dynamic programming model estimates of social security disability insurance application timing this paper develops a dynamic programming model of the social security disability insurance ssdi application timing decision we estimate the time to application from the point at which a health condition first begins to affect the kind or amount of work that a currently employed person can do we use health and retirement study hrs and restricted access social security earnings data for estimation our results show that the type of work limiting health condition presence of employer accommodation and the relative value of income in the application state to income in the work state significantly affect the timing of ssdi application copyright 2004 john wiley sons ltd

strategic groups and rivalrous firm behavior towards a reconciliation this research examines the question of whether rivalry is greater between or within strategic groups by utilizing more direct dynamic and fine grained measures of rivalry examining the competitive actions of firms in different strategic groups to determine if competitive responses were more likely to occur from firms in the same strategic group or from firms in different strategic groups the research found that competitive responses cannot be predicted by strategic group membership importantly however strategic group membership is a predictor of the manner by which firms compete with one another or the frequency with which they undertake competitive actions cut prices instigate warfare and imitate rivals 1997 by john wiley sons ltd

competitive tension the awareness motivation capability perspective this paper investigates competitive tension or the strain between a focal firm and a given rival that is likely to result in the firm taking action against the rival drawing on the awareness motivation capability perspective we show how perceived competitive tension as constructed from managers and industry stakeholders competitor assessments is influenced by the independent and interactive effects of three factors relative scale rival s attack volume and rival s capability to contest our results provide a new avenue for studying competitors and the relationship between competitor analysis and interfirm rivalry in science there is a steady state in which opposing forces hold each other in check until the build up of tension turns the static relationship into dynamic interplay the point when the steel cable snaps the steam chamber s pressure valve opens or one psychological force overwhelms the other in business practice a similar phenomenon exists when tension that one opponent imposes on another triggers rivalrous actions competitor analysis is central to strategy and organization research hitt ireland hoskisson 2005 porter 1980 previous research has explored a number of important issues including conjecture variation amit domowitz fershtman 1988 competitor identification porac thomas 1990 and blind spots zajac bazerman 1991 and has made advances in such areas as theoretical integration of competitor analysis and interfirm rivalry chen 1996 fundamental questions such as who a focal firm s competitors are and how much competition the firm faces from each rival have been implicitly or explicitly addressed by a variety

accounting rates of return many economic studies provide empirical evidence regarding cross sectional differences in firm profitability in most of these studies firm profitability is measured by an accounting rate of return net income dividend by the book value of assets hereafter arr rather than an economic rate of profit franklin fisher and john mcgowan define the firm s economic rate of profit irr as that interest rate which equates the present value of its net revenue stream to its initial outlay 1983 p 82 fisher and mcgowan examine the analytic relation between a firm s arr and its irr in a series of examples and conclude that the arr is such a bad surrogate for the irr that the results of arr based empirical studies are likely to be totally misleading p 91 william long and david ravenscraft 1984 have criticized the theoretical work of fisher and mcgowan because the nature of the analytic relationship between the arr and the irr in the context of highly simplified hypothetical examples may not be indicative of the nature of the relationship in empirical settings their criticism adopts the utilitarian view that the arr has to be treated as a suitable surrogate for the irr as long as no preferable alternative measure of profitability is available for empirical work this view has merit as long as the measurement error which is contained in the arr is random rather than systematic unfortunately the nature and extent of the measurement error which is contained in the arr in a particular empirical setting can only be determined unequivocally if the irr is unequivocally known in such a case of course there would be no need to rely on the arr at all due to this unhappy circle empirical research on firm profitability has continued to rely on the arr despite the fact that many persons reasonably believe that the results of such research may be totally misleading fisher and mcgowan g c harcourt 1965 while others reasonably believe that the results are reliable enough to form a basis for policy decisions long and ravenscraft recent work by y ijiri 1978 1979 1980 and by myself 1982 has shown that conditional irr estimates can be obtained from data in firms financial statements while these irr estimates are conditional they do abstract from certain extraneous factors that influence arrs and that differ across firms consequently the conditional irr estimates are free from some of the sources of measurement error which are known to contaminate the arr thus the conditional irr estimates can be used to provide evidence on whether these sources of measurement error have or have not affected the outcome of prior studies in which profitability was measured by the arr such evidence can help to objectively resolve the conflict between the opposing views on the reliability of arr based profitability research this paper uses conditional irr estimates to examine the properties of the measurement error in the arr in a study of the relationship between firm profitability and firm size the remainder of the paper is organized as follows in section i the theoretical work of fisher and mcgowan is used professor of accounting university of iowa iowa city ia 52242 i gratefully acknowledge the comments of william albrecht dan dhaliwal gary fethke franklin fisher scott linn william r kinney jr and the participants of a workshop at the university of florida on earlier versions of this paper 1 some authors for example william long and david ravenscraft 1984 have used the sales margin ratio earnings sales as a measure of profitability however if one views profitability as return per unit of sacrifice the sales margin ratio is not a profitability measure since it ignores the sacrifice or investment required to generate a dollar of sales consequently this paper does not attempt to shed any insight into prior studies that have relied on the sales margin ratio as a measure of profitability

the impact of sunday shopping on employment and hours of work in the retail industry evidence from canada abstract between 1980 and 1998 every canadian province passed legislation that in some way relaxed restrictions on sunday shopping this study exploits the variation in deregulation dates between provinces to identify how retail employers adjust employment and hours of work when deciding to open on sundays a major complication of this analysis is to first determine for which provinces the deregulation dates are useful indicators of increases in sunday store openings this paper uses a unique trading day regression approach to identify these provinces and then uses aggregate data from the selected provinces to estimate a simple dynamic labour demand model that allows employment and hours to be imperfect substitutes in production the results suggest that retailers needs for sunday labour were disproportionately satisfied through increases in employment levels comparison of the estimates at three levels of the retail industry suggests that the employment and hours gains were larger among general merchandise stores than among more specialized retail establishments and relatively modest at the aggregate retail industry level in addition despite evidence of an immediate shortfall in the employment level below the long run optimal level the results suggest that firms were unable to compensate by temporarily increasing the hours of their existing employees

product and international diversification among japanese multinational firms this paper examines the relationship of performance with product and international diversification on japanese multinational firms from 1977 to 1993 we show the relationships between diversification and performance change over time through the use of multiple time periods and accounting for keiretsu membership results show that while diversity strategies vary between keiretsu and non keiretsu firms performance is not much different across time periods performance varies considerably but strategies are less variable product diversity has weak effects on firm performance only in one time period while international diversification has negative profitability and positive growth consequences in in some periods these results suggest first that diversification strategies and their effects on performance vary across time periods and generally produce some unexpected findings we do not find strong interactive diversity effects copyright 2000 john wiley sons ltd

intraindustry structure and the ease of strategic change there has been considerable recent work in industrial organization emphasizing the importance of group stratification within industries the thrust of this literature is that in empirical work and in particular in investigating public policy problems differences across firms within an industry may be crucial this paper is intended as a contribution to the empirical literature of group structures in this paper i examine patterns of strategic group membership in a number of industries and analyze changes in the strategies used by firms in particular i provide a series of rather simple exploratory tests of the importance of intraindustry strategic differences in a number of industries

unemployment institutions and reform complementarities re assessing the aggregate evidence for oecd countries there is no or limited consensus on the quantitative impact of institutions on unemployment which has led some to question the case for structural reforms recent studies suggest also that institutions interact with each other and cannot be analysed in isolation in this paper we estimate a standard reduced form model to explore the institutional determinants of unemployment and assess its robustness using a large battery of robustness checks we show that although the impact of each individual policy varies across countries due to policy interactions the simple linear model can be used to draw inferences for countries with an average mix of institutions the model is then extended to encompass systemic interactions in which individual policies interact with the overall institutional framework we find relatively robust evidence of broad reform complementarities

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

cointegration of firm strategies within groups a long run analysis of firm behavior in the japanese steel industry this paper uses cointegration analysis to study the competitive interaction among firms within the integrated and minimill groups in the japanese steel industry the use of cointegration analysis overcomes some of the limitations associated with prior attempts at modeling firm behavior within groups and allows us to model strategies that take considerable time to adjust results indicate that several strategies displayed slow adjustment characteristics all of the strategies that displayed these properties were cointegrated within the group finally over the long run the rate of strategic response to shocks in the system varied across members and strategies some converged while others diverged from the group relationship we conclude by discussing the relevance of our findings to research on strategic groups and competitive dynamics among firms thus the paper contributes to the literature on strategic groups and competitive dynamics and illustrates the use of cointegration analyses to study the competitive behavior of firms copyright 2002 john wiley sons ltd

financial incentives and retirement evidence from federal civil service workers we examine the retirement behavior of federal civil service workers employed by the department of defense these workers provide an interesting population for studying retirement because they face relatively simple financial incentives high quality administrative data are available and they are not covered by the social security system we find that these workers respond to their financial incentives in a similar manner to what others have found when analyzing much different retirement systems we also find no evidence of excess retirement at key ages of the social security system which does not support the existence of societal wide norms regarding retirement

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

the perverse effects of partial employment protection reform the case of french older workers abstract french firms laying off workers aged 50 and above have to pay a tax to the unemployment insurance system known as the delalande tax we evaluate the impact of this tax on layoffs as well as on hiring taking advantage of several changes in the measure since its introduction in 1987 a legislative change in 1992 exempted firms from the tax for workers who were hired after age 50 following this change the transition rate from unemployment to employment increased significantly for workers over 50 compared to workers under 50 the difference is sizeable between one third and one half of the initial transition rate evidence on the effect on layoffs is less clear cut the impact is sizeable only for the most stringent tax schedule after 1998

innovation and strategic divergence an empirical study of the u s pharmaceutical industry from 1920 to 1960 today firms employing two distinct survival strategies 1 innovation and 2 imitation coexist in the u s pharmaceutical industry history indicates that this intraindustry heterogeneity did not exist prior to 1940 this study empirically investigates the origin of this strategic divergence by focusing on changes in firms r d inputs and outputs it finds that some u s pharmaceutical firms responded to the opportunity presented by the discovery of antibiotics in the 1940s by investing more in r d while many others did not over time the innovators dominated in developing new drugs and the gap between innovators and imitators steadily increased these findings also shed light on the genesis of strategic groups a phenomenon that is not yet well understood

is tourism firm competitiveness driven by different internal or external specific factors new empirical evidence from spain abstract the quest to understand the multilevel antecedents of competitiveness has led to a separation of approaches on one side of the question are the environment theories that analyze the structural characteristics of the general and competitive environment on the other side are the resource based view and its extensions that highlight firm specific resources and capabilities as the main basis of firms competitiveness however in recent years the nature of competition and shifting economic conditions have given rise to new theoretical approaches that complement the assumptions underlying both environmental and firm theories specifically this study contributes by examining the regional environment effect the district effect and the strategic group effect through a study of 364 spanish tourism firms this research explores the relative importance of distinct external forces such as the general environment or country effect the regional effect the competitive environment or industry effect the district effect and internal factors such as the firm s tangible resources capabilities and strategy selection the results demonstrate that firms capabilities are more important than environment effects and tangible resources

r d intensity firm performance and the identification of the threshold fresh evidence from the panel threshold regression model this article tests whether there is an optimal level of research and development r d intensity at which point a firm is able to maximize its performance an advanced panel threshold regression model is employed to investigate the panel threshold effect of r d intensity on firm performance among publicly traded taiwan information technology and electronic firms the results confirm that a single threshold effect does exist and show an inverted u correlation between r d intensity and firm performance this article demonstrates that it is possible to identify the definitive level beyond which a further increase in r d expenditure does not yield proportional rewards some important policy implications emerge from the findings

prospect theory and the risk return association an empirical examination in 85 industries a new sample of 85 industries about 3 300 firms defined in terms of homogenous products provides strong evidence that prospect theory can explain the tradeoff between two of the most researched parameters in evaluating organizations namely risk and return in particular organizations below their target level are found to be risk takers hl while organizations above their target level are risk averters h2 moreover the below target tradeofl was generally steeper than the above target with a median below to above slope ratio of about 3 l h3 risk and return are probably the two single parameters most researched by the various and related disciplines of economics finance and management although each one of them has looked at these two parameters from different aspects and for different purposes they have provided a wide understanding of these two factors in the contest of the theory of the firm the purpose of this study is to look closely at the relationship between these two important parameters in order to understand firm s competitive behavior using the recent development in behavioral decision theory namely prospect theory kahneman and tversky 1979 although march 1988 has criticized the discipline of management for its later adaptation in considering risk elements for evaluating organization performance and decision making processes recent studies e g bettis 1981 rumelt 1974 singh 1986 jemison 1987 and baird and thomas 1986 have paid considerable attention to risk aspects in evaluating the performance of firms in general these studies have concluded that the characteristics of the firms environment strategy and implementation processes have significant and important influence on the firm s risk level and its associated rate of return bowman 1980 has looked closely at 85 u s industries and explored the

estimating dynamic models of quit behavior the case of military reenlistment we estimate the effect of financial incentives for reenlistment on military retention rates using a stochastic dynamic programming model we show that the computational burden of the model is relatively low even when estimated on panel data with unobserved heterogeneity the estimates of the model show strong effects of military compensation especially of retirement pay on retention rates we also compare our model with simpler to compute models and find that all give approximately the same fit but that our dynamic programming model gives more plausible predictions of policy measures that affect military and civilian compensation at future dates

competitor analysis and foothold moves a foothold is a small position that a firm intentionally establishes within a market in which it does not yet compete we extend theory on competitive dynamics to examine relationships between comp

proactive and reactive product line strategies asymmetries between market leaders and followers to what extent do firms engage in product line actions simultaneously with actions in other marketing variables what are the determinants of product line actions to what extent are product line actions proactive to what degree are they reactive how can a firms product line action elasticity percent change in product line length with respect to percent change in competitors past and anticipated actions be decomposed into reaction and anticipation elasticities are product line actions and elasticities symmetric across market leaders and followers to address these questions we develop a conceptual framework comprising determinants of product line and other marketing actions in a single framework we formulate hypotheses about the asymmetries between market leaders and followers regarding product line actions based on extended expectancy valence and competitive demand elasticity theories we develop a simultaneous equation model of demand and supply with product line and other marketing actions which can be used to identify reaction and anticipation elasticities through the rational expectations approach we estimate the model using data from the computer printer market comprising the market leader hewlett packard hp and followers epson canon and lexmark the results show that the market leader practices a product proliferation strategy and rarely fights on price in contrast market followers adopt a price fighting strategy a firm is more likely to engage in product line actions when its competitors changed their product lines in the past when the firm is large and when its price is high product line reaction and anticipation elasticities are asymmetric between themselves and across the firms for the market leader followers product line reaction elasticity is higher lower than product line anticipation elasticity these differences are related to product line demand elasticities which are higher for the market leader than they are for the followers

hypercompetition in a multimarket environment the role of strategic similarity and multimarket contact in competitive de escalation the effect of intra industry heterogeneity on hypercompetitive escalation and de escalation in a multimarket environment is examined the authors study two critical dimensions of intra industry heterogeneity strategic similarity which captures similarity in competitive orientation and multimarket contact which captures the degree of overlap between rivals in the multiple markets of the industry theory predicts that both variables influence the intensity of rivalry and competitive disruption the predictions in the literature about the effect of strategic similarity on the intensity of rivalry are mixed while strategic group theory proposes that strategic similarity may lead to lower rivalry other theories focusing on product differentiation the resource based view of the firm and hypercompetitive escalation predict that strategic similarity may actually increase rivalry those diametrically opposed propositions are captured as alternative hypotheses of the effect of strategic similarity with r

explaining the spread of temporary jobs and its impact on labor turnover this article provides a simple model that explains the choice between permanent and temporary jobs this model which incorporates important features of actual employment protection legislations neglected by the economic literature so far reproduces the main stylized facts about entries into permanent and temporary jobs observed in continental european countries we find that job protection has very small effects on total employment but induces large substitution of temporary jobs for permanent jobs which significantly reduces aggregate production

the role of shocks and institutions in the rise of european unemployment the aggregate evidence two key facts about european unemployment must be explained the rise in unemployment since the 1960s and the heterogeneity of individual country experiences while adverse shocks can potentially explain much of the rise in unemployment there is insufficient heterogeneity in these shocks to explain cross country differences alternatively while explanations focusing on labour market institutions explain current heterogeneity well many of these institutions pre date the rise in unemployment based on a panel of institutions and shocks for 20 oecd nations since 1960 we find that the interaction between shocks and institutions is crucial to explaining both stylised facts

bank productivity and performance groups a decomposition approach based upon the luenberger productivity indicator abstract the purpose of this paper is twofold first in the framework of the strategic groups literature it analyzes changes in productivity and efficiency of spanish private and savings banks over an eight year period 1998 2006 second by adapting the decomposition of the malmquist productivity indices suggested by fare et al 1994 it proposes similar components decomposing the luenberger productivity indicator initially productivity is decomposed into technological and efficiency changes thereafter this efficiency change is decomposed into pure efficiency scale and congestion changes empirical results demonstrate that productivity improvements are partially due to technological innovation furthermore it is shown how the competition between private and savings banks develops in terms of the analyzed productivity and efficiency components while private banks enjoy better efficiency change savings banks contribute more to technological progress consequently the luenberger components are used as cluster analysis inputs thus economic interpretations of the resulting performance groups are made via key differences in productivity components finally following the strategic groups literature supplementary insights are gained by linking these performance groups with banking ratios

education market rigidities and growth the paper exploits macro panel data for oecd countries close to the technological frontier the education level product market rigidities and employment protection legislation would be significantly related to tfp growth with a substantial contribution of the interaction between market rigidities

does entry regulation hinder job creation evidence from the french retail industry are product market and entry regulation key sources of low employment growth in many european countries we investigate this question in the context of the french retail trade industry since 1974 approval by regional zoning boards has been required for the creation or extension of any large retain store in france we exploit a unique database that provides time and region specific variation in boards approval decisions we show that stronger deterrence of entry by the boards increased retailer concentration and slowed down employment growth in france

to be different or to be the same it s a question and theory of strategic balance this paper addresses the performance consequences of firm level strategic similarity past research observed that firms face pressures to be different and to be the same by differentiating firms reduce competition by conforming firms demonstrate their legitimacy both reduced competition and legitimacy improve performance this paper begins building a theory of strategic balance by synthesizing the differentiation and conformity perspectives the theory directs attention to intermediate levels of strategic similarity where firms balance the pressures of competition and legitimation empirical support for the theory is found in a longitudinal study of commercial banks several suggestions for developing a theory of strategic balance conclude the paper the theory s major implication is that firms should be as different as legitimately possible copyright 1999 john wiley sons ltd

an assessment of the measurement of performance in international business research a sizeable body of international business ib research is devoted to building knowledge about the determinants of organizational performance a key precursor to accurately diagnosing why some organizations succeed in the international marketplace while others struggle is operationalizing performance appropriately yet to date no systematic investigation has considered how well ib research measures performance we examine the measurement of performance in 96 articles published in the academy of management journal administrative science quarterly journal of marketing journal of marketing research journal of international business studies management science organization science a nd thestrategic management journal between 1995 and 2005 the findings reveal that most studies do not measure performance in a manner that captures the multifaceted nature of the construct we describe the implications of these results and offer suggestions for improving future practice journal of international business studies 2008 39 1064 1080

action characteristics as predictors of competitive responses a central question in competitive dynamics is whether a competitive response can be predicted this study links various characteristics of actions with the total number and the time lag of competitors responses the hypothesized relationships were tested with a sample of competitive moves among u s airlines the results suggested that responses are influenced by the characteristics of the actions that evoked them specifically the total number of competitors affected by an action and the importance to these competitors of the markets under attack by the action increase the number of competitive responses strategic as opposed to tactical actions or actions which require substantial implementation efforts reduce the number and delay the timing of rivals counteractions finally contrary to prediction competitors who have a high stake in the markets under attack by a competitive move react slowly

regulation and investment use newly assembled data on regulation in several sectors of many oecd countries to provide evidence that regulatory reform of product markets is associated with an increase in investment a component of reform that plays a very important role is entry liberalization but privatization also has a substantial effect on investment sensitivity analysis suggests that our results are robust jel e22 l5

a structural dynamic analysis of retirement behaviour in the netherlands this study focuses on determinants of elderly labour force participation and retirement decisions in the netherlands this is analysed by a dynamic programming model for the simultaneous choice of retirement age and route which includes social insurance and private pensions eligibility conditions for early retirement lifecycle wage and health profiles and layoffs special attention is given to opportunities for and the effect of participation policies results show that institutional structures of benefit and pension programmes are prime determinants of retirement particularly eligibility conditions and potential substitution between exit routes and that dynamic aspects are relevant for understanding retirement behaviour copyright 2004 john wiley sons ltd

comment on the dynamics of job separation the case of federal employees summary this paper recasts the model presented in the dynamics of job separation the case of federal employees as an optimal stopping problem it shows that the individuals represented by the model are assumed to behave suboptimally and illustrates several policy analysis problems introduced by assuming such behaviour

getting to know you a theory of strategic group identity this paper develops a theory of strategic group identity that explains how strategic groups emerge in an industry and how they can affect firm behaviors and outcomes in so doing it provides a theoretical basis for the existence of strategic groups we argue that managers cognitively partition their industry environment to reduce uncertainty and to cope with bounded rationality social learning theory and social identification theory are used to describe how cognitive groups coalesce into meaningful substructures and how a group level identity emerges we describe the ways in which macro level factors condition the development of groups and their identities we introduce the notion of a strong identity which characterizes any group sufficiently recognized and attended to by members to affect individual action groups with weak identities are no more than transient agglomerations of firms and do not exist in any meaningful sense these ideas are developed into propositions that describe the conditions under which groups with strong identities are likely to emerge a second set of propositions describes their transformation over time identity strength is linked to both positive and negative outcomes in a final set of propositions we show how strategic groups with strong identities can affect firm performance resolving a longstanding problem which has plagued strategic groups research and conclude by suggesting some approaches for measurement and future research 1997 by john wiley sons ltd

anniversary article the strategy field from the perspective of management science divergent strands and possible integration we reflect on the evolution of the strategy field as seen through the window ofmanagement science reflecting the diverse disciplinary roots of strategy research we identify a broad ranging body of work that varies with respect to the assumptions made regarding individual rationality and the level of analysis at which the research is carried out we argue that recent developments begin to delineate a potentially unifying conceptual framework for treating the field s defining questions the conceptual apparatus of evolutionary economics we conclude by laying out important challenges for evolutionary economics if it is to serve as a foundation for both the positive and the normative research agendas of the strategy field

firm level employment labour market reforms and bank distress abstract we explore the impact of financial frictions on the employment effect of labour market reforms our study combines a new cross country reform database on labour market reforms with matched firm bank data for nine euro area countries over the period 1999 to 2013 while we find that labour market reforms are overall effective in increasing employment restricted access to bank credit can undo up to half of medium to long term employment gains at the firm level entrepreneurs without sufficient access to credit cannot reap the full benefits of more flexible employment regulation

how do incumbents respond to the threat of entry evidence from the major airlines this paper examines how incumbents respond to the threat of entry of competitors as distinguished from their response to competitors actual entry it uses a case study from the passenger airline industry specifically the evolution of southwest airlines route network to identify particular routes where the probability of future entry rises abruptly when southwest begins operating in airports on both sides of a route but not the route itself this dramatically raises the chance they will start flying that route in the near future we examine the pricing of the incumbents on threatened routes in the period surrounding such events we find that incumbents cut fares significantly when threatened by southwest s entry into their routes this is true even after controlling in several ways for airport specific operating costs the response of incumbents seems to be limited only to the threatened route itself and not to routes out of nearby competitor airports where southwest does not operate e g fares drop on routes from chicago midway but not chicago o hare the largest responses appear to be restricted to routes that were concentrated beforehand incumbents do experience short run increases in their passenger loads concurrent with these fare cuts this is consistent with theories implying incumbents will try to generate some longer term loyalty among current customers before the entry of a new competitor we examine evidence relating this demand building motive to frequent flyer programs and find suggestive evidence in favor of this notion there is only weak evidence that incumbents increase capacity on the routes

the influence of non pecuniary factors on labor supply the case of navy enlisted personnel this paper expresses the elasticity of labor supply to an occupation in terms of the variances and covariances of the distributions of non pecuniary factors across the alternative occupations we then apply our results to an analysis of reenlistment rates among navy enlisted personnel we argue that those navy skills experiencing a higher incidence of sea duty will have lower pay elasticities this prediction is confirmed empirically using probit analysis

dismissal costs and innovation empirical evidence suggests that dismissal costs are negatively associated with r d intensity across countries but positively within countries over time this evidence can be rationalized theoretically with a negative entry effect and a positive innovation effect for incumbent firms

a theory of compensation and personnel policy in hierarchical organizations with application to the united states military a large literature attempts to explain compensation and personnel policies in large organizations three features of the u s military system flat rank spreads in pay a relatively generous pension and heavy reliance on up or out promotions are at variance with common practices in large civilian organizations this article develops a model of individual decision making in a large hierarchical organization and uses the model to explain these apparent puzzles the lack of lateral entry and heterogeneity in entrants abilities and preferences for military service play key roles in the observed policies

short term pain for long term gain market deregulation and monetary policy in small open economies abstract this paper explores the effects of labor and product market reforms in a new keynesian small open economy model with labor market frictions and endogenous producer entry we show that it takes time for reforms to pay off typically at least a couple of years this is partly because the benefits materialize through firm entry and increased hiring both of which are gradual processes while any reform driven layoffs are immediate some reforms such as reductions in employment protection increase unemployment temporarily implementing a broad package of labor and product market reforms minimizes transition costs importantly reforms do not have noticeable deflationary effects suggesting that the inability of monetary policy to deliver large interest rate cuts in their aftermath either because of the zero bound on policy rates or because of the membership in a monetary union may not be a relevant obstacle to reform alternative simple monetary policy rules do not have a large effect on transition costs

the specification and estimation of dynamic stochastic discrete choice models a survey our main goal is to quantify the returns to a career in the united states congress we specify a dynamic model of career decisions of a member of congress and estimate this model using a newly collected dataset given estimates of the structural model we

antecedents of convergence and divergence in strategic positioning the effects of performance and aspiration on the direction of strategic change this paper investigates drivers of convergence and divergence in strategic positioning in terms of resource allocation decisions the study based on the behavioral theory of the firm suggests two unexplored kinked curve relationships between performance gaps and strategic convergence divergence first the study suggests a negative relationship between a focal firm s performance relative to aspiration levels and strategic convergence divergence where the slope is steeper when performance is above the aspiration level second it suggests a positive relationship between a target firm s performance relative to a focal firm s performance and strategic convergence divergence where the slope is steeper when a target firm s performance is below a focal firm s performance empirical analysis of dyad level data in the u s food processing industry reveals that the direction of a firm s strategic change is shaped by its aspiration level its performance level and the performance gap between it and the firm it selects as a model this study contributes to the current literature by offering preliminary indications of when and how a firm moves closer to or further away from other competing firms in its strategic position

before it gets better the short term employment costs of regulatory reforms the article exploits long time series of industry level data in a group of oecd countries to analyze the short term labor market effects of reforms that lower barriers to entry and dismissal costs estimates show that both policies induce non negligible transitory employment losses the strength of these effects varies depending on the underlying industry and labor market structure and on cyclical conditions the employment cost of deregulation is higher in economic downturns and negligible in good times these findings prove robust to a set of specification and sensitivity checks and are confirmed after standard reverse causality and falsification tests

is economic recovery a myth robust estimation of impulse responses we estimate the impulse response function irf of gdp to a banking crisis using an extension of the local projections method we demonstrate that though robust to misspecifications of the data generating process this method suffers from a hitherto unnoticed bias which increases with the forecast horizon we propose a correction to this bias and show through simulations that it works well applying our corrected local projections estimator to the data from a panel of 99 countries observed between 1974 and 2001 we find that an average banking crisis yields a gdp loss of just under 10 in 10 years with little sign of recovery like the original local projections method our extension of it is widely applicable

the effect of separation bonuses on voluntary quits evidence from the military s downsizing this paper analyzes the decision of mid career personnel to voluntarily leave the u s military in response to a financial incentive program a model of the separation decision is tested using data on navy and air force enlisted personnel who were targeted for the buyout in 1992 two alternative estimates are provided one from a fixed effects model and one from a structural annualized cost of leaving model our basic results indicate the financial incentive had a modest effect in inducing additional quits the impact of the separation bonus however was much larger for occupations facing a threat of involuntary layoff

precautionary saving credit constraints and irreversible investment theory and evidence from serniarid india this article investigates the extent to which poor households are discouraged from making a non divisible but profitable investment using data on irrigation wells in india we estimate the parameters of a structural model of irreversible investment results show that poor farmers fail to undertake a profitable investment that they could in principle self finance because the nondivisibility of the investment puts it out of their reach irreversibility constitutes an additional disincentive to invest simulations show that the availability of credit can dramatically increase investment in irrigation and that interest rate subsidization has little impact

do strategic groups exist an economic framework for analysis this paper offers a framework and methodology for resolving the question regarding the existence of strategic groups we say that a strategic group exists if characteristics of the group affect firm performance independently of firm level and industry level effects we argue that group level effects are a byproduct of strategic interactions among members and develop an empirical testing model based on the new economics of industrial organization to distinguish true group effects from spurious effects from this model we derive a series of logically consistent propositions suggesting that while strategic interactions are critical for a group level effect on profits mobility barriers are necessary to preserve both groups and their effects over time a review of prior empirical studies of strategic groups suggests that the inconclusive nature of prior research has been due more to the lack of a theoretical foundation for empirical analysis than to the nonexistence of groups to the extent that our methods have been employed there is limited evidence that a rigorous search for strategic groups may prove fruitful 1998 john wiley sons ltd

strategic leaders or strategic groups a longitudinal data envelopment analysis of the u s brewing industry abstract this paper builds on strategic group theory which was originally introduced to help explain the observed variation in firm profitability across an industry this paper applies data envelopment analysis dea to identify both strategic leaders the best practice players in the industry and strategic groups to examine which are the source of the most sustained heterogeneity in the performance of u s brewers contrary to the prevalent research approach in strategy and organization research which places a premium on empirical analyses that maximize explanation of average behavior daft and lewin 1990 this paper examines extremal observations as a means of studying or inducing theories about best practice such as best strategies or most effective organization design lewin and minton 1986 the paper argues that significant insights new knowledge and unexpected theories can arise from studying the best or worst of a population the paper applies dea to a longitudinal reanalysis of u s brewing data to demonstrate its usefulness for obtaining new insights from identifying and studying industry outliers the paper raises important questions about the construct of strategic groups and illustrates how competing theories can be deduced and analyzed for explaining performance heterogeneity in the u s brewing industry

crossing the river a comparative perspective on italian employment dynamics crossing the river a comparative perspective on italian employment dynamics this paper studies the unprecedented job destruction which occurred throughout europe during the recession of the early 1990s it raises the question whether changes in the institutional structure of various countries labour markets may have deepened the normal effects of the recession institutional legal and sociopolitical safety nets were used to protect many european employees from technological and demand shocks throughout the 1970s and early 1980s important steps have since been taken to deregulate industrial relations european labour markets may currently be in the middle of the river they already experience the negative employment aspects of an american labour market without yet enjoying its benefits based on a study of several countries the article concludes that the social costs of deregulation will be smallest if the intended destination of the transition is reached credibly and without hesitation policy makers must point decisively towards a well defined riverbank rather than leaving the labour market in the middle of the stream giuseppe bertola and andrea ichino

technological innovation in the pharmaceutical industry the use of organizational control in managing research and development the literature on the management of r d professionals strongly advocates managing r d projects on a project by project basis this literature suggests that projects should be managed differently depending upon project characteristics such as risk ambiguity and nonroutineness while the primary emphasis of the r d professional literature has been on project teams the purpose of this study is to examine the impact of organization wide controls on innovativeness at the firm level in a sample of 57 pharmaceutical firms this study investigates the influence of organizational controls on the research and development activities of r d professionals this study is one of a handful of studies that simultaneously explores the use of input behavior and output controls two categories of innovation are considered as dependent variables incremental innovations in the form of drug enhancements and radical innovations in the form of new drugs contrary to existing theory and hypotheses developed in this study the results show that input behavior and output control enhanced radical innovation and input and output controls enhanced incremental innovation these results challenge several important features of existing models of r d management and diverge from common beliefs about r d management at the project level while it is commonly accepted that incremental and radical innovation should be managed differently the results of this study suggest otherwise in this instance the management of r d activities may be considered more similar than previously thought

strategic risk an ordinal approach strategic management researchers have shown increasing awareness of the importance of the concept of risk at the strategic level in recognition of this interest this research adopts a commonly used conceptualization of risk and shows how this conceptualization leads to a new measure of risk based upon the chance of loss of relative position within a set of firms this framework is shown to be particularly appropriate for strategy research information contained in probability distributions describing the relative positions of sets of firms over time is shown to be partitionable on the basis of gain or loss in position as well as on firm identity leading to the derivation of a new measure of strategic risk for an individual firm this development also provides a hierarchical quantification of risk at the levels of the industry group and individual firm the ordinal risk measure is applied to both hypothetical data for illustration and to data on the u s airline industry

estimating the impact of the r d tax credit on strategic groups in the pharmaceutical industry abstract the economic recovery and tax act of 1981 provided a 25 percent tax credit for increases in research and experimentation expenditures previous studies have shown considerable controversy about the effectiveness of various tax credits this study focuses on the response of the strategic groups in the pharmaceutical industry to the credit four strategic groups were formed using different levels of research intensity research sales and relative cash flow margin cash flow sales the change in research intensity following enactment of the tax credit was estimated the analysis found that the tax credit caused an increase in r d expenditures in addition the r d tax credit appears to have contributed to increased competitive r d spending among the firms in the pharmaceutical industry

sustained competitive advantage temporal dynamics and the incidence and persistence of superior economic performance competitive advantage is a key concept in strategic management research for a number of reasons not the least of which is that an avowed consequence of its attainment is held to be superior economic performance however few prior empirical studies have directly and systematically documented the incidence or prevalence of persistent superior economic performance the research reported here is based on empirical studies of a large number of industry samples for which longitudinal data were stratified by levels of performance using a new methodology and then analyzed in terms of their dynamics this new stratification technique was used in lieu of autoregressive methods employed in prior studies of performance persistence to allow for a true outlier analysis because persistent superior economic performance both has been argued theoretically and found empirically to be rare detailed results from a sample of 6 772 firms in 40 industries over 25 years are presented to illustrate the findings that 1 while some firms do exhibit superior economic performance 2 only a very small minority do so and 3 the phenomenon very rarely persists for long time frames these results while not providing direct support for a particular extant strategic management or economic theory concerning firm performance are most consonant with the resource based view of the firm and have implications for significant aspects of other received strategic management and economic theories

rethinking research methods for the resource based perspective isolating sources of sustainable competitive advantage an exploration of traditional perspectives and contemporary propositions regarding sustainable competitive advantage points to the conclusion that the locus of advantage is located specifically within organizational effects the key issue emerges that research investigating sources of sustainable competitive advantage must be done not only on organizations but also in organizations the fallout from this conclusion is however that the research methodologies traditionally used in strategy research will not unambiguously uncover these sources of sustainable advantage using organizational culture as an example of a possible source of sustainable advantage within a resource based paradigm a four step research framework is suggested for isolating these organizational effects copyright 1999 john wiley sons ltd

manufacturing strategy and competitiveness the importance of manufacturing strategy ms has never been questioned and has been emphasized in many theoretical concepts frameworks and models there are only a few empirical studies however which examine whether these theories work in practice in this paper the hypothesis that the existence of ms contributes to company level competitiveness ros inventory turnover is tested the study is based on international data which were collected in the second round of the international manufacturing strategy survey the database contains more than 700 companies from the machinery industry isic 381 385 from 23 countries the results partially support the hypothesis the existence of ms seems to have a positive effect on ros however it does not have any relation to inventory turnover r 2002 elsevier science b v all rights reserved

high profit strategies in mature capital goods industries a contingency approach high profit and low profit strategic gestalts in two different types of mature capital goods industries are examined multiple avenues to high profits are found within both types but they differ

strategic group dynamics a longitudinal study was conducted of strategic group dynamics over periods of economic stability growth and decline in international offshore oil drilling some changes in group strategy were ob

the personal discount rate evidence from military downsizing programs the military drawdown program of the early 1990s provides an opportunity to obtain estimates of personal discount rates based on large numbers of people making real choices involving large sums the program offered over 65 000 separatees the choice between an annuity and a lump sum payment despite break even discount rates exceeding 17 percent most of the separatees selected the lump sum saving taxpayers 1 7 billion in separation costs estimates of discount rates range from 0 to over 30 percent and vary with education age race sex number of dependents ability test score and the size of payment

a behavioral understanding of investment horizon and firm performance observers have argued that firms overly emphasize short term results at the expense of long run value using a behavioral perspective we analyze three hypotheses related to this general argument first we examine the association of investment time horizons with firm performance contributing new theory that argues for a quadratic rather than linear association second because the tendency toward immediate results could reflect stock market pressures we consider how the interaction of investor patience and firm horizon relates to firm performance third we examine the argument s implication that most firms have investment horizons at a level where marginal increases in horizon associate positively with firm performance measuring horizon as the expected useful lives of capital expenditures we find empirical support for the hypothesized quadratic relation in a large scale multiyear sample of u s publicly held manufacturing firms and confirm that a majority of firms have horizons in the region where our models predict increases in horizon positively influence performance we also find that the most positive returns occur when long horizon investments are aligned with investor patience