Is there a profit premium for market-oriented firms? A panel data investigation

ABSTRACT

This paper provides an empirical investigation of the impact of market orientation on firms' economic performance during the period 1998–2012 using a panel of Italian manufacturing firms. We introduce a dynamic concept of market orientation, in that we define a market-oriented firm as one that persistently undertakes product and marketing innovation, while at the same time introducing organizational changes and training efforts to manage and improve its knowledge assets over the long term. This notion of market orientation is therefore crucially related to the so-called dynamic capability approach. The related empirical model shows that being a market-oriented firm significantly affects profitability, in a framework in which this latter is simultaneously estimated with productivity, thus allowing for more precise estimates of the profit premium which is earned accordingly.     

Trade Liberalization and Antidumping: Is There a Substitution Effect?

Many nations have undergone significant trade liberalization even as they have increased their use of contingent protection measures. This raises the question of whether some of the trade liberalization efforts, at times accomplished through painful reforms, have been undone through a substitution from tariffs to non‐tariff barriers. Among the new forms of protection, antidumping is the most relevant. This paper examines whether the use of antidumping is systematically influenced by the reduction of applied sectoral tariffs in a sample of 29 developing and six developed countries from 1991 through 2002. Evidence is found of a substitution effect only for a small set of heavy users of antidumping among developing countries. There is no similar statistically significant result for other developing countries or developed countries. Robust evidence is also found of retaliation and deflection effects as determinant of antidumping filings across all subsamples.     

Financial development,institutions, and poverty alleviation: an empirical analysis

The aim of this article is to analyse empirically whether the level of institutional quality influences how financial development affects poverty for a sample of developing countries covering the period from 1984 to 2012. Using an interaction term constructed as a product between financial development and institutional quality we find that the pro-poor impact of financial development decreases as the quality of institutions rises. Such a differential effect can be ascribed to the capacity of banks to provide functions that mimic those performed by an institutional framework that works well. The results of this article can be used for policy management.     

Scale and structure in economic modelling

In this paper an attempt is made to put together, within the same model, the supply and the demand side of the economic process. This is done by integrating the progress attained in two fields which have traditionally been considered separate: the input-output approach and the macroeconometric final demand approach. The composition of each traditional macroeconomic variable, determined within the model, is analysed into the functional headings which are peculiar for each variable (family budgets headings for personal consumption expenditures, investing sectors for investments, I-O sectors for output and so on). We can then identify for each variable a scale component - absolute level of the aggregated variable - and a structure component - its inner composition - which are mutually consistent. Two types of applications of the same model are then compared: simulation, where the parametric set is used to obtain the dynamic path of a specific scenario; and integrated impact multiplier analysis where scale and structure effects are evaluated with reference to all the potential behaviour of the system.     

EXPLAINING THE DECLINE OF THE U.S. SAVING RATE: THE ROLE OF HEALTH EXPENDITURE

The U.S. saving rate declined by 8% between 1980 and 2009. We document that the decline can be explained by rising health expenditures. Using exogenous variation in medical expenses generated by Food and Drug Administration drug approvals, we document that a 1 percentage point increase in health expenditure generated a decline in saving rate of 0.9 percentage points. We then estimate a model of household decisions to evaluate the mechanisms behind the decline. We find that the rise in health expenses and drop in saving rate are driven by progress in health technology, reduction in copayment rates, and improvements in income processes.     

Political corruption and capture of the minority

This article presents a model of political corruption in which a briber can choose either to bribe only the incumbent party or to capture also the opposition party to sterilize its monitoring role. The analysis also explores interparty collusion, media independence, and political contestability. The model suggests that policies aiming to strengthen the role of minorities can produce ambiguous effects as they may induce bribers' avoidance behavior. Reputational sanctions appear to be less effective than criminal ones, although political contestability increases their deterrence effect. Paradoxically, harsh criminal sanctions may induce tacit collusion because minorities highly regard their outcomes once in power.     

Effects of Information Technology Capabilities on Strategic Alliances: Implications for the Resource‐Based View

This paper adopts a contingency approach to the resource‐based view (RBV) of the firm and seeks to establish boundary conditions for the value of certain information technology (IT) capabilities. We first identify inter‐organizational alliances as a specific strategy context in which IT capabilities are particularly valuable. We then consider more detailed boundary conditions that can shape the value of these capabilities within the alliance context. Our study shows that firms with better IT capabilities can derive greater value from an alliance, yet this effect also varies across different types of alliances depending on an individual alliance's characteristics. Specifically, IT capabilities are more valuable for alliances with a non‐equity governance structure, as well as those involving a high degree of interdependence between partners. We highlight the implications of our findings for opportunities to advance the RBV.     

On the use of measure-valued strategies in bond markets

We propose here a theory of cylindrical stochastic integration, recently developed by Mikulevicius and Rozovskii, as mathematical background to the theory of bond markets. In this theory, since there is a continuum of securities, it seems natural to define a portfolio as a measure on maturities. However, it turns out that this set of strategies is not complete, and the theory of cylindrical integration allows one to overcome this difficulty. Our approach generalizes the measure-valued strategies: this explains some known results, such as approximate completeness, but at the same time it also shows that either the optimal strategy is based on a finite number of bonds or it is not necessarily a measure-valued process.Received: November 2002, Mathematics Subject Classification: 60H05, 60G60, 90A09JEL Classification: G10, E43The first author gratefully acknowledges financial support from the CNR Strategic Project Modellizzazione matematica di fenomeni economici. We thank professors A. Bagchi, R. Douady and J. Zabczyk for helpful discussions. A special thanks goes to professors T. Björk, Y. Kabanov and W. Schachermayer for comments and suggestions which contributed to improve the final version of this paper.