability that take organizational practices into account. However, economists may also learn from work on capabilities in management research.     

Governing Knowledge Sharing in Organizations: Levels of Analysis,Governance Mechanisms,and Research Directions

We discuss and examine recent claims that research on knowledge processes has paid insufficient attention to micro (individual) level constructs and mechanisms and to the role of formal organization in governing knowledge processes. We review knowledge sharing research published in 13 (top academic plus top practitioner‐oriented) journals in the period 1996–2006 in relation to these two propositions. The review confirms the claim that the knowledge sharing literature is preoccupied with constructs, processes, and phenomena defined at a macro (collective, organizational) level and pay comparatively little attention to micro level constructs. The review provides less support for the proposition that formal governance mechanisms have been under‐researched in comparison to formal organization. Still, the multiple ways in which formal governance mechanisms may interact in influencing knowledge sharing outcomes have been under‐researched, as has the interaction between more informal aspects of the firm and formal governance mechanisms. We argue that future research on knowledge sharing needs to fill these gaps.     

Why Isn’t More US Farmland Organic?

We develop a theoretical model to assess the dollar compensation required to induce conventional growers to convert to organic. The model incorporates the uncertainty in producers’ expectations about future returns and about the impact of policy changes on these expectations in particular. We demonstrate that a new policy which favours organic can have opposing effects on the rate of conversion. An increase in relative returns to organic today will increase conversion rates. However, if the future of the policy programme is uncertain, its introduction can increase the value of waiting to switch, which will decrease conversion rates. We then develop an empirical switching regression model that enables direct estimation of the value associated with being able to postpone the conversion decision until some of the uncertainty is resolved. The model is applied to data on organic and conventional soybeans before and after major changes in US farm policy toward organic growers. The results suggest that sunk costs associated with conversion to organic coupled with uncertainty about future returns can help to explain why there is so little organic farmland in the USA.     

The more,the merrier? Women in top‐management teams and entrepreneurship in established firms

Research summary: We study the association between firms' entrepreneurial outcomes and their gender composition. Though highly topical, there is little solid empirical knowledge of this issue, which calls for an inductive approach. We match a paired‐respondent questionnaire survey with population‐wide employer‐employee data, and find evidence that the presence of female top managers is positively related to entrepreneurial outcomes in established firms. Yet, this relation is conditional on the proportion between male and female top managers. Another finding is that the overall proportion of women in the firm's workforce negatively moderates the relation between female top managers and entrepreneurial outcomes. We discuss various mechanisms that can explain these findings, and argue that they are best understood in terms of the dynamics of social categorization. Managerial summary : We investigate how companies benefit from having more women on the top‐management team. We show that beyond a threshold level of female top managers, more women are associated with more entrepreneurial outcomes (more products and services profitably launched). However, this positive effect is weakened in firms that have many women in the workforce. These effects may be explained in terms of the ways employees mentally categorize managers and how this influences their work motivation. We find evidence for such an explanation. Copyright © 2016 John Wiley & Sons, Ltd.     

DO “CAPITALIZATION EFFECTS” FOR PUBLIC GOODS REVEAL THE PUBLIC'S WILLINGNESS TO PAY?

This article develops a welfare theoretic framework for interpreting evidence on the impacts of public programs on housing markets. We extend Rosen's hedonic model to explain how housing prices capitalize exogenous shocks to public goods and externalities. The model predicts that trading between heterogeneous buyers and sellers will drive a wedge between these “capitalization effects” and welfare changes. We test this hypothesis in the context of changes in measures of school quality in five metropolitan areas. Results from boundary discontinuity designs suggest that capitalization effects understate parents’ willingness to pay for public school improvements by as much as 75%.