down with mne centric theories market entry and expansion as the bundling of mne and local assets both anderson and gatignon and the uppsala internationalization model see the initial mode of foreign market entry and subsequent modes of operation as unilaterally determined by multinational enterprises mnes arbitraging control and risk and increasing their commitment as they gain experience in the target market oli and internalization models do recognize that foreign market entry requires the bundling of mne and complementary local assets which they call location or country specific advantages but implicitly assume that those assets are freely accessible to mnes in contrast to both of these mne centric views i explicitly consider the transactional characteristics of complementary local assets and model foreign market entry as the optimal assignment of equity between their owners and mnes by looking at the relative efficiency of the different markets in which mne and complementary local assets are traded and at how these two categories of assets match i am able to predict whether equity will be held by mnes or by local firms or shared between them and whether mnes will enter through greenfields brownfields or acquisitions the bundling model i propose has interesting implications for the evolution of the mne footprint in host countries and for the reasons behind the emergence of dragon mnes

rewards to investors in innovative information technology applications first movers and early followers in atms innovative information technology it applications are risky investments unless successful applications provide innovators with exceptional returns these investments would not be justified other than a few case studies there is no evidence that the first movers of successful it applications are rewarded for the risks they bear we present the results of an extensive longitudinal study of the effects of early adoption of automated teller machines atms by banks on market share and income the study spans the period from 1971 to 1983 and includes 2 534 banks from across the united states results indicate that the earliest adopters 1971 through 1973 were able to increase market share with market share gains being sustained for a long time banks that adopted atms between 1974 and 1979 however did not gain market share the results also indicate that early atm adoption enabled banks to increase income and income gains were sustained for a long time these findings support case study evidence that early adoption of new it applications can lead to long term competitive advantages for firms

how not to sell nuclear weapons we consider situations where a sale affects the ensuing interaction between potential buyers these situations are modeled by assuming that an agent who does not acquire the object for sale incurs an identity dependent externality we construct a revenue maximizing auction for the seller we observe that 1 outside options and participation constraints are endogenous 2 the seller extracts surplus also from agents who do not obtain the auctioned object 3 the seller is better off by not selling at all while obtaining some payments if externalities are much larger than valuations

choosing a licensee from heterogeneous rivals we examine a rm that can license its production technology to a rival when rms are heterogeneous in production costs we show that a complete technology transfer from one rm to another always increases joint pro t under weakly concave demand when at least three rms remain in the industry a jointly pro table transfer may reduce social welfare although a jointly pro table transfer from the most e cient rm always increases welfare we also consider two auction games under complete information a standard rst price auction and a menu auction by bernheim and whinston 1986 with natural re nement of equilibria we show that the resulting licensees are ordered by degree of e ciency menu auction simple auction and joint pro t maximizing licensees in weakly descending order

asymmetric oligopoly and technology transfers using a simple cournot model this paper shows that 1 if technologies are perfectly replicable then a lower cost firm has always an incentive to transfer its technology and as a result a fully asymmetric oligopoly can never be a noncooperative nash equilibrium 2 as a technology transfer between any two firms can always be disrupted by some other firm the cournot game cum technology transfer has no noncooperative nash equilibria in pure strategies and 3 there exi st nonlinear transfer payments that sustain the fully collusive outcome as an noncooperative nash equilibrium even in a finitely repeated game copyright 1993 by royal economic society

regulatory responses to large format transnational retail in south east asian cities aggressive internationalisation by transnational chains is changing the face of the urban environment in much of emerging asia in south east asia the period following the asian financial crisis o

sectoral patterns of technical change towards a taxonomy and a theory abstract the purpose of the paper is to describe and explain sectoral patterns of technical change as revealed by data on about 2000 significant innovations in britain since 1945 most technological knowledge turns out not to be information that is generally applicable and easily reproducible but specific to firms and applications cumulative in development and varied amongst sectors in source and direction innovating firms principally in electronics and chemicals are relatively big and they develop innovations over a wide range of specific product groups within their principal sector but relatively few outside firms principally in mechanical and instrument engineering are relatively small and specialised and they exist in symbiosis with large firms in scale intensive sectors like metal manufacture and vehicles who make a significant contribution to their own process technology in textile firms on the other hand most process innovations come from suppliers these characteristics and variations can be classified in a three part taxonomy based on firms 1 supplier dominated 2 production intensive 3 science based they can be explained by sources of technology requirements of users and possibilities for appropriation this explanation has implications for our understanding of the sources and directions of technical change firms diversification behaviour the dynamic relationship between technology and industrial structure and the formation of technological skills and advantages at the level of the firm the region and the country

choosing the competition and patent licensing this article examines licensing as a means of choosing the competitors which a patentee monopolist will face in the period after the patent expires the queue of entrants consists of two firms which differ in their relative strengths as competitors for example by size or level of marginal cost by structuring the industry to be composed of weak competitors the incumbent is able to prolong its dominant position in the industry after the patent expires examples are presented in which the evidence suggests that choosing the competition was an important motivation of the licensor s behavior

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

extending the theory of the multinational enterprise internalization and strategic management perspectives this paper assesses the continued relevance of buckley and casson s 1976 book on the future of the multinational enterprise mne against a background of increasing criticism of transaction cost related scholarly work we demonstrate that the schism that can currently be observed in the field between international business and international management is misguided as the transaction cost internalization school may offer useful insights to both management scholars and managers for this to occur however it is necessary first to extend the empirical scope of transaction cost based reasoning to include the functioning of differentiated network mnes the paper suggests that buckley and casson s book still represents a beacon of clarity and a superb starting point for the study of the mne even if the complexity of this governance structure has grown far beyond what any international business scholar or even international management scholar could have predicted 25 years ago

fee versus royalty licensing in a cournot duopoly model abstract this paper finds that royalty licensing can be superior to fixed fee licensing for the patent holding firm when the cost reducing innovation is non drastic the reason for this result is that the patent holding firm enjoys a cost advantage over the licensee under royalty licensing while the two firms compete on equal footing under fixed fee licensing

food safety and urban food markets in vietnam the need for flexible and customized retail modernization policies access to safe and healthy food is a crucial element of food security in vietnam the safety of daily vegetables is of great concern to both consumers and policymakers to mitigate food safety risks the vietnamese government enforces rules and regulations and relies strongly on a single approach for organizing food provision being modernizing retail by replacing wet markets with supermarkets in general reorganizing food provision in this way is increasingly considered to be a guarantee for food safety especially in urban settings with growing populations to assess the effectiveness of this induced retail modernization of the fresh vegetables market in vietnam s capital hanoi this paper examines for whom and under which conditions does this approach deliver the desired outcomes the survey data and interviews show that ongoing retail modernization in hanoi reaches only a minor segment of the population and drives a large group of shoppers into informal vending structures on the basis of five case studies this paper demonstrates how similar supermarket interventions can yield contrasting outcomes when they do not accommodate for differences in shopper population and do not adapt to variations in the urban conditions to reduce exposure to unsafe food particularly for poorer segments of the population we conclude that developing a flexible portfolio of retail modernization pathways and adopting a reflexive policy approach provide better impact and leverage as opposed to the current trend of promoting supermarkets as a single ideal type form of food shopping

the impact of technology adoption on market structure this paper examines the impact of bank adoptions of automated teller machines atms on subsequent levels of concentration in local banking markets the findings suggest that banks have had some success in using atms to attract customers from competitors as a consequence technology adoption s impact on market structure depends upon whether it is the larger or smaller firms within the market that adopt the new technology large firm adoptions increase concentration levels while small firm adoptions tend to reduce them the evidence also suggest that a state of structural disequilibrium seems to be characteristic of banking markets copyright 1990 by mit press

divisionalization franchising and divestiture incentives in oligopoly a two stage game is used to model firms strategic incentives to divide production among autonomous competing units through divisionalization franchising or divestiture firms simultaneously choose their number of competing units which then engage in cournot competition while it is costly to form autonomous units each firm does so in equilibrium thus reducing firm profits and increasing social welfare relative to the case where firms cannot form competing units with linear demand and costs duopolists choose the socially optimal number of competing units oligopolies with larger numbers of firms choose too many the case of nonlinear demand is also examined copyright 1996 by american economic association

international expansion through flexible replication learning from the internationalization experience of ikea business organizations may expand internationally by replicating a part of their value chain such as a sales and marketing format in other countries however little is known regarding how such international replicators build a format for replication or how they can adjust it in order to adapt to local environments and under the impact of new learning to illuminate these issues we draw on a longitudinal in depth study of swedish home furnishing giant ikea involving more than 70 interviews we find that ikea has developed organizational mechanisms that support an ongoing learning process aimed at frequent modification of the format for replication another finding is that ikea treats replication as hierarchical lower level features marketing efforts pricing etc are allowed to vary across ikea stores in response to market based learning while higher level features fundamental values vision etc are replicated in a uniform manner across stores and change only very slowly if at all in response to learning flexible replication we conclude by discussing the factors that influence the approach to replication adopted by an international replicator

is knowledge power knowledge flows subsidiary power and rent seeking within mncs in recent years as multinational corporation mnc subsidiaries have become more closely linked to international networks their knowledge intensity has risen and some of their r d has gained a more creative role simultaneously and often connectedly many subsidiaries have acquired considerable strategic independence in all aspects of their operations and therefore are able to exercise considerable intra firm bargaining power to influence the distribution of the firm s resources in this context we suggest that intra mnc knowledge flows are a key determinant of subsidiary bargaining power we argue that subsidiary managers can exploit such power to pursue their own ends such rent seeking behavior is implicit in much of the literature on managerialism but our analysis suggests that such behavior can now occur in headquarters subsidiary and subsidiary subsidiary relations thus subsidiary strategic independence designed to enhance the competitiveness of outputs market knowledge and inputs asset seeking and learning can be corroded when the pursuit of subsidiary objectives encourages rent seeking empirical analysis of a sample of high technology subsidiaries in the uk provides strong support for the theory we examine several avenues whereby the incentives of units within the mnc can be aligned

a characterization for the negative welfare effects of cost reduction in cournot oligopoly abstract this paper characterizes the welfare effects of cost reductions in a cournot model with linear costs under linear demand a small reduction in a firm s marginal cost reduces welfare if and only if its market share is less than 1 2n 2 or equivalently its marginal cost exceeds a critical level determined by the market a large cost reduction by the firm increases welfare if and only if its magnitude is at least twice the difference between the current marginal cost and its critical value the paper also extends the results to non linear demand but the characterizations become less tractable

fee versus royalty reconsidered for an outsider innovator in a cournot oligopoly royalty licensing could be superior to both fixed fee and auction the result depends on a simple fact that has been overlooked in the existing literature namely the number of licenses can take only integer values

balancing subsidiary influence in the federative mnc a business network view the contest for intra organisational power in the multinational corporation mnc has gradually become a prominent issue on the research agenda as long as 25 years ago hedlund 1980 investigated the strategic roles of subsidiaries in mncs and doz and prahalad 1981 raised the issue of how difficult it is for headquarters to remain in control of its subsidiaries and to influence their strategies over time since then several researchers have suggested that mncs can be considered to be dispersed structures of power in which the top management s authority does not necessarily result in hierarchical power being the ultimate control mechanism hedlund 1986 forsgren 1989 ghoshal and bartlett 1990 doz and prahalad 1993 ferner and edwards 1995 kristensen and zeitlin 2001 morgan and whitley 2003 birkinshaw and hood 1998 examined the evolution of capabilities at the subsidiary level and recognised that in most corporations there is an internal competition for charter that implies a process of change in subsidiary roles birkinshaw and hood 1998 782 case research has also indicated that changes in the charters of divisions or subsidiaries in mncs constitute a strong feature of horizontal or vertical competition in the corporate marketplace galunic and eisenhardt 1996 birkinshaw and fry 1998 the tension between the headquarters and overseas laboratories caused by the laboratories desire for autonomy and influence is an example of such a competition asaka wa 2001

optimal licensing of technology in the face of asymmetric competition abstract we reconsider the optimal technology licensing by an incumbent firm facing multiple competitors first we cover the case of one license and show that competition has a drastic effect on optimal two part tariffs we also consider license auctions and design a more profitable dynamic mechanism next we allow the licensor to award multiple licenses and design a dynamic mechanism that extracts the maximum industry profit it awards licenses to all firms prescribes maximum permitted royalty rates and positive fixed fees and is more profitable than other dynamic mechanisms finally we show that a slight modification of that mechanism is also optimal for outside patent holders

welfare reducing licensing abstract in this paper we characterize situations where licensing a cost reducing innovation to a rival firm using two part tariff contracts a fixed fee plus a linear per unit of output royalty reduces social welfare we show that it occurs if i the firms compete in prices ii the innovation is large enough but not drastic and iii the goods are close enough substitutes moreover we show that regardless of the type of competition first the optimal contract always includes a positive royalty and second even drastic innovations are licensed whenever the goods are not homogeneous

fees versus royalties and the private value of a patent we compare how much profit an owner of a patented cost reducing invention can realize by licensing it to an oligopolistic industry producing a homogeneous product by means of a fixed fee or a per unit royalty our analysis is conducted in terms of a noncooperative game involving n 1 players the inventor and the n firms in this game the inventor acts as a stackelberg leader and it has a unique subgame perfect equilibrium in pure strategies it is shown that licensing by means of a fixed fee is superior to licensing by means of a royalty for both the inventor and consumers only a drastic innovation is licensed to a single producer

how to license intangible property we examine the optimal licensing strategy of a research lab selling to firms who are product market competitors we consider an independent lab as well as a research joint venture we show that 1 demands are interdependent and hence the standard price mechanism is not the profit maximizing licensing strategy 2 the seller s incentives to develop the innovation may be excessive 3 the seller s incentives to disseminate the innovation typically are too low 4 larger ventures are less likely to develop the innovation and more likely to restrict its dissemination in those cases where development occurs and 5 a downstream firm that is not a member of the research venture is worse off as a result of the innovation

externalities from foreign direct investment in the mexican retailing sector this contribution to the discussion on the impact of foreign direct investment in developing countries is based on an empirical study of the consequences of transnational corporations presence in the mexican retailing sector particularly wal mart first it is shown that the arrival of foreign firms accelerates the modernisation but has a negative impact on local firms performance as well as local worker remuneration as a result of the growing competitive pressure in the sector second the changes that occurred in supply chain governance and the tremendous increase of imports initiated by wal mart are described and some probable implications for local suppliers are suggested

general licensing schemes for a cost reducing innovation optimal combinations of upfront fees and royalties are considered for a cost reducing innovation in a cournot oligopoly for both outside and incumbent innovators it is shown that for any nondrastic innovation a the license is practically sold to all firms ensuring full diffusion of the innovation b consumers are better off firms are worse off and the social welfare is improved c the optimal licensing policy involves positive royalty for relatively significant innovations d compared to an incumbent firm an outsider invests more in r d and has higher incentive to innovate and e as a function of the magnitude of the innovation the industry size that provides the highest incentive to innovate is u shaped

helping minor firms reduces welfare the effect on national welfare of uneven technical progress and eli mination of a firm is analyzed under the existence of a cournot oligopolistic sector an increase in the share of an inefficient firm owing to its innovations results in a shift of production from more efficient firms to the inefficient firm causing a less efficie nt allocation of production it may decrease welfare even though the innovation itself is beneficial conversely policies keeping ineffic ient firms from innovations or eliminating them may increase welfare though they make the market structure more oligopolistic copyright 1988 by royal economic society

multi scalar localization and capability transference exploring embeddedness in the asian retail expansion of tesco wood s coe n m and wrigley n multi scalar localization and capability transference exploring embeddedness in the asian retail expansion of tesco regional studies this paper revisits the firm in the region and the region in the firm dichotomy through the case of tesco s retail expansion in asia it focuses on the tension between the transference of proven key capabilities to the host economies tesco has entered and strategic localization primarily for customer facing corporate culture regulatory and institutional reasons it is demonstrated how the retailer has pursued a multi scalar adaptive approach that goes beyond any standardized localized dichotomy to respond to differences between and within national markets in the process this paper provides evidence of genuine two way knowledge flow between the home market and subsidiaries between subsidiaries themselves and of subsidiaries granted autonomy and the ability to flex their strategies

appropriating value from computerized reservation system ownership in the airline industry it is difficult for the firm competing through information technology resources to gain a sustainable advantage because systems are easy to imitate and substitute resources are often available to competitors the innovator may be unable to appropriate all of the benefits from information technology investments airlines have installed computerized reservations systems in travel agencies to appropriate the returns from their investments in information technology the airlines expected to obtain a number of benefits from this strategy including increased efficiency possible bias in favor of the computerized reservations systems owner on the part of the travel agent and fees from other airlines for making reservations for them the purpose of this paper is to evaluate the appropriation of value by computerized reservations systems owners from deploying systems in travel agencies these benefits beyond fees from travel agents should be seen in the vendor airline s market share between cities and in the overall performance of the airline at an industry level this paper models airline performance as a function of computerized reservations systems ownership at two levels for selected city pairs and at the overall level of the firm the city pair analysis employs a multinomial logit market share model that analyzes five years of data on 72 city pair routes the industry model uses longitudinal data for a panel of 10 airlines for 12 years the results of both analyses support hypotheses that computerized reservations systems ownership is positively related to airline performance it appears that strong airlines have appropriated the benefits of their computerized reservations systems turning them into highly specialized assets for further travel related innovation this work offers useful theoretical extensions and methodological approaches for the study of similar kinds of network technology innovations that are currently being deployed in association with electronic commerce on the internet