The role of family conglomerates in emerging markets: What Western companies should know

Large, diversified, family‐owned businesses are dominant players in the economies of most emerging markets and can be excellent business partners for Western companies. This article highlights the evolutionary patterns of family conglomerates (FCs) and delineates principal drivers of their growth, expansion, and internationalization. Those aspects of FCs examined in this study include early mover advantages, foreign alliances, competitive market positioning, and diversification. Also discussed are entry‐mode considerations for Western companies contemplating doing business in the fast‐growth markets of East Asia, Latin America, and elsewhere. © 2004 Wiley Periodicals, Inc.     

Marketing supplementary food products in LDCs: A case study in Morocco

Developing country governments as well as a number of international agencies have become directly involved in the past two decades in the production and marketing of supplementary food products. This article discusses the Moroccan government's involvement in introducing a weaning food targeted for elaborates on the factors which contributed contributedm to the failure of this and other similar ventures, while drawing attention to the important low-income Moroccan children. It role that marketing plays in launching socially desirable food products in developing country environments.     

Internationalization and the Dynamics of Product Adaptation—An Empirical Investigation

Firms competing in foreign markets can choose to make no changes to the physical product and packaging, called a product standardization policy, which keeps costs low. The main drawback of such a policy is that the product might not satisfy customers. Conversely, firms may choose to modify, or to adapt, the physical characteristics or attributes of a product and its packaging to fit the needs and desires of consumers in different countries better, but this increases development, manufacturing, marketing, packaging, and distribution costs. Though product adaptation is a core aspect of customizing an export market offering, little research has investigated modifying the physical product and packaging. To be successful, an adapted product must add sufficient incremental revenue (through increased sales due to better satisfying customer needs and wants relative to competitive product offerings) such that the additional manufacturing and marketing costs that result from adapting the product are recovered. In this article, a model of the product adaptation process is developed. Using mail surveys, information is gathered from managers in 239 U.S. organizations and 302 South Korean organizations, all of which export products. The goal was to understand better the motivation of firms to adapt their products for export markets as well as the performance implications of adapting products. Furthermore, the model was tested in these two countries to determine if the model is robust and to uncover differences between the United States and South Korea. Using structural equation modeling to analyze the data, a positive association was found between the level of product adaptation and profitability at the project level. Second, U.S. firms appear to be more reactive when adapting products for export markets, doing so when laws and regulations in the export market mandate changes relative to the U.S. market. Conversely, South Korean firms appear to be more proactive and to adapt products even when not required by the governments of export markets. Third, greater international product adaptation is linked to a more responsive marketing organization with customer‐focused practices. Fourth, while a positive link was expected between business unit experience and the extent of international product adaptation, inconsistent results were found between the two country samples. For U.S. firms, it was found that greater experience in international business and product design capability is linked to a higher level of international product adaptation. For South Korean firms, however, a negative relationship was found. Greater international product adaptation occurred with less international business and product design experience. These findings are discussed, and areas for future research are noted.     

The Impact of Durable Relationship with Banks when Crisis Hits

Firms develop relationships with their banks in order to ensure access to financing when credit conditions deteriorate in time of crisis. I investigate the effect of bank-firm relationships in Turkey where 90 percent of a firm’s financial debt is obtained through bank loans. I find that adjusted for loan terms and firm-fixed effects, borrowers with past relationships with incumbent banks have lower risk-adjusted financing costs. Furthermore, lower financing costs associated with relationship are even more pronounced during the 2008–2009 financial crisis.     

A within-trial cost-effectiveness analysis of panitumumab compared with bevacizumab in the first-line treatment of patients with wild-type RAS metastatic colorectal cancer in the US

Abstract

Aims: This analysis investigated the cost-effectiveness of panitumumab plus mFOLFOX6 (oxaliplatin, 5-fluorouracil, and leucovorin) compared with bevacizumab plus mFOLFOX6 in the first-line treatment of patients with wild-type RAS metastatic colorectal cancer (mCRC).

Materials and methods: The cost-effectiveness analysis was developed from a third-party payer perspective in the US and was implemented using a partitioned survival model with health states for first-line treatment (progression-free), disease progression with and without subsequent active treatment, and death. Survival analyses of patients with wild-type RAS mCRC from the PEAK head-to-head clinical trial of panitumumab vs bevacizumab were performed to estimate time in the model health states. Additional data from PEAK informed the amount of each drug consumed, duration of therapy, subsequent therapy use, and toxicities related to mCRC treatment. Literature and US public data sources were used to estimate unit costs associated with treatment and duration of subsequent active therapies. Utility weights were calculated from patient-level data from panitumumab trials in the first-, second-, and third-line settings. A life-time perspective was taken with future costs and outcomes discounted at 3% per annum. Scenario, one-way, and probabilistic sensitivity analyses were performed.

Results: Compared with bevacizumab, the use of panitumumab resulted in an incremental cost of US $60,286, and an incremental quality-adjusted life-year (QALY) of 0.445, translating into a cost per QALY gained of US $135,391 in favor of panitumumab. Results were sensitive to wastage and dose rounding assumptions modeled.

Limitations: Progression-free and overall survival were extrapolated beyond the follow-up of the primary analysis using fitted parametric curves. Costs and quality of life were estimated from multiple and different data sources.

Conclusions: The efficacy of panitumumab in extending progression-free and overall survival and improving quality of life makes it a cost-effective option for first-line treatment of patients with wild-type RAS mCRC compared with bevacizumab.     

Bounds for best response functions in binary games

This paper studies the identification of best response functions in binary games without making strong parametric assumptions about the payoffs. The best response function gives the utility maximizing response to a decision of the other players. This is analogous to the response function in the treatment-response literature, taking the decision of the other players as the treatment, except that the best response function has additional structure implied by the associated utility maximization problem. Further, the relationship between the data and the best response function is not the same as the relationship between the data and the response function in the treatment-response literature. We focus especially on the case of a complete information entry game with two firms. We also discuss the case of an entry game with many firms, non-entry games, and incomplete information. Our analysis of the entry game is based on the observation of realized entry decisions, which we then link to the best response functions under various assumptions including those concerning the level of rationality of the firms, including the assumption of Nash equilibrium play, the symmetry of the payoffs between firms, and whether mixed strategies are admitted.     

Why do over-deviated firms from target leverage undertake foreign acquisitions?

This paper examines how deviation from firms’ target leverage influences their decisions on undertaking foreign acquisitions. Using a sample of 5746 completed bids by UK acquirers from 1987 to 2012, we observe that over-deviated firms are more likely to acquire foreign targets. Consistent with co-insurance theory, we find that over-deviated firms engage in foreign acquisition deals to relieve their financial constraints and to mitigate their financial distress risk. We also note that foreign acquisitions enhance over-deviated firms’ value and performance, measured by Tobin’s q and return on assets (ROA) respectively. These findings support the view that over-deviated firms pursue the most value-enhancing acquisitions. Overall, this paper suggests that co-insurance effects, value creation and performance improvements are the main incentives for over-deviated firms’ involvement in foreign acquisitions.     

Toward a Wider Analysis of Market Definition: Theory and Evidence from the Turkish Telecommunications Industry

This article develops a novel approach to the analysis of market definition. The article empirically investigates the main components of market definition, such as market power, substitution, and the simultaneous interaction between the demand and its determinants for the fixed and mobile voice services. To this end, I employ the multivariate Johansen cointegration methodology and analyze the Turkish voice telecommunications industry. While the VECM analysis confirms the presence of a simultaneous long-term causality relationship among the variables, the Johansen normalization results reveal demand elasticities that enable the analysis of market power and fixed-to-mobile substitution. My findings suggest that the fixed and mobile voice services, which are traditionally viewed as separate markets, can be defined as products that compete in the single market.     

Competitive price-matching guarantees under imperfect store availability

This paper analyzes the role of verification of product availability in the context of competitive price-matching guarantees (PMGs). PMGs involve a retailer matching any lower price offered by competition for an identical item. Until now, researchers focused on the scenario where customers can receive the lower price with a simple proof (e.g., weekly flyers). However, in reality, retailers reserve the right to verify the availability at the competitor location; if the product is not available there, then the price-match request might be declined. We develop a price competition model to investigate the effects of verification of availability on price decisions and profit levels of competing retailers. In our model, demand is driven by the availability levels of retailers as well as the price-search cost and store-switching cost incurred by customers. Price-search cost leads to two customer segments: uninformed ones who have no knowledge about prices, and informed ones who are knowledgeable about prices. On the other hand, store-switching cost determines how many customers search for the product at an alternative location because of high price or unavailability at their preferred retailers. Our analysis reveals, among others, that the outcome of availability verification is linked to three factors: price-search cost, store-switching cost, and the reservation prices of customer segments. Verification of availability allows retailers to price discriminate customers who could not be discriminated otherwise, specifically those belonging to the informed customer segment. Furthermore, it is a significant profit-enhancing mechanism only if there are switching customers in the market. Interestingly, even though customers view the verification of availability as a hassle, it can actually result in them paying lower retail prices by increasing the level of retail price competition.     

Does Zero Tillage Improve the Livelihoods of Smallholder Cropping Farmers?

The biophysical benefits of zero tillage (ZT) are well documented in the literature. However, the literature on its economic benefits, especially in the context of small and medium‐scale farmers in the temperate developing world is scanty. Using a study of 621 wheat farmers in Syria, we provide empirical evidence on the impacts of adoption of ZT on farm income and wheat consumption. We use propensity score matching (PSM) and endogenous switching regression (ESR) approaches to account for potential selection biases. After controlling for confounding factors, we find that adoption of the ZT technology leads to a US$ 189/ha (33%) increase in net crop income and a 26 kg (34%) gain in per capita wheat consumption per year (adult equivalent) – an indication of meaningful changes in the livelihoods of the farm households. Besides the biophysical and environmental benefits documented elsewhere, our results suggest that adoption of ZT can also be justified on economic and food security grounds. Therefore, ZT can have sizeable impacts in transforming the agricultural sector in the temperate developing world provided that the technology is well promoted and adopted.