new product introduction and incumbent response strategies their interrelationship and the role of multimarket contact in this article the author studies the determinants of both new product introduction and incumbent response strategies in a single integrated framework building on previous research in strategic

exchange market intervention under multiple solutions abstract this paper analyzes exchange market intervention in a small open economy in the analysis the solutions are refined by two alternative criteria under the minimal state solution a simple feedback rule can perfectly stabilize income fluctuation if and only if exogenous shocks are unanticipated and serially correlated however under a collective rational solution the simple rule can always perfectly stabilize income fluctuation regardless of the forms of exogenous shocks and their degrees of anticipation the latter result is surprising because this simple rule may be more effective than the rules derived in the previous literature

is the european community an optimal currency area optimal taxation versus the cost of multiple currencies the authors propose a view of optimal currency areas that is based on the principles of public finance inflation taxes are distortionary and an optimal spreading of tax distortions may require high inflation in one region and low inflation in another each region would need its own currency to do this on the other hand multiple currencies imply valuation and currency conversion costs which impede trade between regions this tradeoff is explored in the context of the european community s debate over a common currency using a two country variant of robert lucas and nancy stokey s cash in advance model copyright 1990 by american economic association

credibility and seigniorage in a common currency area in the paper we show that common currency areas tend to amplify the inefficiencies associated with lack of credibility of monetary policy lack of commitment in redistribution of seigniorage leads to excessive inflation and suboptimal taxation in the monetary union lack of commitment to inflation creates multiple inefficient equilibria that do not exist in a regime of national monetary independence

industry and firm specific factors of innovation novelty this article investigates the underlying factors that might shape the firm s choices with respect to degrees of innovation novelty using a sample of 2983 firms observed under the portuguese community innovation survey we assess the relative relevance of a set of firm and industry specific factors in explaining firms choices about incremental or radical innovation the results indicate that both the firm s idiosyncratic historical factors giving rise to heterogeneous r d capabilities and the industry context have power to shape the firm s innovation choices even though firm specific factors appear to be more powerful the estimated impacts on firm s innovation novelty are nonetheless significantly moderated by the type of firm and industry

corporate governance and innovation a survey abstract the traditional economics of innovation inspired by schumpeter and more recent advances on his work seem unable to explain why firms with similar external conditions may show greatly different performance in innovation contrastingly the literature on corporate governance provides some useful insights for understanding corporate innovation activity to the extent that such literature examines the economic effects of different modes of coordination between firm members the process through which individuals integrate their human and physical resources within the firm is central to the dynamics of corporate innovation this paper provides the first survey of the literature on this issue we start by discussing how various theoretical approaches to the analysis of the firm deal with technological innovation we then describe three main channels corporate ownership corporate finance and labour through which a system of corporate governance shapes a firm s innovation activity finally we examine the relationship between country level institutional settings national patterns of corporate governance and the aggregate innovation activity of corporations we conclude by suggesting that future research should focus more deeply on the interrelation between the various dimensions of corporate governance and on their joint effect on firm innovation

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

competitive consequences of interfirm collaboration how joint ventures shape industry profitability recent international business research on international joint ventures focuses on how firms can use such ventures for knowledge access and learning to enhance their competitiveness thereby increasing competition in the industry by contrast research in industrial organization economics has observed that firms can also use joint ventures in various ways to attenuate competition in this paper we join these two streams of research to investigate the conditions under which joint ventures reduce or enhance competition by empirically testing the effects of different types of joint ventures on industry profitability our results suggest that joint ventures can be pro competitive or anti competitive depending on whether or not they are formed between competing firms represent foreign market entry and operate in relatively concentrated industries our paper shows the importance of adopting a contingent approach to evaluating the competitive implications of joint ventures and it also points to the value of reinvigorating international business research on the competitive context and consequences of interfirm collaboration

corporate venturing and value creation a review and proposed framework abstract over the past decade companies worldwide have used corporate venturing cv as a means of revitalizing their operations building new capabilities and achieving strategic renewal creating value for shareholders business interest in cv has stimulated academic interest in the topic resulting in a rapidly growing but fragmented body of literature despite the growing international scholarly interest in cv researchers have devoted little effort to integrating prior findings in a cumulative fashion as a result studies do not build upon one another making it difficult to gauge the progress being made in addressing the fundamental research questions related to cv in this paper we examine the literature on cv seeking to synthesize integrate and link its key findings to do so we analyze this literature over the past decade to identify its major themes and research findings setting the stage for greater coherence in future research on cv we give special attention to the challenges and rewards of theory building in future cv research our review clearly shows that cv is an area of scholarly inquiry that has important implications for managerial practice

the allocation of seigniorage in a common currency area this paper considers the allocation of seigniorage in a common currency area with an independent central bank it is shown that if the central bank retains autonomy in the allocation of seigniorage inflation will be suboptimally high and taxes and government spending will be suboptimally low constitutionally mandating the rate of money growth will result in optimal inflation but taxes and government spending will be too low as long as consumers do not put too much weight on public good consumption relative to private it is better to constitutionally mandate seigniorage allocation shares than the level of money growth

marketing models and the lucas critique the lucas critique has been largely ignored in the marketing literature we present a number of conditions under which the critique is most likely to also apply in marketing settings next we provide some perspectives on how to diagnose and accommodate the lucas critique and identify various avenues for future research

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

monetary fiscal policy interactions and commitment versus discretion in a monetary union abstract we consider monetary fiscal policy interactions in a monetary union if monetary and fiscal authorities have different ideal output and inflation targets the nash equilibrium output or inflation or both are beyond the ideal points of all authorities leadership of either authority is better fiscal discretion entirely negates the advantage of monetary commitment the optimal monetary rule is equivalent to discretionary leadership of monetary over fiscal policy agreement about ideal output and inflation creates a monetary fiscal symbiosis yielding the ideal point despite disagreement about the relative weights of the two objectives for any order of moves without fiscal co ordination and without monetary commitment

monetary and fiscal policies under two alternative types of rules abstract this paper considers the relative advantage of two types of monetary and fiscal feedback rules when the private agents have full current information the appropriate combination of monetary and fiscal feedback on past disturbances dominates the contemporaneous feedback in stabilizing the real output and the price level this dominancy however disappears when the exchange rate stability is included in the objective function or when the currently observable variables are limited in general there exist some tradeoffs among feedback parameters some of the policy coefficients can be set arbitrarily enabling the optimal policy rules to be specified in many equivalent ways

venture capital and management led leveraged buy outs a european perspective abstract management and leveraged buy outs became phenomena of the 1980s from beginnings in the u s they quickly traversed the atlantic spreading first to the u k and then throughout europe the venture capital industry has played a crucial role in the development of buy outs in europe particularly in smaller deals in the u k the netherlands and france this paper examines three aspects of the market for venture and development capital funded management led buy outs in europe it provides a framework for analysis of the different levels of development of each country s market it examines performance of u k buy outs and addresses the extent and nature of exits throughout the paper use is made of the extensive database of european buy outs developed by the authors the main conclusions to emerge are as follows european experience can not be compared to that in the u s as a single economy there are important differences between european countries in respect of the level of buy out activity and the extent to which conditions are or will be favourable for the development of such transactions conceptually a buy out market may be considered as requiring three main factors to be present if it is to develop the generation of buy out opportunities the infrastructure to complete a transaction and opportunities for the investors in a buy out to realise their gains these broad groups may be further sub divided the generation of opportunities will be heavily influenced by attitudes to entrepreneurial risk and hence willingness of managers to buy the ownership structure of industry and hence the generation of entities which are for sale and the state of development of mergers and acquisition markets the infrastructure to complete transactions includes sources of funding both in respect of venture capital availability and the ability of banks to fund transactions the nature of legal and taxation regimes and the existence of intermediaries and advisors who can both identify and negotiate buy outs the existence of suitable exit routes comprises stock market flotation sale to another group and recapitalisation possibly through a secondary buy out many of these factors are similar to the conditions necessary for venture capital deals to develop the generation of entities for sale may take various forms with succession issues in family firms divestment of unwanted divisions privatization of public sector activities and going privates of companies quoted on a stock market being the most important this framework was used to analyze european buy out markets through a combination of interview and desk research the evidence shows that the most highly developed buy out markets and those with the greatest short term potential are not necessarily to be found in the largest economies u s investors who turn towards europe to develop their markets at a time when the u s buy out market is experiencing a downturn and european investors seeking to broaden their activities need to be aware of these differences as in comparable studies in the u s u k lbos on the evidence from our survey of 182 buyouts on average produce performance improvements u k lbos appear to undertake a greater level of new product development and asset purchase after buy out than do their counterparts in the u s and have placed less emphasis on asset disposals than u s lbos managers buying out frequently tightened up their control of working capital the results of our survey indicate support for both the entrepreneurial and agency cost reduction perspectives about buy outs with the former perhaps being somewhat more in evidence exit routes are an important aspect of the buy out market but evidence presented here indicates that buy outs are unlikely to exit in the way in which they originally envisaged in particular buy outs that initially were aiming for flotation on a secondary tier stock market have almost invariably been sold to third parties

fiscal solvency and price level determination in a monetary union abstract this paper applies the fiscal theory of price level determination to the case of a monetary union a fiscal perspective suggests first that the focus of past studies on seigniorage per se may be misplaced second a rise in the level of debt by one member government can raise the common price level throughout the union suggesting a role for fiscal rules third conditions are discussed under which fiscal solvency is not necessary for each member government in a monetary union

contextual influences on the corporate entrepreneurship performance relationship a longitudinal analysis abstract over the past several years corporate entrepreneurship has been widely touted by executives and researchers alike as an effective means for revitalizing companies and improving their financial performance for the most part the call for greater entrepreneurial behavior on the part of established companies has been accepted on faith as an inherently desirable objective the implicit logic behind the pervasive belief in the value of corporate entrepreneurship seems to be that risk taking innovation and aggressive competitive action the key elements of entrepreneurial corporations will help in identifying and pursuing lucrative product market opportunities and in providing new bases for achieving superior competitive positions but what do we really know about the financial consequences of corporate entrepreneurship most of the evidence that corporate entrepreneurship pays off is anecdotal in nature or based on cross sectional studies that focus on the short term implications of entrepreneurial behaviors as such in a definitive sense we know very little about the financial consequences of corporate entrepreneurship in an attempt to improve our understanding of this issue this article describes a study of corporate entrepreneurship and its impact on company financial performance data were collected from three different samples over a seven year period to assess the longitudinal impact of corporate entrepreneurship on firm performance these samples consist of 24 medium sized manufacturing firms representing 14 industry segments 39 chemical companies and 45 fortune 500 industrial firms representing five industry segments data were gathered on each sample using both primary and secondary sources regression analysis was then used to analyze the data the results suggest that corporate entrepreneurship has a positive impact on financial measures of company performance this effect on performance which tends to be modest over the first few years increases over time suggesting that corporate entrepreneurship may indeed be a generally effective means for improving long term company financial performance moreover the results indicate that corporate entrepreneurship is a particularly effective practice among companies operating in hostile environments as opposed to benign environments the study has three principal implications for practicing managers first the study documents the general financial viability of engaging in corporate entrepreneurship this is not to suggest that corporate entrepreneurship is a panacea for improving financial performance however entrepreneurial behavior when considered on the whole i e across firms and industries is associated with superior financial performance second the study suggests a need to use a long term time horizon in order to adequately judge the financial consequences of corporate entrepreneurship the use of a shorter evaluation period may not allow sufficient time for entrepreneurial actions to have their full market and corresponding financial impact finally the study identifies the context specific character of effective entrepreneurial practice specifically corporate entrepreneurship appears to be a particularly effective strategic practice among firms operating in hostile business settings

responding to rivals and complements how market concentration shapes generational product innovation strategy this study examines how competitive market conditions shape the responsiveness with which businesses release generational product innovations gpis following the introduction of gpis by either competitors or complementary firms gpis are substantial technical advances in the performance of products within technology regimes prior studies of innovation timing in the organizational strategy literature emphasize internally driven strategies of gpi although internally driven strategies may predominate when businesses face diffuse competition for their product lines the literature largely overlooks the point that businesses need to be increasingly responsive to external events as market concentration increases this study which examines businesses competing in the u s packaged software industry in the 1990s shows that increasing industry concentration raises the stakes surrounding market positions and leads to greater interdependence of innovation strategies in an industry including interactions both with competitors and with other players in a larger system of complementary products as concentration increases therefore organizations are less driven by historical patterns of innovation and become increasingly responsive to innovations by both types of external actors

choosing a monetary instrument the case of supply side shocks abstract this paper examines the monetary instrument choice problem in models with an explicit supply sector and endogenous prices and price expectations we use the popular linear quadratic certainty equivalence framework to obtain analytic solutions the results indicate that interest rate policies generally are better able to insulate the real sector from unanticipated supply shocks we also show that at this level of abstraction the optimal choice of an instrument is independent of the specification of expectations e g rational vs adaptive price expectations the paper then reports empirical evidence from two experiments on the large nonlinear mit penn ssrc econometric model the evidence is consistent with the hypothesis that interest rate policies are preferable if the supply sector is the major source of uncertainty

letting rivals come close or warding them off the effects of substitution threat on imitation deterrence a resource based theory postulate is that firms must defend their resources against imitation to sustain competitive advantage however by deterring imitation firms may induce rivals to create su

a volatility based theory of fiscal union desirability abstract heterogeneous countries may rationally choose to form a currency union first and a fiscal union later we find and illustrate empirically for the emu countries reasonable volatility conditions under which this sequencing in the deepening process is indeed rationalizable changes in the distribution of expected income shocks require a reassignment of political weights to restore unanimous support for an added fiscal dimension the bargaining space depends on countries relative income size and cross correlation of shocks

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

capital tax competition under a common currency abstract we re examine the view that capital taxes are too low when capital is mobile across tax jurisdictions we do so by emphasising a previously neglected implication of decentralised capital tax setting when jurisdictions share a common currency namely capital taxes give rise to a vertical externality by affecting the revenues of the over arching central bank from issuing the common currency this externality may lead ceteris paribus to too high regional capital taxes and may more than offset the usual effects of tax competition in this case and contrary to conventional wisdom decentralised capital taxes will be too high

assessing the contribution to innovation of private equity investors a study on european buyouts abstract the paper provides an empirical analysis of the patenting activity of a sample of western european manufacturing firms undergoing a buyout between 1998 and 2004 a panel data design is used to test whether the characteristics of the deal and of private equity pe firms can affect acquired companies subsequent innovation effort as measured by the number of patents granted by the epo results support the view that the innovation activity of portfolio firms is affected by different types of investors pursuing different objectives and differing in their risk propensity expected returns and investment policies the characteristics of lead investors size stage specialization geographical location and of the deal amount invested presence of multiple investors are also investigated and are found to differently affect the post buyout innovation activity of sample firms

business cycle convergence in emu a first look at the second moment we analyse the dynamics of the standard deviation of demand and supply shocks as well as of the demand component of gdp across countries in the european monetary union emu this analysis allows us to evaluate the patterns of cyclical comovement in emu and compare them the cyclical performance of the new members of the eu and other oecd countries we make use of sigma convergence methods to identify synchronization patterns in business cycles the eurozone has converged to a stable lower level of dispersion across business cycles during the end of the 80s and the beginning of the 90s the new eu members have also experienced a strong pattern of convergence from 1998 to 2005 when a strong divergence trend appears an enlargement of the emu to 22 members would not significantly decrease its optimality as a currency area there is evidence for some europe specific characteristics as compared to global comovements in business cycles authors abstract

seigniorage and the case for national money in countries with high rates of inflation there is typically movement away from the use of the local currency the paper analyzes the costs and benefits of using a local currency with emphasis on the seigniorage foregone by using a foreign money even if it should be desirable for a country to fix its exchange rate it still loses seigniorage if it does not use its own money the case for using a foreign money then turns largely on the superior discipline imposed on domestic policymakers by removing their control over the money supply alternative methods of imposing discipline are discussed estimates of the amount of seigniorage raised by different governments are presented seigniorage amounts in some cases to about 10 percent of government revenue estimates are also presented of both the annual flow and one time stock costs of giving up use of domestic currencies and instead using the dollar the flow cost is typically about 1 percent of gnp and the stock cost is around 10 percent of gnp

rapid fdi expansion and firm performance today more firms are expanding rapidly into foreign markets to reach global scale quickly and to capture or nullify first mover advantages these trends run counter to the conventional theory of gradual internationalization which suggests that firms maximize the benefits of learning from prior experience thereby minimizing the hazard of failure we argue that this conventional wisdom does not consider the risk of being a perennial late mover in the face of increased global competition this study explores the circumstances under which rapid fdi expansion a strategy of undertaking fdi expansion at an accelerated speed can be a viable strategy using data on korean firm expansion we find that rapid fdi expansion enhances firm performance in industries where globalization pressures are high and when it is done by firms with superior internal resources and capabilities

financial performance of leveraged buyouts an empirical analysis abstract this study compares management performance before and after leveraged buyouts of 25 sample companies average performance for the two years before a leveraged buyout is compared to average performance for the two years after a buyout the year of the buyout is omitted from comparisons because it usually includes recognition of a number of atypical events which distort comparisons managers must acquire some equity ownership as part of the buyout and a major restructuring must not occur in either the pre or post buyout periods seven accounting variables adjusted in the pre buyout periods to reflect values reflected in the post buyout periods are used to measure performance comparison of pre and post buy out performance are made directly for the same entity comparisons are also made of pre and post buyout performance in terms of the ratios of company performance to industry performance multivariate analyses of variance using all seven variables reflect change in both comparisons which is significant at the 001 level post hoc tests are performed to attempt to identify the extent of change in the separate variables and to examine the significance of income tax savings financial performance after the buyouts is superior to performance before the buyouts the evidence is convincing that management focus changes apparently from minimizing variability in reported profits to maximizing cash flow the improvement is greater than from income tax savings alone three groups of lbo participants are interviewed to gain insight into the forces behind the changes which are reflected in the financial data executives of institutional investors lbo house principals and chief executive officers of lbo companies all anticipate a higher return on investment in the post buyout period and more efficient use of corporate assets they tend to consider cashflow to be the primary measure of performance of lbo companies the reason for the improvement in performance cannot be identified with certainty but no explanation is more persuasive than the introduction of entrepreneurial management by the small group of new owner managers interviewees provide anecdotal evidence that the utility functions of on site managers and other investors converge on the task of debt reduction indicating a reduction of agency costs absence of free cash flow in the post buyout period also provides support for lesser agency costs however the introduction of entrepreneurial management is interpreted to include the exploitation of a wider set of opportunities to achieve wealth and position for owner managers than from the reduction of agency costs alone the findings are important for investors future lbo players and for makers of public policy efficiency improvements can reasonably be expected from similar future leveraged buyouts improvement not dependent on income tax savings

optimal monetary policy and wage indexation under alternative disturbances and information structures the interdependence between the optimal degree of wage indexation and optimal monetary policy is analyzed for a small open economy under a variety of assumptions regarding 1 relative information available to private agents and the stabilization authority and 2 the perceived nature of the disturbances impinging on the economy the distinctions between 1 unanticipated and anticipated disturbances and 2 permanent and transitory disturbances are emphasized the extent to which stabilization is achieved is shown to depend upon the nature of the disturbances and the available information the policy redundancy issue is emphasized implying that optimal rules can frequently be specified in many equivalent ways copyright 1987 by ohio state university press

a dynamic perspective of internal fit in corporate venturing abstract managers of corporate parents and their ventures have long been faced with the question of how closely to tie the parent and venture a close connection may enable a venture to capitalize on the competencies and resources of the parent however venture autonomy could prevent corporate inertia and bureaucracy from constraining venture growth the lack of consensus on this issue leads us to the first of two complementary research questions that we address in this paper what is the effect of internal strategic fit between a corporate parent and its venture on venture performance we suggest that a tight fit is positively associated with venture performance because of the venture s access to its parent s resources managers and researchers alike have often observed that growing enterprises are dynamic entities in the case of corporate ventures this implies that the relationship between parent and venture evolves over time our second research question directly addresses this issue by asking does the relationship between a corporate parent and its venture s evolve over time and if so how we identify two dimensions of the fit between corporate parents and their ventures relational and economic a relational fit reflects organizational culture and structure while an economic fit is a function of the needs of the venture and the resources of the parent we develop a series of hypotheses and test them with survey data from 97 canadian corporate ventures for the purposes of this study we define success as the ability of a firm to meet internal milestones on schedule we find that the degree of fit between a corporate parent and its venture does affect the success of a venture and that success is associated with high levels of awareness commitment and connection further the relational dimension of the parent venture interface appears to have a greater association with venture success than does the economic dimension our data support the idea that the parent venture relationship is dynamic in nature as ventures in our sample generally lessened their economic connections with their parents as they matured or vice versa we did find however that the relational bonds remained more or less intact the exceptions to these general trends were an increasing emphasis on financial targets along with decreasing ceo involvement as ventures matured both of these findings make intuitive sense greater financial independence is accompanied by greater financial accountability and as a venture gains in both independence and accountability there is less need for the ceo to provide air cover these two issues aside the basic model of enduring relational ties and diminishing economic ties was supported as well the increasing accountability is consistent with our expectation that a close connection is preferable to high venture autonomy

government finance with currency substitution abstract we analyze seigniorage in an overlapping generations model where a friction induces a precautionary demand for a weaker currency the friction which is modeled as a transactions cost is viewed as an inverse measure of currency substitutability governments finance spending with costly income taxation or seigniorage we show that if governments act independently money growth is suboptimally low if currencies are sufficiently substitutable and too high otherwise if money growth is suboptimally low increasing substitutability lowers it further however since greater substitutability is associated with smaller real costs of exchanging money welfare need not fall

inflation and taxation with optimizing governments this paper examines the empirical validity of the predictions that if governments minimize the deadweight loss from raising revenue through inflation and tax finance there should be a positive contemporaneous association between inflation and the level of tax burdens the authors examine the empirical validity of this prediction using data from great britain france germany japan and the united states inflation and tax rates are as likely to be negatively as positively correlated so the results cast doubt on the empirical relevance of simple models in which governments with time invariant tastes choose monetary policy to equate the marginal deadweight burdens of inflation and taxes copyright 1990 by ohio state university press

predicting order and timing of new product moves the role of top management in corporate entrepreneurship abstract in this study we focused on new product move as a form of corporate entrepreneurial activity we developed hypotheses relating the characteristics of the top management team tmt to the order and timing of new product moves made by firms we analyzed 223 new product introduction moves from the personal computer long distance telecommunication and brewing industries from the period of 1975 1990 we found that firms with larger tmts were more likely to be first movers the hypothesis that firms with larger tmts are more likely to respond quickly to new product moves received marginal support the hypothesis that tmts more heterogeneous in terms of organizational tenure of executives are more likely to be first movers as well as earlier in the order of new product moves received marginal support we found contradictory results with tmt organizational tenure and tmt educational background heterogeneity as predictors of order and timing of new product moves subsequently we conducted industry wise analysis that revealed important differences in this new product entrepreneurial activity across the three industries

the ethics of the complete management buyout cycle a multi perspective analysis management buyouts occur when incumbent managers typically in association with third party investors purchase all of a firm s outstanding stock and remove it from public trading prior ethical analyses of such activities have ignored the fact that large numbers of such buyouts return to public trading the ethical implications of management buyout activity can be more fully understood if the entire buyout process is considered beginning with the time the firm is taken private until it is returned to public trading using a widely employed strategic management ethical framework developed by hosmer 1994 this paper examines the ethics of the complete buyout cycle

grand corruption instead of commitment reconsidering time inconsistency of monetary policy abstract this paper suggests that inflation may be affected differently by grand corruption compared to its positive nexus with petty corruption in an extended barro and gordon 1983a model grand corruption may serve as a quasi commitment device a cheating expropriating government may actually deter a monetary authority from cheating reneging furthermore rogoff s 1985 conservative central banker has an unambiguously beneficial effect she reduces the inflationary bias even more while also rendering fiscal policy more effective the model nests the standard fiscal monetary interaction logic with and without expropriation as well as the diametrical symbiosis result obtained by dixit and lambertini 2003a

symbiosis of monetary and fiscal policies in a monetary union we consider the interaction between the monetary policy in a monetary union and the separate fiscal policies of the member countries we use a barro gordon type model extended to many countries and fiscal policies each country s fiscal policies inflict externalities on other countries and the common monetary policy has its time consistency problem but if the two types of policymakers agree about the ideal levels of output and inflation then this ideal is attained despite disagreements about the weights of the objectives despite ex post monetary accommodation to fiscal profligacy without fiscal coordination without monetary commitment and for any order of moves

strategic entry deterrence in analyzing deterrence of large scale entry two classes of entry barriers may be distinguished an innocent entry barrier is unintentionally erected as a side effect of innocent profit maximization in contrast a strategic entry barrier is purposely erected to reduce the possibility of entry two types of innocent barriers may also be distinguished a postentry absolute advantage has the property that if entry did occur the established firm would be at a profit advantage over the entrant examples are superior technology or product design patents and lower input prices a preentry asymmetry advantage arises from the fundamental preentry asymmetry between established firm and potential entrant before the entrant makes his entry decision the established firm has already committed resources this prior existence gives first move advantages the preentry asymmetry is independent of symmetry or asymmetry in the rules the equilibrium concept of the postentry game that might ensue even if the postentry game will be played according to nash cournot or entrant as leader rules the preentry leadership

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

mode size and location of foreign direct investments and industry markups abstract several studies find that inward foreign direct investment fdi raises host industries competition and productivity using aggregate fdi measures the monetary flows or the change in the industries foreign production share yet fdi flows are composed of many individual heterogeneous investments reflecting this heterogeneity i ask how the average traits of the individual investments that constitute the fdi flow further affect the host while the results show that inward fdi does heighten competition for us manufacturing industries in 1987 1991 price cost markups fall even more when foreign investments locate further away from incumbent industry which is consistent with endogenous location choice

interfirm competition for human resources evidence from the software industry to test a model of interfirm competition for human resources firms responses to the loss of employees to single rivals were examined results suggest that attributes of hiring firms and of hired employees are associated with target firms decisions to defend and retaliate against labor market rivals the findings have implications for the validation of intrafirm differences in human resource systems this study opens the door for further theorizing and modeling of interfirm competition for intangible resources a number of analysts have suggested that one of wal mart s sources of competitive advantage is its homegrown data warehouse and inventory management systems in 1998 internet retailer amazon com hired 15 of wal mart s information technology and logistics professionals intimately familiar with these systems alleging unfair competition wal mart responded by filing suit settling the lawsuit out of court amazon agreed to reassign most of the hired employees and refrain from actively recruiting wal mart employees for 12 months schwartz salamone 1999 similar interactions have been observed between microsoft and borland sears and montgomery wards and

predation reputation and entry deterrence abstract economists often argue that predatory practices are irrational since there exist cheaper or more certain means to gain or maintain a monopoly our gametheoretic equilibrium analysis suggests that if a firm is threatened by several potential entrants then predation may be rational against early entrants even if it is costly when viewed in isolation because it yields a reputation which deters other entrants asymmetric information plays a crucial role in our analysis since it provides the rationale for entrants to base their expectations of the firm s future behavior on its past actions the analysis also suggests methods to treat general reputational phenomena

time inconsistency and free riding in a monetary union in monetary unions a time inconsistency problem in monetary policy leads to a novel type of free rider problem in the setting of non monetary policies the free rider problem leads union members to pursue lax non monetary policies that induce the monetary authority to generate high inflation free riding can be mitigated by imposing constraints on non monetary policies without a time inconsistency problem the union has no free rider problem then constraints on non monetary policies are unnecessary and possibly harmful this theory is here detailed and applied to several non monetary policies labor market policy fiscal policy and bank regulation

complementary resources and capabilities for an ethical and environmental management a qual quan study managers commitment to contribute to sustainable development holds the key to their long term business success and may be a source of competitive advantage the managerial perception of business ethics is influenced by the level of moral development and personal characteristics of managers these perceptions are also shaped by forces existing in the environment of the firm including available resources societal expectations sector and regulations the resource based perspective can thus contribute to the analysis of ethical issues offering important insights on how they can influence the environmental strategy of the firm the findings of this study show that firm resources have a strong influence on business managers ethical attitudes in addition the application of resource based rationales to ethical issues can be justified in the following several ways it influences a managerial perception of natural environment as a competitive opportunity it requires investments of financial and human resources flexibility and speed in the adaptation to environmental changes and it creates new resource based opportunities through changes in prevention pollution technology policy process and market forces

government finance in a common currency area abstract european integration in 1992 may require greater exchange rate coordination thatn currently exists the delors report goes as far as to recommend the eventual adoption of a single currency however the formation of a common currency area raises fears that independent fiscal policies may produce inferior outcomes this paper shows that lack of cooperation in fiscal policy leads to too little inflation too high taxes and too much government spending jel f33

the correlates of entrepreneurship in three types of firms the objective of the research was to discover the chief determinants of entrepreneurship the process by which organizations renew themselves and their markets by pioneering innovation and risk taking some authors have argued that personality factors of the leader are what determine entrepreneurship others have highlighted the role played by the structure of the organization while a final group have pointed to the importance of strategy making we believed that the manner and extent to which entrepreneurship would be influenced by all of these factors would in large measure depend upon the nature of the organization based upon the work of a number of authors we derived a crude typology of firms simple firms are small and their power is centralized at the top planning firms are bigger their goal being smooth and efficient operation through the use of formal controls and plans organic firms strive to be adaptive to their environments emphasizing expertise based power and open communications the predictiveness of the typology was established upon a sample of 52 firms using hypothesis testing and analysis of variance techniques we conjectured that in simple firms entrepreneurship would be determined by the characteristics of the leader in planning firms it would be facilitated by explicit and well integrated product market strategies and in organic firms it would be a function of environment and structure these hypotheses were largely borne out by correlational and multiple regression analyses any programs which aim to stimulate entrepreneurship would benefit greatly from tailoring recommendations to the nature of the target firms

r d rivalry with licensing or imitation the authors study the rivalry between two firms to develop an innovation in a dynamic setting that allows for post development dissemination of the innovation such as licensing or imitation this dissemination may cause the noninnovating firm to benefit from the discovery when this occurs conventional results in the economics of r d no longer need apply they find that industry leaders will tend to develop minor innovations but will develop major innovations only if imitation is difficult copyright 1987 by american economic association

corporate entrepreneurship and financial performance the case of management leveraged buyouts executive summary leveraged buyouts lbos have created much controversy in the literature centering on their potential effect on a company s ability to innovate engage in new ventures and support entrepreneurial projects some believe that post lbo debt reduces the financial resources available for entrepreneurial activities conversely others argue that despite the burden of debt some lbos provide executives with an opportunity to innovate and take risks malone 1989 however past studies have focused primarily on changes in r d spending and ignored other corporate entrepreneurship ce activities a firm might pursue additionally these studies have not documented the changes in ce after a management led lbo thus past studies offer only a snapshot of the effect of lbos on ce finally earlier studies did not directly examine the association between changes in entrepreneurial activities after the lbo and changes in performance to address these shortcomings this study adds to the literature in three ways first it compares a company s pre and post lbo commitment to corporate entrepreneurship ce measured along two dimensions innovation and venturing second the study compares pre and post company performance levels third the study shows how changes in a company s entrepreneurial activities impact performance therefore the following hypotheses were tested h1 a company s commitment to ce activities increases after an lbo h2a company performance will be higher after an lbo than before the transaction h2b post lbo company performance will surpass that of the firm s industry average h3 changes in post lbo ce activities venturing and innovations are positively associated with company financial performance data were collected from 47 lbo companies data were gathered from secondary sources to augment and validate interview data data collected from two executives per firm were averaged and the mean was then used in all analyses data covered the three years immediately before and three years immediately after the lbo companies in the sample were selected based on three criteria first at least 25 of the value of the lbo should have been paid by the firm s senior executives vice presidents and higher second the firm must have gone through a single lbo and must have remained private through the period of the study that eliminated reverse lbos from consideration finally the firm must have undergone its lbo at least three years before data collection this provided an opportunity to observe changes in a company s ce and performance multivariate analysis of covariance mancova analysis of covariance ancova and multiple regression were used to test the study s hypotheses the results supported h1 showing that lbo companies increased their commitment to developing new products placed greater emphasis on commercializing their technology enhanced the quality and size of their rd and intensified their new venture efforts however r d spending did not change significantly after the lbo the results also showed that post lbo company performance was significantly higher than pre lbo levels and the industry s average thus supporting h2a and h2b finally as stated in h3 changes in a company s ce activities were significantly associated with changes in post lbo company performance leveraged buyouts lbos have created considerable controversy among scholars executives and public policy makers concern centers on the potential impact of an lbo on a company s willingness to innovate and engage in entrepreneurial ventures to date little empirical research has been devoted to documenting the changes that occur in a company s entrepreneurial behavior after an lbo and to linking these changes to company performance using data from 47 lbos this study s results lead to three conclusions first companies reported increases in their product development technology related alliances r d staff size and capabilities and new business creation activities moreover these firms did not change their r d spending or the focus of r d projects second post lbo company performance was higher than pre lbo levels third changes in corporate entrepreneurship activities after lbos were significantly and positively associated with changes in company performance

pioneering and market share is entry time endogenous and does it matter dogenous variable they test the model by reestimating a recent empirical pioneering model using hausman s specification test they find statistically significant bias in the exogenous pioneering model in assessing the effect of pioneering on market share they find substantive differences between the biased and inconsistent exogenous pioneering estimates and the consistent endogenous estimates in terms of both statistical and practical significance

response to competitive entry a rationale for delayed defensive reaction empirical studies examining responses to new product entries come to the puzzling conclusion that in general an incumbent reacts to a new entrant after a significant delay even easy to implement price cuts are observed after significant lag following entry these findings seem to contradict the existing literature that either implicitly assumes or strongly advocates immediate defensive responses to limit competitive encroachment when a competing firm enters the market consumers may be uncertain about the entering firm s product quality the incumbent firm through rigorous tests may fully know the entrant s quality suppose the incumbent aggressively lowers price this may cause the consumers to wonder if indeed the entrant s quality is high in other words an incumbent s reaction may cause the consumers to make inferences about the entrant s quality such strategic implications of the incumbent s reactions have to be carefully analyzed before determining the optimal response by the incumbent in this paper we propose a conceptual framework for understanding differences in the magnitude and timing of incumbents responses to competitive entries we consider a model in which a monopolist incumbent firm faces competitive entry the incumbent firm knows the true quality of the entrant with certainty although consumers are aware of the incumbent s product quality through their prior experience they are initially uncertain of the entrant s product quality in such a situation a high quality entrant has the incentive to signal her true quality through her strategic price choice however the uncertainty about the entrant s quality is favorable to the incumbent in the sense that consumers believe with a high probability that the entrant s quality is low as a result the strategic incentives facing the incumbent and the entrant oppose each other while the entrant wants to signal her high quality the incumbent wants to prevent her from doing so we demonstrate that one way the incumbent can prevent the quality signaling is to select a higher than his optimal competitive duopoly price in other words the incumbent can prevent or jam the entrant s quality signaling by choosing a price higher than his optimal competitive price when consumers are fully informed about the entrant s true quality though the signal jamming price is lower than the monopoly price the price is substantially higher than the competitive price this marginal reduction in the incumbent s price from the pre entry monopolistic price represents a muted or lack of response by the incumbent to the competitive entry however once the entrant s quality gets revealed in subsequent periods through consumer usage and word of mouth the entrant has no incentive to engage in quality signaling and the incumbent has no incentive to jam it therefore the market reverts to the complete information competitive prices and the incumbent lowers his price considerably this temporal pattern of muted price reduction in the first period followed by a sharp price reduction in the second period corresponds to a delayed defensive reaction in our model although the empirical studies suggest that the delayed reaction may arise due to factors such as managerial inertia or indecision we demonstrate that such a behavior is indeed an optimal strategy for a profit maximizing firm thus our model reconciles empirical results with the equilibrium outcome of a strategic analytical framework furthermore in an experimental setting we test the predictive power of our framework and establish that consumers indeed form conjectures about the entrant s quality based on the incumbent s reactions in the first experimental study we find strong support for the notion that the incumbent s price reaction may indicate entrant s quality in a follow up study we observe that whenever the incumbent lowers prices respondents judge the quality of the entrant to be higher as compared to the case when prices are the same or increased the managerial implication of this paper is that well established incumbent firms should be cautious in the implementation of their defensive responses to product introductions of uncertain quality by competitors of particular concern are situations where the reactions are easily observable by consumers a strong reaction may suggest that the incumbent takes the competitive threat seriously leading consumers to believe in the quality of the competitor s product

evaluating participation in african monetary unions a statistical analysis of the cfa zones abstract thirteen african nations are engaged in two monetary unions with france often referred to as the cfa zone despite the acknowledged benefits of zone membership a convertible currency pooled resources and greater monetary and fiscal discipline several observers have questioned whether particular aspects of the zone such as the lack of autonomy of the two central banks and the surrender of the exchange rate as a policy instrument have impeded its members growth this paper addresses that question by testing whether cfa zone countries had different gnp growth rates from selected comparator countries during 1960 1982 results show that cfa countries grew significantly faster than comparator sub saharan african countries but usually slower and often significantly so than the whole sample of developing countries when the comparison is made by subperiod before and after 1973 cfa countries performance vis a vis that of their comparators improved during the 1973 1982 period casting further doubt on the claim that the monetary union is not functioning adequately

cheap talk coordination and entry we show how costless nonbinding nonverifiable communication cheap talk can achieve partial coordination among potential entrants into a natural monopoly industry where the payoffs are qualitatively like the battle of the sexes the analysis would apply equally in other economic situations with such payoffs for example bargaining under complete information or choosing compatibility standards while cheap talk helps achieve asymmetric coordination in a symmetric mixed strategy equilibrium it cannot achieve complete coordination if the game involves even a small amount of conflict

monetary policy and the information content of prices rational expectations and cleared markets lead to the proposition that feedback monetary policy is irrelevant to real activity as in the analyses of sargent and wallace however if agents are differentially informed and have access to a common price then prospective monetary policy actions future feedback to imperfectly known current circumstances can alter real activity by changing the information content of prices

economic analysis and the quest for competitive advantage curred in the past decade between applied microeconomists and those who study business strategy business strategists have cast up a series of questions for industrial economists who have responded with numerous applications of economic theory and quantitative research methods this interchange has been fruitful and indeed more fruit remains for the picking i shall argue for centering the collaborative effort on what may be called committed competition rivalrous moves among incumbent producers that involve resource commitments that are irrevocable for nontrivial periods of time most concerns of business strategy are with policy choices that

timing order and durability of new product advantages with imitation this research examined the effects of timing order and the durability of first mover advantages by analyzing the stock market reactions to new product introductions and imitations the major findings are that both timing and order of moves are important and that rival reactions undermine the durability of first mover advantages more specifically 1 early and fast movers achieve greater gains than late and slow movers and 2 first movers suffer at the time of new product imitations copyright 2000 john wiley sons ltd

characteristics of smaller company leveraged buyouts abstract while stories abound in the business press about multibillion dollar leveraged buyouts lbos scant attention has been paid to this type of buyout financing in smaller companies some observers argue that lbos are little more than financial manipulation while others suggest that they are an alternative form of entrepreneurial endeavor and that smaller company lbos may serve to rejuvenate formerly stodgy organizations in this study data from 56 firms that experienced an lbo between 1981 and 1987 were analyzed to ascertain the current state of smaller company lbos and what changes if any occur after the lbo takes place most of the smaller company lbos occur in industries far different from the high growth high technology environments of the glamorous start up the cash flow requirements of the high debt component seem to favor industries in which growth is very slow or even negative and in which the technology is stable likewise smaller lbos are relatively immune from foreign competition the typical smaller company lbo individual has generally been associated with the company as an officer or director prior to the buyout and possesses at least a college education while it was presumed that the typical lbo individual would be between 40 and 55 years of age a substantial number of both older and younger individuals were discovered in the study in terms of internal operating changes after the buyout it was expected that the locus of decision making would shift toward the lead investor and that managerial compensation would become increasingly incentive based unexpectedly little change in the locus of decision making occurred but there was a pronounced shift away from salaried compensation sample firms indicated that asset stripping or personnel layoffs occurred relatively infrequently and the most common operating changes focused on such revenue generation efforts as increased sales and marketing and on imposing more stringent capital budgeting requirements the study suggests that the once stable environments in which these firms operated may become far more exciting in the future on the positive side these smaller companies are being operated by owner managers experienced in both the company and the industry the financial requirements of the high debt levels and the resulting emphasis on cash flow rather than profitability may make these firms extremely fierce competitors on the negative side is the instability that may be caused by the high debt levels because most of these companies have not yet faced an economic recession their long term viability remains to be tested

confidence in imitation niche width strategy in the uk automobile industry our study examines the imitation behavior of uk automobile manufacturers from 1894 to 1981 and supports previous studies on interorganizational imitation by showing that manufacturers tend to imitate other manufacturers that are similar we also find that the degree of confidence manufacturers have in their imitating behavior affects the intensity of that behavior where an organizations confidence is determined by the variance of the routines used by its reference group and the number of firms in the reference group our results show that 1 manufacturers whose reference groups showed large variance in niche width changes during the previous year are less likely to imitate the mean of those changes 2 manufacturers who have large reference groups are more likely to imitate the changes and 3 the negative effect of variance on the imitating behavior is strengthened as the number of reference organizations increases

on the need for fiscal constraints in a monetary union the desirability of fiscal constraints in monetary unions depends critically on whether the monetary authority can commit to following its policies if it can commit then debt constraints can only impose costs if it cannot commit then fiscal policy has a free rider problem and debt constraints may be desirable this type of free rider problem is new and arises only because of a time inconsistency problem

competitive bluffing an examination of a common practice and its relationship with performance bluffing a common and consequential form of competitive behavior has been comparably ignored in the management literature even though misleading one s rivals is suggested to be an advantageous skill in a multifaceted and highly competitive environment to address this deficiency and advance scholarship on competitive dynamics our study investigates the moral reasoning behind competitive bluffing and using a simulated market entry game examines the performance effects of bluffing findings suggest that decision makers views on the ethicality of bluffing competitors differ from their beliefs on the ethicality of misleading other organizational stakeholders analysis also indicates that decision makers who view competitor bluffing as more ethical less unethical are more willing to engage in competitive bluffing finally while bluffing is often thought to be an effective business practice results show that in the context of repeated interaction bluffing is not conducive to high levels of performance and in fact can have undesirable consequences

the competitive externalities and the optimal seignorage this study analyzes the inflation tax in an economy with several competing decisionmakers who can effectively print more money via the central bank the author derives the sequential rational expectation equilibrium and shows that the presence of competing decisionmakers increases the inflation rate and may put the economy on the wrong side of the inflation tax laffer curve the analysis is interpreted for a country consisting of several states or provinces where the centralized government system is weak similar results apply to the case of competing ministers in an economy where the central bank is weak copyright 1992 by ohio state university press

event studies in management research theoretical and empirical issues we examined the use of event studies in management research and found that there was inadequate attention paid to theoretical and research design issues this lack of attention may lead to false in

monetary union without fiscal coordination may discipline policymakers abstract with benevolent policymakers and fiscal leadership monetary unification reduces inflation taxes and public spending these disciplining effects of a monetary union which become stronger if the number of participants in the union increases are likely to raise welfare two types of arrangements are considered for the union s common central bank ccb making the ccb more conservative and imposing an inflation target on the ccb in contrast to the results of svensson 1997 svensson l e o 1997 optimal inflation targets conservative central banks and linear inflation contracts american economic review 87 98 114 an optimally designed conservative ccb may outperform inflation targeting finally we find that fiscal coordination offsets the disciplining effects of monetary unification hence subsidiarity in fiscal policymaking may enhance welfare

corporate entrepreneurs and privatized firms in russia ukraine and belarus abstract this paper provides a preliminary examination of the development of corporate entrepreneurship in privatized firms in russia belarus and ukraine three countries with a common background as part of the soviet union but with different incentives and constraints on entrepreneurship since the beginning of transition using large scale surveys of newly privatized companies the paper shows that there are differences in the nature and extent of entrepreneurship in established businesses in the three countries the paper utilizes representative samples of general directors in 105 privatized russian enterprises 100 privatized ukranian enterprises and 68 privatized enterprises in belarus evidence is presented that suggests that russian privatized firms have lower insider stakes greater outside ownership less employee voice and greater managerial power within the firm than is the case in belarus and ukraine the active monitoring of managers by outsiders may be an important aspect of the transformation of russian firms to efficient commercially viable entities in ukraine and belarus a lack of outside involvement in corporate governance may lead to managerial opportunism and low incentives to attract outside strategic investors including foreign partners russia appears to be building a stronger platform for the future development and effectiveness of entrepreneurship than is the case in ukraine and belarus the findings provide evidence of the importance of direct involvement and the development of relationships to counteract the shortcomings of the legal infrastructure and financial reporting mechanisms in general the findings of the study for russia show that in the current hostile and rapidly changing environment entrepreneurial priorities and actions so far have primarily focused on controlling cash flow seeking new markets and redefining businesses through retrenchment and restructuring although it is as yet too early to examine the longer term effects of the changes in entrepreneurial conditions the paper presents the first large scale comparative evidence of the indications of a divergence in entrepreneurial development between the three countries there was a greater incidence of turnover among the senior management team in russia managers in ukraine and belarus had more diverse strategic objectives in contrast to those in russia where managers have behaved in a more realistic fashion by focusing on retrenchment for academics the study s findings suggest further research is needed to examine the longer term nature and effects of corporate entrepreneurship compare entrepreneurship in new start ups in the three countries and compare with corporate entrepreneurship elsewhere in emerging markets and the barriers to the development of corporate entrepreneurship for practitioners and policy makers the study highlights the need to develop and enforce an appropriate regulatory framework which strengthens the rules of the game under which corporate entrepreneurship operates

a methodology for competitive advantage analysis and strategy formulation an example in a transitional economy industrial competitiveness has become the focal point of study in recent years as global competition has intensified although many studies are devoted to the topic they remain largely conceptual and descriptive and thus it is difficult to make them operational very recently several studies were conducted to model industrial competitiveness through quantitative analysis but few consider how to combine the degree and scope of determinant factors of competitive advantages dfcas and competitive strategic goals csgs to maximize a firm s competitiveness or how to analyze the main problems of creating competitive advantage the present study proposes a model based approach to competitive analysis and discusses its multi phased implementation in a large electronic plant in china the proposed model can provide a comprehensive analytical tool for industrial competitiveness and can yield useful insights for competitive strategy formulation

chinese management buyouts and board transformation we assess the extent to which chinese mbos of listed corporations enable a balance to be achieved between facilitating growth and supporting the interests of minority shareholders other than the buyout organization using novel hand collected data from 19 mbos of listed corporations in china a matched sample of 19 non mbos and the population of listed corporations we examine the extent to which boards of directors are changed to bring in executive and outside directors with the skills to grow as well as restructure a business we also examine the extent to which outside directors become involved in actions to develop the business rather than actions related to fostering the interests of all shareholders we find in fact little evidence that outside board members have the skills to add value to the mbo firms boards appear to focus mainly on related party transactions with some more limited attention to growth strategies outside directors do not seem to openly disagree with incumbent managers on the disclosure of their actions but may express their views and exert pressure behind the scenes

optimal wage indexation foreign exchange intervention and monetary policy this paper deals with the design of optimal monetary policy and with the interaction between the optimal degrees of wage indexation and foreign exchange intervention the model is governed by the characteristics of the stochastic shocks which affect the economy and by the information set that individuals possess because of cost of negotiations nominal wages are assumed to be precontracted and wage adjustments follow a simple indexation rule that links wage changes to observed changes in price the use of the price level as the only indicator for wage adjustments may not permit an efficient use of available information and may result in welfare loss the analysis specifies the optimal set of feedback rules that should govern policy aiming at the minimization of the welfare loss these feedback rules determine the optimal response of monetary policy to changes in exchange rates interest rates and foreign prices the adoption of the optimal set of feedback rules results in the complete elimination of the welfare cost arising from the simple indexation rule and from the existence of nominal contracts since optimal policies succeed in the elimination of the distortions issues concerning the nature of contracts and the implications of specific assumptions about disequilibrium positions become inconsequential the analysis then proceeds to examine the interdependence between the optimal feedback rules and the optimal degree of wage indexation it is shown that a rise in the degree of exchange rate flexibility raises the optimal degree of wage indexation one of the key conclusions is the proposition that the number of independent feedback rules that govern a policy must equal the number of independent sources of information that influence the determination of the undistorted equilibrium thus it is shown that with a sufficient number of feedback rules for monetary policy there may be no need to introduce wage indexation it is also shown that an economy that is not this abstract was borrowed from another version of this item

commitment and the adoption of a common currency in contrast to mundell s inquiry on the optimality of currency areas this article aims to understand under what circumstances a pareto dominant monetary union will be established using a multicountry overlapping generations model we highlight gains from monetary union arising from reduced transactions costs and lower inflation despite these gains countries acting independently will impose barriers to exchange through local currency restrictions thereby creating transactions costs and providing an incentive for inflation therefore the gains from monetary union are most likely to be lost without collective effort