antecedents and outcomes of modular production in the brazilian automobile industry a grounded theory approach our paper focuses on how foreign automobile manufacturers in brazil have implemented and benefited from strategic modularization based on our case studies and in depth interviews we developed a theoretical framework to examine the antecedents and outcomes of strategic modularization our theoretical framework suggests that strategic modularization may help improve a firm s positional advantage by reducing the cost of managing tacit knowledge in addition the adoption of strategic modularization influences the nature of relationships with major suppliers further blurring the boundaries of the firm

meta paradigm change and the theory of the firm many seemingly unrelated debates on the theory of the firm are in fact part of a single deeper transformation of the social sciences as the foundational assumptions of 20th century social science have slowly been shown by science to be false new sub paradigms have emerged which cumulatively drop i theoretical assumptions about markets to explain firms ii epistemological assumptions about knowledge to explain diversity and iii metaphysical assumptions about causality to explain technical change debates occur across each of these levels

contracts as a barrier to entry it is shown that an incumbent seller who faces a threat of entry into his or her market will sign long term contracts that prevent the entry of some lower cost producers even though they do not preclude entry completely moreover when a seller possesses superior information about the likelihood of entry it is shown that the length of the contract may act as a signal of the true probability of entry

strategic group formation and performance the case of the u s pharmaceutical industry 1963 1982 the focus of this paper is on three major questions 1 what is the theoretical rationale for the strategic group concept 2 does strategic group membership have performance implications and 3 are strategic groups and membership in strategic groups stable characteristics of industries a statistical procedure is proposed to longitudinally identify strategic groups the empirical setting is the u s pharmaceutical industry over the period 1963 82 while performance differences are found in terms of market share profitability differences between groups are not observed neither are differences found in terms of risk and risk adjusted performance these results are attributed to the existence of performance variation within each strategic group a dynamic model of competitive repositioning is proposed which helps integrate the findings from the study

nonmarket performance evidence from u s electric utilities building on a framework that assesses the attractiveness of political markets where firms transact over public policies with government policy makers we develop hypotheses regarding the success or performance of firms nonmarket strategies we propose that the ability of firms to gain more favorable policy outcomes is increasing in the degree of rivalry among elected politicians the firm s recent experience with policy makers and the opportunity to learn from other firms recent experiences and is decreasing in the degree of rivalry from competing interest groups and the resource base of regulatory agencies using data on regulatory filings for rate increases made by the population of u s privately owned electric utilities over a 13 year period we find empirical support for our arguments

trade liberalization and rising wage inequality in latin america reconciliation with hos theory abstract the paper puts forward the hypothesis that the transitory effects of trade liberalization on wage inequality can differ from the long run outcome in cases where the hos theory predicts a decline in wage inequality in the long run a temporary rise can nevertheless occur due to i the asymmetries in the speed of contraction in the import sector and expansion in other sectors and ii the capital skill complementarity in production the asymmetric contraction and expansion causes a transitory capital accumulation that boosts the relative and the real wage of skilled labor due to capital skill complementarity although the long run hos fundamentals are therefore dominated in the short run by the transient effects arising due to capital skill complementarity the observed rise in wage inequality is nonetheless consistent with the hos theory appropriately extended to a dynamic setting

welfare effects of liberalization reforms with distortions in financial and labor markets abstract liberalization can have ambiguous effects on welfare and produce unexpected macroeconomic changes because of conflicting effects stemming from distortions in other markets both within the same period and across time this approach presents a two period intertemporal model of a small open economy to examine the welfare effects of removing one distortion financial repression tariffs while others wage and price rigidity remain in place the equilibrium conditions from this model are used to derive welfare effects of various liberalization policies and to determine optimal levels of the policy variables

asset stock accumulation and sustainability of competitive advantage given incomplete factor markets appropriate time paths of flow variables must be chosen to build required stocks of assets that is critical resources are accumulated rather than acquired in strategic factor markets barney barney j 1986 strategic factor markets expectations luck and business strategy management sci october 1231 1241 sustainability of a firm s asset position hinges on how easily assets can be substituted or imitated imitability is linked to the characteristics of the asset accumulation process time compression diseconomies asset mass efficiencies inter connectedness asset erosion and causal ambiguity

wage bargaining and the phillips curve the identification and specification of aggregate wage equations most economists believe that wage setting is very important for understanding macroeconomic behavior but the form of wage equations commonly estimated suffer from problems of identification the aim of this paper is to consider whether these problems are inevitable and if they are not to suggest ways in whi ch one can estimate structural models of wage setting it is argued that if one confines attention to models of wage bargaining t hat are commonly used identification of the parameters of wage setting should not be a problem and that the most appropriate form of an aggregate wage equation should be a phillips curve copyright 1993 by royal economic society

lag length selection and tests of granger causality between money and income one of the most widely accepred relationships in macroeconomics is the positive relationship between the rate of growth of the money supply and the rate of growth of income a diversity of opinion arises however with the attempt to identify a causal relationship between these variables while friedman and schwartz 1963 initiated the empirical investigation of money income causality sims 1972 made the most significant contribution to this literature with a practical application of the criterion developed by granger 1969 for identifying a causal relationship since the appearance of sims s approach and an alternative one advanced by sargent 1976 many researchers have applied these techniques to the investigation of the causal relationship between money and income l with two exceptions hsiao 1981 and mcmillin and fackler 1984 these researchers have arbitrarily chosen the lengths of their distributed lags the purpose of this paper is to test for granger causality between money and income this paper differs from previous work in that considerably more attention is focused on the effect of the lag specification on the test results in particular we investigate the extent to which rules of thumb arbitrary lag specifications and

the time varying nairu and its implications for economic policy the nairu the unemployment rate consistent with a constant rate of inflation is estimated in this paper as a parameter allowed to vary over time value is determined in an econometric model where the inflation rate depends on its past values demand and supply shocks the nairu estimated for the gdp deflator varies over the past forty years within 5 4 to 6 5 percent its estimated value for the most recent quarter 1996 q2 is 5 6 percent the nairu has declined in recent years in response to global competition immigration other factors weakening labor s bargaining position and the rapidly declining prices of computers and other electronics

the effectiveness of economic policy and position in the cycle the case of tax reductions on overtime in france the economic situation of all the major developed countries has changed significantly during the 2007 10 period yet many economic policies have been kept in place this is true in particular of a key measure in french government policy tax reductions on overtime hours and their exemption from social charges in this article we propose simulations of this scheme based on the economic context in which it is implemented according to our simulations this kind of measure is pro cyclical and therefore poorly suited to the current situation of the french economy furthermore even in the case of good conditions the scheme would not be funded without financing this measure would widen the deficit and would amount to a fiscal stimulus financing it through an increase in levies would radically change its nature

costly search and mutual fund flows this paper studies the flows of funds into and out of equity mutual funds consumers base their fund purchase decisions on prior performance information but do so asymmetrically investing disproportionately more in funds that performed very well the prior period search costs seem to be an important determinant of fund flows high performance appears to be most salient for funds that exert higher marketing effort as measured by higher fees flows are directly related to the size of the fund s complex as well as the current media attention received by the fund which lower consumers search costs

an architectural framework for global talent management a unique characteristic of the multinational corporation is that it comprises a geographically dispersed and culturally differentiated workforce that embodies both firm specific and location specific human capital this article takes an architectural approach to describe how different types of human capital develop from the individual level to the unit level and then to the firm level in order to build a talent portfolio for the multinational corporation depending on the company s strategy multidomestic meganational transnational different configurations of the talent portfolio tend to be emphasized and integrated to achieve competitive advantage implications for theory and practice are discussed and a research agenda is introduced

gradualism in free trade agreements a theoretical justification a notable feature of many recent trade agreements is the gradual rather than immediate reduction of trade barriers in this paper we model trade liberalization as a cooperative relationship that evolves gradually in a non cooperative environment we show that specialization capacity irreversibility and the development of trade partner specific capital increase the benefit of continuing the liberalizing relationship and decrease over time the lowest obtainable self enforcing tariff by increasing the penalty of future defection sunk costs ensure that the self enforcing trading relationship starts slowly but once in progress the level of cooperation continues to improve

money does granger cause output in the bivariate money output relation abstract a bivariate granger causality test on money and output finds statistically significant causality when data are measured in log levels but not when they are measured in first differences of the logs bootstrap simulation experiments indicate that most probably the first difference results reflect lack of power whereas the level results reflect granger causality that is actually in the data the reason for the lack of power in the first difference f statistic is that first differencing the data appears to entail a specification error by showing that money does granger cause output in the bivariate relation we remove a potential embarrassment for models that assign an important role to money in business fluctuations

terms of trade tariffs and labor market adjustment in developing countries a three goods model importables exportables and nontradables is used to analyze labor market adjustment to changes in the terms of trade and import tariffs for a small open economy first a three goods four factor model labor and capital specific to each sector is developed and used to investigate how an exogenously generated change in a country s terms of trade affects labor allocation and wages in the short run next a more traditional three goods two factor model is used to examine the effects in the long run the analysis is carried out under alternative assumptions regarding wage flexibility full flexibility economy wide real wage rigidity and sector specific real wage rigidity

money market mutual fund maturity and interest rates the average maturity of money market mutual funds ranged from twenty nine to fifty three days during 1982 through 1990 according to the popular press changes in this time series provide interest rate forecasts the hypothesis is that fund managers lengthen their maturities when interest rates will be falling while the maturities are shortened when rate increases are imminent granger causality tests reject this hypothesis however there is a causal relation in the opposite direction interest rates granger cause average fund maturity indicating that on average fund managers respond to past rate changes copyright 1992 by ohio state university press

optimal sequencing of credible reforms with uncertain outcomes abstract we study a two period representative agent economy in which economic liberalization is modeled as adding a positive random variable to the marginal product of capital we show liberalization always raises the expected utility of agents agents may respond to this by increasing consumption in the first period consequently consumption in the second period is sometimes smaller than the in the first depending on the realization of the random variable this tail may cause the government to reject liberalization of declining gdp enters negatively in the government s objectives we apply these results to the chilean experience of the 1980s

cultural differences mne learning abilities and the effect of experience on subsidiary mortality in a dissimilar culture evidence from korean mnes in a departure from prior studies presuming a beneficial experience effect in foreign direct investment fdi the present paper examines the conditions under which fdi experience may actually harm subsequent subsidiaries we argue that multinational enterprises mnes may draw erroneous inferences and learn incorrectly from their early expansions when new to a dissimilar culture because their learning abilities are eroded by cultural differences we posit that the characteristics of an mne s international expansion including scope pace rhythm and entry mode moderate this negative experience effect by influencing the mne s learning ability in foreign cultures using a data set of fdis by south korean mnes between 1990 and 2006 we find a positive relationship between subsidiary mortality and experience when an mne has a low level of experience in a dissimilar culture this relationship is weaker if the mne s prior fdi has been dispersed across different cultures is stronger if it expanded internationally at a fast pace and becomes negative once the mne has accumulated a high level of experience in the host culture we conclude that when expanding into dissimilar cultures mnes must establish mechanisms to mitigate incorrect learning and reexamine the correctness of inferences drawn from past experience before applying them

unemployment in the oecd this article examines the course of unemployment in oecd countries during the recent recession the severity of the recession and the strength of macro policy responses varied from country to country however even after correcting for these differences unemployment experiences were various unemployment generally rose by less in those countries which had strict employment protection legislation as it did in those countries with relatively high collective bargaining coverage various forms of work sharing also helped some countries to dampen the rise in unemployment so did increasing the generosity of out of work benefit arrangements the latter finding suggests that search theoretic approaches need to be modified institutions do matter and not just in the short run hysteresis effects could project their influence into the medium term

nonmarket strategy performance evidence from u s electric utilities this paper develops and tests a theory of the performance determinants of a firm s nonmarket strategy in shaping public policy outcomes building on the concept of political market attractiveness we argue that nonmarket performance is influenced by both the characteristics of a firm s regulatory and political environment especially rivalry among interest groups or politicians and by internal capabilities that enable a firm to mitigate political transaction costs using data on regulatory filings for rate increases made by u s electric utilities over a 13 year period we find empirical support for our approach

autoregressive modelling and money income causality detection abstract a step wise procedure based on granger s concept of causality and abaike s final prediction error criterion is suggested as a practical means to identify the order of lags of each variable in a multivariate autoregressive process the model seems useful because it can serve as a reduced form formulation to avoid imposing often spurious or false restrictions of the model it also provides a reasonably powerful test of causality the idea is applied to u s postwar money and income data it is found that between m1 and gnp a bivariate feedback model fits the data best between m2 and gnp a one way causal model from money to income performs better diagnostic checks applied to our model seem to indicate the adequacy of our approach

fdi spillovers over time in an emerging market the roles of entry tenure and barriers to imitation in this study we examine how foreign direct investment fdi spillovers to domestic firms in an emerging market occur over time from the organizational learning perspective we propose that as entry tenure of foreign firms in an industry increases domestic firms can learn from the foreign firms over time and improve their productivity we further build upon the competitor imitation argument to propose that this effect will be stronger when barriers to imitation faced by the domestic firms are lower based upon a comprehensive panel dataset on manufacturing firms in china in 1998 2007 our findings strongly support these arguments we find that entry tenure of foreign firms in an industry has a positive relationship with the productivity of individual domestic firms in the same industry albeit at a diminishing rate we also find that this positive relationship is stronger when the foreign firms have lower export intensity lower intangible asset intensity and have followed a more rhythmic i e less irregular entry pattern situations characterizing lower barriers to imitation

the future of stakeholder management theory a temporal perspective we propose adding a temporal dimension to stakeholder management theory and assess the implications thereof for firm level competitive advantage we argue that a firm s competitive advantage fundamentally depends on its capacity for stakeholder management related transformational adaptation over time our new temporal stakeholder management approach builds upon insights from both the resource based view rbv in strategic management and institutional theory stakeholder agendas and their relative salience to the firm evolve over time a phenomenon well understood in the literature and requiring what we call level 1 adaptation however the dominant direction of stakeholder pressures can also change namely from supporting resource heterogeneity at the firm level to fostering industry homogeneity and vice versa when dominant stakeholder pressures shift from supporting heterogeneity towards stimulating homogeneity in industry the firm must engage in level 2 or transformational adaptation stakeholders typically provide valuable resources to the firm in an early stage without these resources which foster heterogeneity in line with rbv thinking the firm would not exist at a later stage stakeholders also contribute to inter firm homogeneity via isomorphism pressures in line with institutional theory thinking adding a temporal dimension to stakeholder management theory has far reaching implications for this theory s practical relevance to senior level management in business

the accuracy of interest rate forecasts in the asia pacific region opportunities for portfolio management we analysed interest rate forecasts from australia china hong kong india indonesia malaysia new zealand singapore south korea taiwan and thailand we assessed 532 forecast time series with

location specificity and the transferability of downstream assets to foreign subsidiaries we investigate the effect of firm specific advantages being local in scope and the influence of subsequent location specific disadvantages on the choice of foreign entry mode and subsidiary performance to look into this issue we examine japanese fdi data from the wholesale and retail industries two sectors that have productive activity concentrated in downstream processes and location bound resources our theoretical and empirical analyses demonstrate that in situations where required capabilities must be developed through local experience and where location specific resources were subject to market failure acquisition and joint venture strategies were preferred greenfield entries were successful in industries that permitted the offsetting of location specific disadvantages with firm specific advantages from our results we draw implications for the entry mode literature and offer a perspective on the performance of the entry mode choice

interdependency competition and industry dynamics asystematic understanding of industry dynamics is critical to strategy research because individual firm performance dynamics both reflect and affect change at the industry level descriptive research on industry dynamics has identified a dominant pattern where prices fall output rises and the number of firms rises and then falls over time several models have been advanced to explain these patterns with a particular focus on explaining why a shakeout in the number of firms occurs in the most prominent models shakeout is generated by rising realized heterogeneity among firms that either is assumed to be unrecognized but determined ex ante or is generated by stochastic innovation outcomes coupled with convex adjustment costs and scale advantages in innovation and learning in this paper we develop an alternative model where heterogeneity develops among firms over time leading to a shakeout because firms must make choices about highly interdependent productive activities where the ideal combinations cannot be easily deduced or imitated by combining two established models a cournot model of competition with an nk model of interdependency in production activities we are able to advance an alternative explanation for the observed patterns of industry behavior including shakeout we show that variation in the potential for interdependency in activities among industries is able to explain varying levels of shakeout as well as differing patterns of entry and exit among industries notably the model generates several empirical predictions not apparent in past research and several that directly conflict with the results of prominent alternative models of industry dynamics specifically we show that when the potential for interdependency within an industry is low entry slows down and incumbent survival is all but assured whereas in industries where the potential for interdependencies is high shakeouts are severe and the rates of entry and exit remain high over longer time periods with decreasing survival rates for incumbents

exchange rate based stabilization in latin america abstract this paper examines the use of the exchange rate as a nominal anchor for achieving price stability in latin america it will explore the impact of exchange rate anchoring on the real sector by analyzing five stabilization programs the paper will identify conditions that make exchange rate based stabilization successful and those that lead to its failure it will also demonstrate that while the income effect can be instrumental in describing consumption booms associated with exchange rate based stabilizations the popular view based on the credibility hypothesis fails to explain key events associated with such programs

no place like home relocation capabilities and firm survival in the german machine tool industry after world war ii we explore the extent to which organizational capabilities are location specific by studying the location choices and longevity of east german machine tool producers that relocated to west germany after world war ii relocating firms were similar in performance to experienced west german incumbents they outperformed new entrants without prewar industry experience this suggests they were able to build on capabilities acquired before the war even though relocating firms tended lo locate in industry agglomerations and in urbanized regions we find no evidence suggesting that firm performance benefited from agglomeration economies copyright 2011 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

corporate social responsibility product differentiation strategy and export performance this article argues that corporate social responsibility csr may contribute to product differentiation in export markets and thus improve export performance we test this argument by observing a period of decreasing export competitiveness in a leading emerging economy brazil using a large scale survey design with 252 questionnaires completed by medium and large sized brazilian exporters we used structural equations modelling to test our hypotheses the results suggest that csr product differentiation predicts export performance better than product quality differentiation and almost as well as product innovation differentiation multi group analysis further revealed that the positive and significant effect of csr product differentiation on export performance is likely to be contingent on the number and type developing vs developed of countries that are targeted our study contributes to the literature on csr and export performance by developing and empirically validating a model that explains under which conditions csr based product differentiation may lead to improved export performance

identifying a distinctive competence forecasting ability in the money fund industry testing the causal link between a firm specific competence and its antecedents or consequences has become a key objective for strategy research over the past decade on one hand case studies can identify a competence but with their small sample size their retrospective research design and their tendency toward sampling on the dependent variable they can not reliably test the causal connection between a competence and its antecedents or its consequences on the other hand variance decomposition studies demonstrate the existence of firm specific performance differentials but have not identified which particular competencies are responsible for them the present paper avoids both of these problems by measuring a particular competence across a large sample of organizations over a long period of time so that a test of statistical causality can be applied to the relationship of this competence to both its antecedents and its consequences the particular competence studied is the ability of money market mutual funds to forecast changes in short term interest rates a competence known from prior research to be both valuable and rare in particular we test the effect of forecasting ability on the economic surplus generated by the fund and its growth conversely we also test the effect of growth on the subsequent development of forecasting ability copyright 2000 john wiley sons ltd

reputation and decision making under ambiguity a study of u s venture capital firms investments in the emerging clean energy sector this study examines the role of reputation on decision making under ambiguity drawing on social cognition and behavioral theories we propose that a firm s reputation exerts dual pressures on its decision making under ambiguity on the one hand a firm s reputation increases its aspirations for future performance and promotes its engagement in risky strategies to achieve them on the other hand preserving the already established reputation requires a firm to deliver consistent performance over time which promotes greater use of risk reduction strategies our analyses of the u s venture capital firms investments in the clean energy sector from 1990 to 2008 demonstrate that while reputable firms are more likely to invest in the emerging sector they also employ risk reduction strategies more extensively the sector s legitimation further influences these firms investment decisions both directly and through its interaction with firm reputation

neoliberalism and income distribution in latin america abstract this paper reviews the principal neoliberal policy measures instituted in latin america in the last decade and their impact on equity it first emphasizes the difficulty of separating the impact of liberalization measure from the necessary fiscal adjustments of the 1980s and their transitional vs longrun effects and then places the observed movements in distribution in global and historical context the second part places several innovations of neoliberal regimes in historical perspective and argues that their overall impact is unlikely to be regressive and that previous regimes were probably not especially progressive over the long run developments in factor markets the demand side driven by reoriented industrial growth and the increasing importance of the service sector interacting with the relative supplies of skilled and unskilled labor are likely to be of overriding importance in determining the evolution of the distribution of income

measuring the nairu evidence from seven economies several specifications of state space models are used to obtain estimates of the nairu for the g7 except japan plus australia over the past 28 years a phillips curve type regression is shown to deliver estimates that do not mimic low frequency movements in unemployment rates even when a drift is included in the specification of the nairu standard errors around the estimates are extremely large using information about the behavior of unemployment in addition to inflation alleviates both these shortcomings

speed of adjustment and self fulfilling failure of economic reform abstract an economic reform programme where inefficient public labour is laid off is considered the immediate effect is a lowering of wages and increased profitability in the private modern sector over time as capital accumulates in the modern sector wages and production increases big bang reform generates a sharp transitory drop in wages while gradual reform gives a more modest decline in the presence of a subsistence wage constraint popular resistance can cause the cancellation of big bang reform two arguments for gradualism can in that case be made first a more gradual reform requires a less abrupt drop in the wage and will therefore be feasible second the initial wage drop will be stronger if a cancellation of reform is expected and since cancellation is dependent on the severity of the initial wage drop multiple equilibria occurs the existence of multiple equilibria is dependent on the speed of reform sufficiently gradual programmes have a unique successful equilibrium

efficiency gains within firms under voluntary environmental initiatives this paper focuses on efficiency gains that voluntary environmental initiatives may achieve within the firm current debate concerning the extent and significance of inefficiencies within firms is critically important to the progress of energy and environmental policies several recent lines of inquiry in microeconomics help explain the persistence of inefficiencies within firms in addition two of the most prominent new approaches in the field of business strategy resource based strategy and the capabilities perspective focus on the heterogeneity among firms and the resulting pockets of inefficiency within firms they suggest at least three generic strategies for voluntary environmental initiatives challenging outdated organizational routines creating opportunities for differentiation or complementing firms resource investment trajectories these generic approaches suggest that there is considerable scope for further experimentation with voluntary environmental initiatives

a memoir and reflection knowledge and an evolutionary theory of the multinational firm 10 years later the production of the 1993 article awarded the jibs decade award was written during a time when ideas regarding knowledge and the international expansion of the firm confronted a hostile audience the sources of these ideas were directly related in winter s and roger s prior work but also to a broader literature on category errors and technology transfer the theory of the firm as a social community is a distinctly sociological theory and though sharing many key ideas with the resource based view that developed at the same time is deeply opposed to engineering conceptions of firms as legomodular pieces that can be easily shifted bought and sold we describe our individual biographies and the subsequent intellectual development of the

determinants of taiwan s trade liberalization the case of a newly industrialized country abstract this paper attempts to account for the success of policy reform in taiwan s trade liberalization through an investigation of the periods 1986 92 and 1992 95 the objective is to undertake an empirical examination of haggard et al s the political feasibility of adjustment in developing countries development centre of the oecd oecd paris 1995 strategies for minimizing the political costs involved in implementing policy reforms empirical evidence supports the haggard et al arguments that is indirect compensation is used to facilitate the implementation of trade liberalization for downstream industries while the speed of trade liberalization within certain specific industries is comparatively slow furthermore in a democratic regime the pressure brought to bear by well organized domestic interest groups along with the pressure from international interest groups can strongly influence the pattern of trade liberalization policies

don t rest on your laurels reputational change and young technology based ventures abstract we combine resource based theory and social cognition theory to investigate the factors both limiting and related to between period reputational change of young firms in a dynamic technology based industry an analysis of computer graphics chipmakers during the period 1992 2003 provides evidence that operational signals are related to reputational change specifically receiving a product award in the current period is associated with positive change and gaps in product announcements are associated with negative change we find little support for our hypothesis that the reputations of older firms are less likely to change

the born global firm an entrepreneurial and capabilities perspective on early and rapid internationalization our 2004 journal of international business studies article innovation organizational capabilities and the born global firm provided a framework for the phenomenon of early and rapid internationalization among young entrepreneurial firms this work can be characterized as an integration of marketing entrepreneurial and capability based thinking around exporting positioned as the born global exporter the article also reported findings from a national study of start up firms that expanded abroad early in their evolution in the present commentary we reflect on the contributions of the 2004 article review the scholarship on the topic over the past decade and offer suggestions for future inquiry while the incidence of early internationalization by firms was a novel concept two decades ago today such firms are found in abundance in many countries yet many unresolved research questions remain including the crucial topic of what happens to born global firms as they grow and mature over time similarly the issue of why some firms internationalize early others late in their evolution and still others choose to remain local is a fundamental question for international business scholarship

a dynamic game of r and d patent protection and competitive behavior a theory of dynamic optimal resource allocation to r and d in an n firm industry is developed using differential games this technique represents a synthesis of the analytic methods previously applied to the problem static game theory and optimal control the use of particular functional forms allows the computation and detailed discussion of the nash equilibrium in investment rules this paper addresses the problem of resource allocation to research and development among the important issues that a firm engaging in r and d must evaluate are uncertainty regarding the feasibility and profitability of a particular innovation the possibility of a protracted development period the possibility that a rival firm may innovate first capturing either a patent or a significant share of the new market the possibility that a rival firm may imitate the innovation and appropriate some of the profits in the new market in what follows we will develop a theory of optimal resource allocation to research and development which incorporates the aspects of r and d enumerated above we will use a dynamic game theoretic analysis determining the nash equilibrium strategies for n identical firms the availability of perfect patent protection is shown to accelerate development of the innovation and the effect of increasing rivalry is addressed the impact of increasing rivalry on nash equilibrium investment in r and d depends upon the degree of appropriability of rewards if patent protection is perfect then increasing the number of nash rivals results in increased r and d effort however when imitation is rewarded the opposite may be true finally some notions of competitive and perfectly competitive equilibrium are examined in the context of the model developed below

random walks and sustained competitive advantage strategy is concerned with sustained interfirm profitability differences observations of such sustained differences are often attributed to unobserved systematic a priori differences in firm characteristics this paper shows that sustained interfirm profitability differences may be very likely even if there are no a priori differences among firms as a result of the phenomenon of long leads in random walks even a random resource accumulation process is likely to produce persistent resource heterogeneity and sustained interfirm profitability differences a cournot model in which costs follow a random walk shows that such a process could produce evidence of substantial persistence of profitability the results suggest that persistent profitability does not necessarily provide strong evidence for systematic a priori differences among firms nevertheless since the phenomenon of long leads is highly unrepresentative of intuitive notions of random sequences such evidence may still be persuasive