where do markets come from production markets have two sides producers are a fully connected clique transacting with buyers as a separate but aggregated clique each producer is a distinctive firm with a distinctive product each side continually monitors reactions of the other through the medium of a joint social construction the schedule of terms of trade each producer is guided in choice of volume by the tangible outcomes of other producers not by speculation on hypothetical reactions of buyers to its actions each producer acts purely on self interest based on observed actions of all others summarized through a feedback process the summary is the terms of trade schedule which reduces to constant price only in limiting cases the market emerges as a structure of roles with a differentiated niche for each firm explicit formulae both for firms and for market aggregates are obtained by comparative statics methods for one family of assumptions about cost structures and about buyers evaluations of differentiated products not just any set of firms can sustain terms of trade with any set of buyers there prove to be three main kinds of markets and three sorts of market failure within a parameter space that is specified in detail one sort of market paradox has a madison avenue flavor another is more conventional grind and a third crowded is a new form not included in any existing theory of markets current american industrial markets are drawn on for 20 illustrations of which three are presented in some detail inequality in firms market shares measured by gini coefficients is discussed

the social structure of a national securities market in this article a national securities market the stock options market is characterized as a social structure represented by the networks of actors who traded options on the floor of a major securities exchange trading among actors exhibited distinct social structural patterns that dramatically affected the direction and magnitude of option price volatility the argument that this market is socially structured is constructed in four parts behavioral assumptions about the nature of economic actors models of micronetworks models of macronetworks and price consequences in the ideal typical model of the market actors are assumed to be hyperrational and never to act opportunistically with these behavioral assumptions the micronetworks of actors should be expansive a condition which would result in undifferentiated and homogeneous macronetworks such macronetworks would tend to reduce the volatility of option prices but in the empirical market studied here actors are subject to bounded rationality a

network structure and regional innovation a study of university industry ties the emergence of the network paradigm has led to growing interest in understanding network structures relating to knowledge flows and patterns of regional innovation this paper explores the structure of knowledge networks stemming from ties between universities and other actors principally firms based upon a network analysis of empirical data for regions across the uk it is found that the most innovative and economically developed regions are more likely to be the location for actors holding highly central and influential positions within knowledge network architectures it is concluded that network structures and resulting stocks of structural network capital influence patterns of regional innovation and development

balancing exploration and exploitation in alliance formation do firms balance exploration and exploitation in their alliance formation decisions and if so why and how we argue that absorptive capacity and organizational inertia impose conflicting pressure

deviations from purchasing power parity in the long run this paper demonstrates that deviations from purchasing power parity reveal a remarkable and possibly startling consistency with martingale behavior during both fixed and flexible rate periods for a wide variety of countries and in both monthly and annual data since this pattern appears to be much more general than one would expect on the basis of models founded on international commodity arbitrage the paper proposes an alternative explanation which instead relies on financial arbitrage in bonds as the underlying mechanism this paper will demonstrate that deviations from purchasing power parity ppp reveal a remarkable and possibly startling consistency with martingale behavior during both fixed and flexible exchange rate periods for a wide variety of countries and in both monthly and annual data this pattern appears to be much more general than one would expect on the basis of models founded on international commodity arbitrage the paper therefore proposes an alternative explanation which does not presuppose free trade in goods but which instead relies on financial arbitrage in bonds as the underlying mechanism the major implication of the theory and the results is that ppp is as likely to be violated in the long as in the short run as an empirical matter deviations from ppp can be observed for most currencies at any instant see kravis et al 21 stockman 37 and genberg 15 among others these deviations are typically both cumulative and persistent the real exchange rate can remain on either side of parity for lengthy but variable time intervals of a year or more as a consequence the current consensus shared

the effect of entry on r d networks we investigate the effect of potential entry on the formation and stability of r d networks considering farsighted firms we show that the presence of a potential entrant often alters the incentives of incumbent firms to establish an r d link in particular incumbent firms may choose to form an otherwise undesirable r d collaboration in order to deter the entry of a new firm moreover an incumbent firm may refrain from establishing an otherwise desirable r d collaboration expecting to form a more profitable r d link with the entrant finally potential entry may lead an inefficient incumbent to exit the market we also perform a welfare analysisand show that market and societal incentives are often misaligned

a new approach to dating and predicting australian business cycle phase changes due to well known lags counter cyclical macroeconomic policies often exacerbate rather than ameliorate business cycles early recognition of upcoming phase shifts particularly contractions may assist in fine tuning such policies this objective is pursued in the paper by applying hamilton s 1989 1990 1991 quasi bayesian markovian regime switching model to monthly growth rates of leading long leading and coincident indexes of australian economic activity a simple rule applied to regime probabilities for each data point of the coincident index produces a phase chronology that is very similar to that produced by the bry and boschan 1971 turning point algorithm the regime switching model is also applied to the leading and long leading indexes the application of a simple rule to the resultant regime probabilities is found to result in a potentially very reliable advance signalling system for australian business cycle phase changes

towards a knowledge based theory of the geographical cluster co located firms within related industries enhance the ability to create knowledge by variation and a deepened division of labour the interdependent development between economic activities and local institutions make the cluster attractive to some industries and hostile to others the very reasons why cognitive distance might be small within the cluster tend to make cognitive distance great between clusters and make interfirm co operation across bodies of knowledge more costly the additional value created when clustering may justify the additional cost copyright 2001 by oxford university press

in search of the exchange risk premium a six currency test assuming mean variance optimization abstract a number of authors examining deviations of actual rates of currency depreciation from forward discounts have claimed to find evidence of risk premiums if these deviations are indeed partly due to risk premiums rather than being entirely due to expectational errors then they should be systematically related to those variables on which risk premiums are thought to depend finance theory tells us that if investors optimize with respect to mean and variance the risk premium depends in a specific way on 1 the supplies of assets denominated in the various currencies 2 the variance covariance matrix of the rates of return and 3 the coefficient of risk aversion the null hypothesis of this paper is that the coefficient of risk aversion is zero countries assets are perfect substitutes and risk premiums are nonexistent the alternative hypothesis is that rates of return are systematically related to asset supplies by a macroeconomic portfolio balance function the maximum likelihood technique used dominates previous attempts to find such a relationship in that the parameters of the portfolio balance function are constrained to depend on the variance covariance matrix as the finance theory says they should on the other hand the technique also dominates previous applications of the finance theory in that the expected returns are allowed to vary over time as the macroeconomic portfolio balance theory says they should the paper s finding is a statistical inability to reject the null hypothesis for a portfolio of six currencies although this could be due to low power in the test

the conditional nature of embeddedness a study of borrowing by large u s firms 1973 1994 economic and organizational sociologists have increasingly demonstrated that the actions of individuals and firms are affected by the social networks within which they are embedded in recent years scholars have begun to recognize that the effects of these social networks may vary across populations or types of relations this article examines the extent to which the effects of interfirm networks on the behavior of firms are historically contingent focusing on the level of debt financing among approximately 140 large u s corporations over a 22 year period the authors show that the extent to which the firms use of debt was influenced by those with which they were tied through director interlocks declined over time the authors argue that this decline in the network effect reflected a shift in the institutional environment within which the firms operated and that it was driven by three processes the professionalization of the finance function within the firm the internalization of financial decision

a note on exchange rate expectations and nominal interest differentials a test of the fisher hypothesis this note tests the hypothesis that nominal interest differentials between similar assets denominated in different currencies can be explained entirely by the expected change in the exchange rate over the holding period this proposition often called the fisher open hypothesis or the hypothesis of perfect asset substitutability has been a major component of recent theories of exchange rate determination and has important implications for monetary policy 1 the fisher hypothesis differs from the covered interest parity theorem enunciated by keynes 11 while covered interest parity equates the nominal interest differential between financial centers to a known premium or discount on forward foreign exchange and is thus in principle riskless fisher parity involves risk in an essential way the two conditions are equivalent only when forward exchange rates equal expected future spot rates recent theoretical work for example that of grauer litzenberger and stehle 8 kouri 12 and frankel 6 shows that this need not be the case when market participants are risk averse thus while covered interest parity must always hold exactly in an informationally efficient asset market with no transactions costs fisher parity need not nominal interest differentials may reflect risk premia in addition to expected exchange rate movements 2 it should be emphasized at the outset that the tests conducted in this paper are really joint tests of the fisher hypothesis and a weak form of foreign exchange market informational efficiency levich 14 has argued that tests of market efficiency are always joint tests involving some hypothesized structure of normal equilibrium returns below we assume informational efficiency and instead test fisher s hypothesized arbitrage condition that nominal interest differentials equal expected percentage changes in exchange rates

interorganizational alliances and the performance of firms a study of growth and innovation rates in a high technology industry this paper investigates the relationship between intercorporate technology alliances and firm performance it argues that alliances are access relationships and therefore that the advantages which a focal firm derives from a portfolio of strategic coalitions depend upon the resource profiles of its alliance partners in particular large firms and those that possess leading edge technological resources are posited to be the most valuable associates the paper also argues that alliances are both pathways for the exchange of resources and signals that convey social status and recognition particularly when one of the firms in an alliance is a young or small organization or more generally an organization of equivocal quality alliances can act as endorsements they build public confidence in the value of an organization s products and services and thereby facilitate the firm s efforts to attract customers and other corporate partners the findings from models of sales growth and innovation rates in a large sample of semiconductor producers confirm that organizations with large and innovative alliance partners perform better than otherwise comparable firms that lack such partners consistent with the status transfer arguments the findings also demonstrate that young and small firms benefit more from large and innovative strategic alliance partners than do old and large organizations copyright 2000 john wiley sons ltd

real effects of exchange rate volatility abstract in the presence of exchange rate volatility and internationally differing rates of time preference investment in the stock of domestic capital is shown to proceed beyond or to fall short of the point where the marginal productivity equals the respective rate of time preference if the national rate of time preference is comparatively low high the respective country winds up as a creditor debtor internationally upon an increases in exchange rate volatility domestic capital of a debtor country creditor country decreases increases the long run effect of increased exchange rate volatility on the trade balance cannot be determined unequivocally

origin of alliance portfolios entrepreneurs network strategies and firm performance alliance portfolios are ubiquitous and influential for firm performance extant research addresses attributes of high performing alliance portfolios but not how executives originate such portfolios

money bonds and foreign exchange in the theory of finance capital markets provide securities which allow the ownership of productive assets to be allocated among investors according to their willingness to bear risk in exchange for return and independently of their tastes for the productive services provided by the assets this paper uses the theory of finance to study the role of money as a productive asset and the transformation of money into a portfolio asset true to its purpose the capital market provides securities nominal bonds that allow an allocation of the current services of the money supply according to its current productivity and without regard for its future purchasing power risk and an allocation of the future purchasing power risk of the money supply according to the willingness of investors to bear this risk in exchange for return and without regard for investor needs for the future transactions services of money in open

following or breaking regional development paths on the role and capability of the innovative entrepreneur structural change economic diversification and new path development feature prominently in scientific and policy debates against the backdrop of increasing specialization in the economy this paper reinterprets schumpeterian innovative entrepreneurship as a fundamental process that creates new connections between distinct fields of specialization thereby induces path breaking innovations and structural change it is argued that the transformation capability of innovative entrepreneurs rests essentially on their position s and networks within evolving innovation systems by focusing on micro level processes and transformation capability the paper complements the large body of work on structural barriers unintended consequences supporting institutional arrangements and policy implications are discussed

determinants of governance structure in alliances the role of strategic task and partner uncertainties research in transaction cost economics and structural sociology has emphasized the role of opportunism and trust in the choice between equity and non equity governance forms in alliances this paper suggests that the uncertainty surrounding partner cooperation is not straightforwardly predictive of governance structure in alliances instead task uncertainty and strategic uncertainty associated with the activities performed within alliances induce coordination and adaptation requirements that are important determinants of alliance governance independently of partner uncertainty support for this view is provided based on a 12 year panel of alliances formed in the us telecommunications entertainment and computer industries

meeting strangers and friends of friends how random are social networks we present a dynamic model of network formation where nodes find other nodes with whom to form links in two ways some are found uniformly at random while others are found by searching locally through the current structure of the network e g meeting friends of friends this combination of meeting processes results in a spectrum of features exhibited by large social networks including the presence of more high and low degree nodes than when links are formed independently at random having low distances between nodes in the network and having high clustering of links on a local level we fit the model to data from six networks and impute the relative ratio of random to network based meetings in link formation which turns out to vary dramatically across applications we show that as the random network based meeting ratio varies the resulting degree distributions can be ordered in the sense of stochastic dominance which allows us to infer how the formation process affects average utility in the network

leveraging knowledge as a competitive asset the intensity performance and structure of universities entrepreneurial knowledge exchange activities at a regional level universities are no longer considered to be isolated islands of knowledge but as institutions increasingly engaged with a range of external partners through entrepreneurial activities this paper examines the associations between the intensity and performance of knowledge exchange activities undertaken in uk universities with non academic actors drawing on data concerning the structural factors of interactions of universities in the uk with external partners the paper sheds further light on the nature of these activities through a prism of competitive and uncompetitive regions in order to better understand how universities may be able to leverage both their knowledge and partnerships more effectively as competitive assets on the one hand it is found that academics in uncompetitive regions are more intensively engaged in entrepreneurial activities but generate less income from them than their counterparts in competitive regions suggesting that there are differences in the income generating capacity of academics across regions on the other hand academic knowledge is found to be more strongly bounded within a certain distance in uncompetitive regions whilst geographical distance seems less of a hindrance to academics in competitive regions

faculty support for the objectives of university industry relations versus degree of r d cooperation the importance of regional absorptive capacity abstract the growing importance of regions in the analysis of innovation and the pressure on european universities to interact with their environment justify this article it argues that faculty support for the objectives of university industry relations uir does not vary across disciplines and does not respond to university encouragement in a region with low absorptive capacity these results are in contrast with those obtained in studies of technology leading countries like the usa furthermore incentives for uir may generate unpredicted dynamics while instruments to cooperate are not significant finally support for the objectives of uir should not be confused with the degree of r d cooperation the former is sensitive to university age while the latter is sensitive to gender discipline commitment to r d and university encouragement empirical evidence is obtained from a sample of faculty from the valencian community spain and analysed through a set of models for discrete choice

knowledge interactions between universities and industry in austria sectoral patterns and determinants the relationship between university and industry is a complex and heterogeneous phenomenon and an important topic of the recent debate on innovation systems this chapter explores the role of knowledge flows between universities and firms in the austrian national innovation system and provides valuable insights into several dimensions of knowledge flows that are not typically explored in research on this topic the patterns of interaction between 46 different fields of science and 49 economic sectors represent an important and interesting outcome of the analysis left censored tobit models are used to evaluate the effect of sector specific and science field specific characteristics upon the probability of knowledge interaction disaggregated by type of interaction

innovation networks and vertical integration abstract a central debate in industrial policy today is that between proponents of large vertically integrated firms on the one hand and those of networks of small specialized producers on the other this paper argues that neither institutional structure is the panacea its supporters claim the menu of institutional alternatives is in fact quite large and both firms and networks of which there are several kinds can be successful growth promoting adaptations to the competitive environment industrial structures vary in their ability to coordinate information flows necessary for innovation and to overcome power relationships adverse to innovation the relative desirability of the various structures then depends on the nature and scope of technological change in the industry and on the effects of various product life cycle patterns the principal policy conclusion of this analysis is that the government s role ought to be facilitating rather than narrow and prescriptive allowing scope for firms to develop organizational forms that are best adapted to their particular environments

r d internationalization r d collaboration and public knowledge institutions in small economies evidence from finland and the netherlands this paper investigates domestic and foreign innovating firms determinants of r d collaboration with domestic universities and public knowledge institutes in finland and the netherlands we put particular emphasis on the impact of incoming academic spillovers on the probability to co operate with these public r d institutes based on data from community innovation surveys we find that foreign firms in the netherlands are less likely to co operate with domestic public knowledge institutions than domestic firms while in finland no significant difference can be detected another result is that incoming knowledge spillovers are an important determinant for r d collaboration with domestic public knowledge institutions in both countries in case of foreign firms in finland incoming knowledge spillovers affect the probability to co operate with public knowledge institutions more positively as compared with domestic firms for the netherlands no substantial difference could be found in this respect further innovating firms in finland that require academic or basic knowledge do not co operate significantly more with public knowledge institutions than those that need applied knowledge at the same time they are willing to share knowledge with public r d partners in the netherlands innovating firms that require relatively more basic than applied knowledge increase the probability of co operation with dutch universities and public knowledge institutions but there is reluctance to share proprietary knowledge with public r d partners for both countries no significant difference between foreign and domestic firms with regard to academic knowledge requirements could be found this raises the issue whether finnish innovation policies with a strong focus on r d co operation provide incentives for strategic behaviour by domestic public partners to put more emphasis on applied research

domestic alliance networks and regional strategies of mnes a structural embeddedness perspective we draw on a social network perspective to explain multinational enterprises mnes propensity to distribute their operations unevenly across various regions of the world we focus on how the positioning of mnes in their domestic network of strategic alliances affects their geographic scope i e whether they concentrate on their home region or expand beyond it we theorize that embeddedness in alliance networks constitutes a double edged sword to the geographic scope of mnes strong embeddedness in domestic alliance networks drives the development of location bound firm specific advantages fsas which may narrow down mnes geographic scope in contrast moderate embeddedness leads to more non location bound fsas which reduce liability of foreignness and hence motivate mnes to widen their geographical scope we thus predict a non linear relationship between domestic alliance network embeddedness and mne geographic scope furthermore the impact of the domestic alliance network on mne geographic scope hinges on the organizational ability to efficiently and effectively absorb resources stemming from the network we test our hypotheses using fdi data from 302 us mnes in the information and communication technology industry for the period of 2001 2008 and generally find robust support for the hypothesized relationships

price uncertainty and the exchange rate risk premium abstract this paper develops a simple two country portfolio model of the exchange rate risk premium which incorporates price uncertainty in both countries it is shown how the risk premium depends on the world shares of outside assets and wealth as well as on the variance covariance matrix of prices and the exchange rate in particular when purchasing power parity holds the distribution of world wealth has no effect on equilibrium asset prices

what drives the formation of valuable university industry linkages insights from the wine industry abstract most of the literature on university industry u i linkages assumes that these linkages are beneficial per se we question this assumption suggesting that not all such linkages are equally helpful in this paper we explore the factors driving the formation of valuable u i linkages conceived as those linkages between universities and firms that have a higher potential to diffuse knowledge to other firms in their regional economy our empirical strategy combines case study methodology with econometric techniques using data from two wine clusters in chile and in italy the firm s knowledge base is found to be a key driver of valuable u i linkages we conclude that selectivity should be encouraged among policy makers endeavouring to promote u i linkages

the small world of germany and the durability of national networks the globalization offinancial markets and the concomitant restructuring decisions of firms challenge the historical legacy of national systems of governance german corporate ownership patterns and restructuring events in the 1990 s are examined here in this light the results show that ownership links among german firms constitute a small world that has consequences for understanding mergers and acquisitions ownership links form closely knit clusters offirms that are nonetheless highly connected across the network as a whole restructuring events fall squarely in the center of this structure despite increasing global competition the german small world tends to replicate itself to illustrate this robustness potential disruptions to the observed german network are simulated this simulation shows that the properties of the small world remain intact even when ownership ties are changed these findings suggest that a more global economy in germany need not lead to the dissolution of the ownership structure but rather may be associated with a deepening of network ties

are output fluctuations transitory according to the conventional view of the business cycle fluctuations in output represent temporary deviations from trend the purpose of this paper is to question this conventional view if fluctuations in output are dominated by temporary deviations from the natural rate of output then an unexpected change in output today should not substantially change one s forecast of output in say five or ten years our examination of quarterly postwar united states data leads us to be skeptical about this implication the data suggest that an unexpected change in real gnp of 1 percent should change one s forecast by over 1 percent over a long horizon

on the sources and significance of interindustry differences in technological opportunities abstract the set of technological opportunities in a given industry is one of the fundamental determinants of technical advance in that line of business we examine the concept of technological opportunity and discuss three categories of sources of those opportunities advances in scientific understanding and technique technological advances originating in other industries and in other private and governmental institutions and feedbacks from an industry s own technological advances data from the yale survey on industrial research and development are used to measure the strength of various sources of technological opportunity and to discern interindustry differences in the importance of these sources we find that interindustry differences in the strength and sources of technological opportunities contribute importantly to explanations of cross industry variation in r d intensity and technological advance

modelling the innovation value chain innovation events the introduction of new products or processes represent the end of a process of knowledge sourcing and transformation they also represent the beginning of a process of exploitation which may result in an improvement in the performance of the innovating business this recursive process of knowledge sourcing transformation and exploitation comprises the innovation value chain modelling the innovation value chain for a large group of manufacturing firms in ireland and northern ireland highlights the drivers of innovation productivity and firm growth in terms of knowledge sourcing we find strong complementarity between horizontal forwards backwards public and internal knowledge sourcing activities each of these forms of knowledge sourcing also makes a positive contribution to innovation in both products and processes although public knowledge sources have only an indirect effect on innovation outputs in the exploitation phase innovation in both products and processes contribute positively tocompany growth with product innovation having a short term disruption effect on labour productivity modelling the complete innovation value chain highlights the structure and complexity of the process of translating knowledge into business value and emphasises the role of skills capital investment and firms other resources in the value creation process

the spatial evolution of the british automobile industry does location matter this article aims to describe and explain the spatial evolution of the automobile sector in great britain from an evolutionary perspective this analysis is based on a unique database of all entries and exits in this sector during the period 1895 1968 collected by the authors cox regressions show that spinoff dynamics agglomeration economies and time of entry have had a significant effect on the survival rate of automobile firms during the period 1895 1968

do urban social enterprises benefit from agglomeration evidence from four uk cities pinch s and sunley p do urban social enterprises benefit from agglomeration evidence from four uk cities regional studies this paper examines the relevance of clustering theory for an understanding of the location of social enterprises ses this is accomplished through an analysis of the extent to which managers of ses in four major uk cities perceive themselves to benefit from agglomeration effects the paper concentrates on two broad sets of agglomeration processes the first is marshallian externalities and porter s cluster processes and the second set includes urbanization economies and local institutional relationships the study suggests the key benefits of agglomeration to ses are that it enables access to demand for se goods and services together with institutional support funding and commercial contracts as well as access to both formal and informal networks that can provide a wide range of knowledge and mutual support it was however difficult to find direct evidence to support the i

network location and learning the influence of network resources and firm capabilities on alliance formation this paper presents a dynamic firm level study of the role of network resources in determining alliance formation such resources inhere not so much within the firm but reside in the interfirm networks in which firms are placed data from extensive fieldwork show that by influencing the extent to which firms have access to information about potential partners such resources are an important catalyst for new alliances especially because alliances entail considerable hazards this study also assesses the importance of firms capabilities with alliance formation and material resources as determinants of their alliance decisions i test this dynamic framework and its hypotheses about the role of time varying network resources and firm capabilities with comprehensive longitudinal multi industry data on the formation of strategic alliances by a panel of firms between 1970 and 1989 the results confirm field observations that accumulated network resources arising from firm participation in the network of accumulated prior alliances are influential in firms decisions to enter into new alliances this study highlights the importance of network resources that firms derive from their embeddedness in networks for explaining their strategic behavior copyright 1999 john wiley sons ltd

the rise and fall of small worlds exploring the dynamics of social structure this paper explores the interplay between social structure and economic action by examining some of the evolutionary dynamics of an emergent network that coalesces into a small world system the study highlights the small world system s evolutionary dynamics at both the macro level of the network and the micro level of an individual actor this dual analytical lens helps establish that in competitive and information intensive settings a small world system could be a highly dynamic structure that follows an inverted u shaped evolutionary pattern wherein an increase in the small worldliness of the system is followed by its later decline as a result of three factors 1 the recursive relationship between the evolving social structure and individual actors formation of bridging ties which eventually homogenizes the information space and decreases actors propensity to form bridging ties creating a globally separated network 2 self containment of the small world network or increasing homogenization of the social system which makes the small world less accepting of and less attractive to new actors thereby limiting formation of bridging ties to outside clusters and 3 fragmentation of the small world network or the small world system s inability to retain current clusters the study uses data on interorganizational tie formation in the global computer industry in the period from 1996 to 2005 to test the hypothesized relationships

power law distributions in entrepreneurship implications for theory and research a long held assumption in entrepreneurship research is that normal i e gaussian distributions characterize variables of interest for both theory and practice we challenge this assumption by examining more than 12 000 nascent young and hyper growth firms results reveal that variables which play central roles in resource cognition action and environment based entrepreneurship theories exhibit highly skewed power law distributions where a few outliers account for a disproportionate amount of the distribution s total output our results call for the development of new theory to explain and predict the mechanisms that generate these distributions and the outliers therein we offer a research agenda including a description of non traditional methodological approaches to answer this call

dynamic capabilities what are they this paper focuses on dynamic capabilities and more generally the resource based view of the firm we argue that dynamic capabilities are a set of specific and identifiable processes such as product development strategic decision making and alliancing they are neither vague nor tautological although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence they have significant commonalities across firms popularly termed best practice this suggests that they are more homogeneous fungible equifinal and substitutable than is usually assumed in moderately dynamic markets dynamic capabilities resemble the traditional conception of routines they are detailed analytic stable processes with predictable outcomes in contrast in high velocity markets they are simple highly experiential and fragile processes with unpredictable outcomes finally well known learning mechanisms guide the evolution of dynamic capabilities in moderately dynamic markets the evolutionary emphasis is on variation in high velocity markets it is on selection at the level of rbv we conclude that traditional rbv misidentifies the locus of long term competitive advantage in dynamic markets overemphasizes the strategic logic of leverage and reaches a boundary condition in high velocity markets copyright 2000 john wiley sons ltd

the social shaping of the national science base abstract innovation studies confirm de tocqueville s prediction that continuous technical change in business firms in modern society would require the development in close proximity of publicly funded basic research and associated training the rate and direction of the development of a country s science base is strongly influenced by its level of economic development and the composition of its economic and social activities in other words it is socially shaped

investigating the microstructure of network evolution alliance formation in the mobile communications industry theories of network evolution frequently focus on network endogeneity which stresses predictable path dependent evolution rooted in previous network structure however theories of technological evolution and innovation remind us that networks may undergo significant change as technological discontinuities exert pressures on existing relationships and firms engage in exploratory search how can we incorporate sources of change into our theories of network evolution instead of focusing so squarely on sources of inertia by using recent advances in graph theory we develop a more flexible theory of network evolution by examining two patterns of partner selection that have the potential to change networks shortcut formation between relatively unconnected partner clusters and the entry of new firms into the main component of incumbent partners our findings suggest an important contingency for the endogeneity perspective structural homophily predicts shortcut formation but not alliance formation within clusters furthermore we demonstrate that the pattern of alliance formation between incumbents and new entrants to the alliance network is driven by a combination of endogenous and exogenous mechanisms new entrants attach to more prominent incumbents but they are more likely to attach with an alliance deal that comprises multiple partners we demonstrate these findings in an industry where systemic technology encourages cooperation and where network entry is prevalent the mobile communications industry from 1993 2002

revisiting marshall s agglomeration economies technological relatedness and the evolution of the sheffield metals cluster potter a and watts h d revisiting marshall s agglomeration economies technological relatedness and the evolution of the sheffield metals cluster regional studies according to alfred marshall firms receive increasing returns from a trinity of agglomeration economies a local pool of skilled labour local supplier linkages and local knowledge spillovers this article re examines the mechanisms underlying marshall s agglomeration economies in the sheffield metals cluster wherein marshall discovered them despite the cluster s decline empirical evidence is found that the mechanisms underlying marshallian agglomeration economies continue to occur within the surviving metals industry however upon closer examination marshallian agglomeration economies have evolved to become more prevalent amongst plants that use related metals technology the results highlight the importance of technological relatedness to cluster survival

co evolution of firms industries and networks in space ter wal a l j and boschma r co evolution of firms industries and networks in space regional studies the cluster literature suffers from a number of shortcomings 1 it often neglects that cluster firms are heterogeneous in terms of capabilities 2 it tends to overemphasize the importance of geographical proximity and underestimates the role of networks and 3 it hardly addresses the origins and evolution of clusters the authors propose a theoretical framework that brings together the literature on clusters industrial dynamics the evolutionary theory of the firm and network theory it is described how clusters co evolve with 1 the industry with to they adhere 2 the capabilities of the firms they contain and 3 the industry wide knowledge network of which they are part ter wal a l j et boschma r la coevolution geographique des entreprises des industries et des reseaux regional studies la documentation sur les clusters souffre d un nombre de points faibles 1 elle ne tient c

the duality of collaboration inducements and opportunities in the formation of interfirm linkages i argue that the linkage formation propensity of firms is explained by simultaneously examining both inducement and opportunity factors drawing upon resource based and social network theory literatures i identify three forms of accumulated capital technical commercial and social that can affect a firm s inducements and opportunities to form linkages firms possessing these capital stocks enjoy advantages in linkages formation however firms lacking these accumulated resources can still form linkages if they generate a radical technological breakthrough thus i identify paths to linkage formation for leading as well as peripheral firms i test these arguments with longitudinal data on technical collaborative linkages in the global chemicals industry copyright 2000 john wiley sons ltd

the optimal currency composition of external debt theory and applications to mexico and brazil the changes in exchange rates interest rates and commodity prices during the past decades have had large impacts on developing countries many developing countries have limited access to already incomplete international long term hedging markets thus the question arises whether the currency composition of external debt can be used to minimize exposures to external price risk using a utility maximizing framework this article shows that by choosing the optimal currency composition a country can indeed manage its external exposure the optimal risk minimizing currency composition depends on the relation between export receipts and the costs of borrowings in each currency and on the relations among the costs of borrowings in different currencies a simple methodology can be used to derive the optimal shares of individual currencies and is applied to mexico and brazil the results show that mexico and brazil could have lowered their external exposure to a limited degree by continuously alternating the currency composition of their debts the low correlations between the costs of borrowings and export and import prices make the currency composition of debt a very imperfect hedging tool and it is likely that hedging instruments directly linked to prices are preferable

knowledge and competitive advantage the coevolution of firms technology and national institutions this issue of jibs offers reviews of two books that analyse the dynamic interaction between the business environments and business strategies in very different ways the institutional underpinnings for business strategies are a major research topic for comparative management aiming to explain why in different contexts firms pursue different strategies and with different implications for performance j peter murman in knowledge and competitive advantage takes a historical perspective focusing on the co evolutionary processes between national innovation systems business strategies and performance this books thus adds to the industry level longitudinal research reviewed in jibs no 4 2003 tom murtha et al s managing new industry creation and david mckendrick et al s from silicon valley to singapore

technological competition and the structure of the computer industry we examine thirty years of computer industry market structure our analysis explains the persistence of dominant computer firms their recent decline and the changing success of competitive entry it emphasizes the importance of technological competition between computer platforms not firms this aspect of competition has changed little over time two things did change young platforms serving newly founded segments eventually challenged established platforms across segment boundaries through a process of indirect entry vertically disintegrated platforms have led to divided technical leadership in important segments the result is an industry with far more technological competition

home asset preference and productivity shocks abstract this paper presents sufficient conditions for the domestic investor consumer to hold in equilibrium a disproportionate share of domestic assets the analysis is carried out in a general equilibrium framework of products and assets markets when the source of the uncertainty is productivity shocks in the nontraded goods industries in the asset markets we allow trade in instruments with a payoff which is not necessarily positively correlated with the price of the consumption good as the instruments considered in the existing literature consequently in our analysis in contrast to the existing literature hedging against price uncertainty is neither necessary nor sufficient for home asset preference

a new turning point signalling system using the markov switching model with application to japan the usa and australia a new business cycle turning point signalling system is proposed and examined by using japanese us and australian composite indexes of economic activity time varying transition probabilities in a markov regime switching model are used as the basis of the signalling system the performance of the system is satisfactory though its reliability varies between peaks and troughs and across countries based on data up until may 1998 the system suggests the absence of turning points in any of the three countries in 1998

technology transfer and public policy a review of research and theory abstract my purpose is to review synthesize and criticize the voluminous multidisciplinary literature on technology transfer to reduce the literature to manageable proportions i focus chiefly not exclusively on recent literature on domestic technology transfer from universities and government laboratories i begin by examining a set of fundamental conceptual issues especially the ways in which the analytical ambiguities surrounding technology transfer concepts affect research and theory my literature review follows and i emphasize technology transfer s impact and effectiveness i employ a contingent effectiveness model of technology transfer to organize the literature as the model s name implies it assumes that technology effectiveness can take a variety of forms in addition to examining the more traditional effectiveness criteria those rooted in market impacts the model considers a number of alternative effectiveness criteria including political effectiveness capacity building

survival of businesses using collaborative relationships to commercialize complex goods authors with many theoretical and managerial perspectives argue that businesses commercializing technologically complex goods benefit when they collaborate closely with other businesses collaboration is viewed as a means for businesses to overcome competency limitations and to achieve the close configuration of components required for complex goods we predict that collaborative relationships often assist businesses to produce complex goods but that the relationships might also cause problems for the collaborating businesses we find that firms using development oriented and marketing oriented collaborative relationships in the hospital software systems industry are less likely to shut down than businesses that follow independent approaches when the environment changes gradually but businesses using collaborative relationships are sometimes susceptible to being acquired by other firms following a sudden environmental shock businesses with collaborative relationships for activities central to the shock became more likely to shut down while businesses with collaborative relationships for activities outside the focus of the shock became more likely to survive the study critically evaluates and tests the widely stated but little tested argument that interfirm collaboration is usually beneficial the results address the issue of whether organizational choices affect comparative business performance

networks as the pipes and prisms of the market1 this article draws an analytical distinction between two types of market uncertainty egocentric which refers to a focal actor s uncertainty regarding the best way to convert a set of inputs to an output desired by a potential exchange partner and altercentric which denotes the uncertainty confronted by a focal actor s exchange partners regarding the quality of the output that the focal actor brings to the market given this distinction the article considers how the value of structural holes and market status vary with these two types of uncertainty the article proposes that the value of structural holes increases with egocentric uncertainty but not with altercentric uncertainty in contrast the value of status increases with altercentric uncertainty but declines with egocentric uncertainty thus actors with networks rich in structural holes should sort into markets or market segments that are high in egocentric uncertainty high status actors should sort into markets that are low in egocentric