building competitive advantage innovation and corporate governance in european construction this paper explores the relationship between corporate governance and innovation this is examined through detailed interviews with the largest contractors in five european countries the ability to undertake research and development in production technologies by contractors differs widely across different countries this may be explained by the extent to which strategic control is in the hands of those who have the incentives and abilities to allocate resources to uncertain and irreversible investments in innovation this is influenced by particular features of firm ownership organisational and management structure internal mechanisms to diffuse knowledge and links to external sources of knowledge

human fallibility and economic organization doctrines concerning what is a good way to organize a society have influenced human societies more deeply than any other set of doctrines specifically beliefs that one way of organizing production and exchange is better than others have inspired a number of socioeconomic experiments leading to modern capitalist and socialist societies with far reaching implications yet surprisingly the central doctrines though a source of continuing ideological debate have been the subject of only limited scientific enquiry the major proposition the so called langelerner taylor theorem asserting the equivalence between competitive capitalist economies and decentralized socialist economies which make use of the price system made a point in stressing that the issue of the ownership of the means of production might not be central in the comparison of economic systems the theorem however was based on models both of capitalism and of market socialism in which the most important differences between the two systems were suppressed this paper describes a research program attempting to delineate some of the critical differences among alternative forms of economic organization we contend that central to an understanding of these differences is an understanding of differences in the organization of decision making of who gathers what information how it gets communicated and to whom and how decisions get made both concerning what actions to take and who should fill decision making positions this view should be contrasted with the traditional economic paradigm in which decision making plays no role the manager for instance simply looks up in a book of blueprints what the appropriate technique of production is for the given set of factor prices in the conventional paradigm moreover mistakes are never made either in gathering or transmitting information or in making decisions and indeed there are no costs associated with these activities by contrast the view we take here is that to err is human and that different organizational systems differ not only in what kinds of errors individuals make in them but also in how the systems aggregate errors as a result organizations differ systematically in the kinds of errors they make and thus in their overall economic performance organizations also differ in the costs associated with information collection with information communication and processing and with decision making indeed as we discuss below perfect decision making can be achieved by arranging enough decision makers in an appropriate manner no matter how fallible the decision makers are provided their decisions are not purely random or worse what prevents perfect decision making is the cost we refer to the specification of the structure of information gathering communication and decision making as an organization s architecture the objective of our research program has been to construct stylized models of an economic organization within which the consequences of alternative organizational architectures can be examined using these models not only can we compare the performance of particular organizational forms but we can also ask given a particular set of objectives and circumstances what is the optimal structure within tdiscussants david kreps stanford university paul milgrom yale university

the effect of concealed weapons laws an extreme bound analysis i introduction in a recent paper lott and mustard 1997 provide evidence on the relationship between concealed handgun laws often called right to carry or shall issue laws and crime they examine 16 years 1977 1992 of county level crime data from the fbi s uniform crime reports ucr and compare crime rates before and after the introduction of right to carry laws controlling for demographic factors and county level arrest rates they find that introducing right to carry laws resulted in significant reductions in the violent crimes of murder rape aggravated assault and robbery and increases in some property crimes such as burglary larceny and auto theft the latter increase is attributed to a substitution effect suggesting that potential criminals will at the margin switch from violent crimes that have now become more risky to them to property crimes where the probability of encountering an armed victim is much lower comparing these two effects coupled with a slight increase in accidental gunshots from individuals owning concealed handguns lott and mustard conclude that the social benefits of these laws exceed their costs economists who present one set of empirical results are always vulnerable to criticism that they could have selected another group of right hand side variables or modeled them in a different way lott and mustard s analysis has been criticized by black and nagin 1998 who re examine the data set choosing a different set of controls and a different model and reach different conclusions about the effects of the right to carry laws uncertainty about what to control for and how to do it has been called model uncertainty by leamer 1983 who suggests estimating the size of model uncertainty by testing the sensitivity of the particular results to many different possible model specifications this methodology is called extreme bound analysis in this paper we report extreme bounds from nearly 20 000 estimated regressions that vary the modeling choices made by lott and mustard we find support for the deterrence result from a broad set of specifications in particular we find strong support for the hypothesis that the right to carry laws are associated with a decrease in the trend in violent crime rates we do not find much support for a substitution effect into property crimes in what follows we first describe some econometric issues related to the problem of estimating the effect of the right to carry laws on crime rates we then report our extreme bound analysis and offer concluding remarks ii extreme bound analysis although behavioral theories can provide general guidance about the kinds of factors that should influence the crime rate they do not specifically determine which variables should be included in a regression analysis in addition conflicting theories typically suggest alternate model specifications in the context of crime rates for example we might expect higher crime rates in counties with higher unemployment and a larger percentage of young men age 18 30 following convention we call this a supply effect nagin 1978 however it is also possible that higher unemployment leads to the passage of right to carry laws or that right to carry laws are less likely to be enacted in areas with high percentages of young men age 18 30 we call this a demand effect omitted or unobserved demand or supply variables may induce a spurious correlation between the adoption of the right to carry laws and crime rates that has nothing to do with the supply of crime leamer 1983 suggests a formal specification search or extreme bound analysis to estimate the size of such model uncertainty surrounding certain regression results for example by including different right hand side variables in a supply of crime equation for murder leamer estimates an extreme bound interval for the deterrent effect of capital punishment that ranges from 29 to 12 murders prevented for every execution

supplier development at honda nissan and toyota comparative case studies of organizational capability enhancement what factors facilitate and constrain the sustained development and replication of organizational capabilities at suppliers this question is addressed in a comparison of historical case studies at toyota nissan and honda in japan first as expected replication difficulty is overcome by enabling companies to share the practice rather than the representation of tacit knowledge second the interdependence in the hierarchy of routines that constitute organizational capabilities has led companies to broaden the scope of supplier development over time third this broadening challenges suppliers to accept customer companies intervention in internal investment decisions requiring a certain mode of corporate governance it is argued that the boundary of a capability based firm may go beyond legally distinct units of financial control when firms are subjected to a cumulative process of capability enhancement

an ecology of ideology theory and evidence from four populations this paper analyzes the founding rates of two types of jewish agricultural cooperatives the moshav and the kibbutz to show how political ideology intersects with resource requirements to produce competition and mutualism between organizations these two populations which share ideology and a resource base competed with each other they both enjoyed mutualism with the population of credit cooperatives which represented a kindred ideology but relied on different resources they both suffered competition from the population of corporations which represented a rival ideology capitalism copyright 2004 oxford university press

entry into the market for large transport aircraft abstract european governments have been accused of unfair trading practices in providing subsidies for market entry in the large commercial aircraft industry a capacity game is calibrated for 1987 to 2006 showing that the disadvantage of late entry is overcome only after a long time hence market entry is unlikely without government subsidies the scale and scope effects of production outweigh the output reducing effects of a monopoly government supported market entry as an anti monopoly policy yields higher consumer welfare overall welfare is lower due to large losses in producer surplus

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

law finance and innovation the dark side of shareholder protection proponents of minority shareholder protection state that national legal institutions protecting small investors boost stock markets and in turn the long term performance of countries in this paper we empirically challenge this argument we perform three stage least squares estimation on a sample of 48 countries during 1993 2006 and find that countries with stronger shareholder protection tend to have larger market capitalisation but also lower innovative activity we cope with stock market endogeneity and industry heterogeneity and circumvent omitted variables bias so that this finding is unlikely to be driven by misspecification problems the estimation results are interpreted arguing that stronger shareholder protection may depress rather than encourage the most valuable corporate productions because it enables small and diversified shareholders to play opportunistic actions against undiversified stockholders after specific investments are undertaken by the company innovative activity largely based on specific investing is particularly exposed to this problem copyright oxford university press

publicly funded r d programs and survival of patents i apply a survival model to a detailed data set of swedish patents to estimate how different financing factors affect the likelihood of patent renewal since the owners know more about the patents than potential external financiers there is a problem of asymmetric information to overcome this sweden has for a long time relied on government support rather than private venture capital pvc in the empirical analysis two kinds of government loans are unbundled the empirical results show that patents which have received soft government loans in the r d phase have a higher probability of expiring than patents without such financing but patents that have received more market oriented government loans during the commercialization phase are renewed for as long as other commercialized patents this finding suggests that rather than bad choices of projects it is the nature of the contract terms that explains the low renewal of some patents with government financing

innovation diversity and diffusion a self organisation model a number of features of innovation diffusion are identified appropriability diversity expectations selection learning and spillover externalities a dynamic model is formul ated to embed the diffusion question into a more general framework of disequilibrium competition the model incorporates distinct vintage structures reflecting a change in technological trajectory learning by using a nd expectations driven investment rules of thumb simulation studies reveal robust quasi logistic curves but a complicated pattern of net market share gains and losses uncertainty regarding the rationality of early or late adoption it is argued ensures that the requisite behavioral variety is present to generate these diffusion patterns copyright 1988 by royal economic society

unions innovation and investment australian evidence machin and wadhwani have produced evidence indicating that trade unions encourage investment in the uk this paper uses comparable data to ascertain whether their finding holds with respect to australia in general and contrary to the uk study the net effect of unions on investment in australia is found to be negative nevertheless investment levels at workplaces where unions were active were above the levels at non union workplaces offering support for the union voice hypothesis which machin and wadhwani use to explain their results

model uncertainty and the effect of shall issue right to carry laws on crime in this paper we explore the role of model uncertainty in explaining the different findings in the literature regarding the effect of shall issue right to carry concealed weapons laws on crime in particular we systematically examine how different modeling assumptions affect the results we find little support for some widely used assumptions in the literature e g population weights but find that allowing for the effect of the law to be heterogeneous across both counties and over time is important for explaining the observed patterns of crime in terms of model uncertainty we find that there is substantial variation in the estimated effects for each model across all dimensions of the model space this suggests that one should be cautious in using the results from any particular model to inform policy decisions

toward a neo schumpeterian theory of the firm this article offers a sketch of what an economic theory of the firm would look like if it were founded on the thought of joseph schumpeter particularly on chapters 1 and 2 of his theory of economic development schumpeterian analysis requires an intuitively appealing and realistic conceptualization of the distinction between routine and innovative behavior and in particular a conceptualization relevant to complex organizations and complex tasks it is argued that the production theory found in mainstream economics does not meet this requirement particularly because its characterization of productive knowledge involves an overly sharp distinction between technically possible and technically impossible a distinction which has no counterpart in the realities of organizational knowledge the main elements of a schumpeterian view are described and contrasted with those in the mainstream view copyright 2006 oxford university press

on the economic rationale for codetermination law abstract this paper develops a positive efficiency economic case for codetermination law resting on the correction of labor and capital market and organizational failures a legally mandated codetermination structure is shown to provide employee checks on several structural incentives for management opportunism codetermination is shown to offer advantages for technical efficiency skill development and knowledge generation through its protection of specific human capital investments financial markets cannot enforce codetermination due to a set of free rider problems

alfred chandler and capabilities theories of strategy and management alfred d chandler s scholarship on the large industrial enterprise has deepened understanding of economic development and helped establish the field of strategic management research chandler s monumental work emphasized the importance of organizational innovation managerial acumen and business performance a particular contribution was the support provided for a capabilities theory of the business enterprise this article also looks at recent developments in industrial organization that are less well explained and appreciated in the chandler framework copyright 2010 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

discontinuities and senior management assessing the role of recognition in pharmaceutical firm response to biotechnology despite an increasing emphasis on the role of senior management cognition in shaping organizational action there have been few attempts to link top management mental models to strategic choice in the face of discontinuous innovation this paper uses 23 years of data covering 15 major pharmaceutical firms to explore the degree to which each firm s response to the revolution in biotechnology was shaped by the senior team s recognition of biotechnology s importance controlling for a number of important alternative explanations we show that recognition may be an important predictor of action suggesting that cognition at the most senior level can play a critical role in shaping established firms response to discontinuities copyright 2003 oxford university press

ambiguity aversion and incompleteness of financial markets it is widely thought that incomes risks can be shared by trading in financial assets but financial assets typically carry some risk idiosyncratic to them hence disposing incomes risk using financial assets will involve buying into the inherent idiosyncratic risk however standard theory argues that diversification would reduce the inconvenience of idiosyncratic risk to arbitrarily low levels this argument is less robust than what standard theory leads us to believe ambiguity aversion can exacerbate the tension between the two kinds of risks to the point that classes of agents may not want to trade some financial assets thus theoretically the effect of ambiguity aversion on financial markets is to make the risk sharing opportunities offered by financial markets less complete than it would be otherwise

the role of financial analysts in the strategy formation process of business firms increasingly financial analysts are influencing the strategy formation process of corporations but so far little attention has been paid to the complex processes of interaction and the corresponding strategic outcomes this article discusses these influences through different theoretical lenses strategic management finance and accounting theory and economic sociology institutional and systems theory based on case study evidence from three companies we describe how the interactions between financial analysts and business firms take place and formulate several propositions on the relationship between financial analysts and business firms as well as on its influence on the strategic outcome of business firms the results suggest that the influence of financial analysts is indeed significant but depends on a number of contextual factors such as the financial situation of the company or the need for capital practicing managers can learn how to handle a turbulent environment such as the financial analyst community and how they can change their planning processes to absorb as much information as possible

from the econometrics of capital punishment to the capital punishment of econometrics on the use and abuse of sensitivity analysis the academic debate over the deterrent effect of capital punishment has intensified again with a major policy outcome at stake about two dozen empirical studies have recently emerged that explore the issue donohue and wolfers 2005 claim to have examined the recent studies and shown the evidence not to be robust to specification changes we argue that the narrow scope of their study does not warrant this claim moreover focusing on our two studies that they have examined we show the deterrence findings to be robust while their work has serious flaws and their reporting appears to be selective the selectivity is biased towards showing no deterrence

is the growth of small firms constrained by internal finance this paper examines the long standing theory that the growth of small firms is often constrained by the quantity of internal finance under plausible assumptions when financing constraints are binding an additional dollar of internal finance should generate slightly more than an additional dollar of growth in assets this quantitative prediction should not hold for the relatively small number of firms which access external equity we test these predictions with a panel of more than 1 600 small firms and find that the growth of most firms is constrained by internal finance our results have implications for several different research literatures including models of firm growth

public provision of sales contingent claims backed finance to smes a policy alternative abstract in europe and elsewhere governments intervene to stimulate innovation in the sme sector and because smes face financial constraints in particular governments encourage the provision of debt and equity venture capital finance to such firms this paper discusses sales contingent claim scc backed finance funding secured only on a claim written on sales that offers a different repayment profile to debt and equity the attractiveness of such finance to firms as well as the behaviour of firms financed in this way are analysed for various reasons scc backed financial instruments are generally not available to smes on the market but it is argued that wider availability could further stimulate the growth and innovative activity of smes the correction of this market incompleteness by the introduction of government schemes providing scc backed corporate finance for smes in higher risk higher tech sectors is recommended the workability of such a scheme is explored by looking at existing examples aimed largely at project finance for larger firms

trade with heterogeneous prior beliefs and asymmetric information no trade theorems have shown that new information will not lead to trade when agents share the same prior beliefs this paper explores the structure of no trade theorems with heterogeneous prior beliefs it is shown how different notions of efficiency under asymmetric information ex ante interim ex post are related to agents prior beliefs as well as incentive compatible and public versions of those efficiency concepts these efficiency results are used to characterize necessary and sufficient conditions on agents beliefs for no trade theorems in different trading environments

disequilibrium economic dynamics a post schumpeterian contribution abstract adaptive economizing in a decentralized economy with alternative technologies and scarce resources leads to various kinds of locally unstable behavior economic disequilibrium is the rule in such a world and requires the presence of market mechanisms that make possible continued viability if in addition to local instability economies are also globally unstable as considerable evidence suggests then the discovery and application of new structure is essential a complete dynamic theory of economic change must therefore be based not only on conventional rationality and routinely adapting behavior but on a superior faculty which may perhaps best be called creative intelligence

capital market information and industrial performance the role of west german banks in orthodox theory external capital markets play a dual role supplying various forms of investment finance and disciplining firms which are inefficient or fail to pursue profit goals an extensive literature speaks of the efficiency of external capital markets meaning that firms can make production investment decisions and investors can choose among the securities that represent ownership of firms activities under the assumption that security prices at any time fully reflect all available information fama i970 1 however this concept of efficiency is purely technical it depends critically on what information is available and we know there are problems of appropriability and failure in information markets deriving ultimately from certain peculiarities of information as a commodity arrow i962 thus another growing literature focusses on problems of achieving equilibrium in markets where agents are imperfectly or asymmetrically informed amongst other things this literature shows that informational failures of the kind in question can lead to capital rationing in loan and credit markets and the use of strict collateral requirements as screening devices jaffee and russell i976 stiglitz and weiss i98i cable and turner i983 these may then be expected to affect the efficiency of individual firms and the system as a whole capital shortage implies that some profitable investment opportunities are foregone and production choices may also be distorted by the need to satisfy additional financial constraints contrived to elicit signals of creditworthiness of the firms undertaking them similarly the disciplining role of external capital markets can be impaired by information impactedness williamson i975 and the costs of mobilising and giving effect to shareholders preferences thus in the principal agent framework developed by jensen and meckling i976 and fama i980 the degree of constraint on managerial pursuit of non profit goals as posited by managerial theorists depends on the transactions costs of stock owner intervention the result is an optimal degree of departure from cost minimising profit maximising behaviour determined by the level of transactions costs institutional factors which affect the way information is distributed amongst agents can therefore have an important bearing on allocative and technical efficiency and the west german system of industrial finance provides an in

bargaining structures and delay in innovation it is sometimes argued that fears about the employment consequences of introducing new technology may lead unions to wish to delay innovations and this may reduce incentives for firm to carry out r d we explore these issues in a model of two countries that compete over both market share and r d and we restrict attention to cases where unions would wish to delay innovation we show that allowing unions to bargain over the timing of innovation need not reduce the possibility of a firm successfully competing for r d however simulations suggest that for a particular model allowing unions to delay innovation does not help a firm compete over r d

the japanese economy and corporate reform what path to sustainable prosperity in the 1980s as japan reaped the rewards of its extraordinary economic development of the post world war ii decades companies around the world sought to learn from japanese managerial practices even as in the united states financial interests including a growing number of corporate ceos were more aggressively advocating maximization of shareholder value as a managerial ideology within american industrial corporations slogans such as total quality management also vied for attention goldstein 1997 but the collapse of japan s bubble economy in 1990 and the persistence of recessionary conditions during the 1990s have raised doubts about the viability of the japanese model particularly in the west but increasingly in japan as well japan s negative rates of economic growth in 1997 and 1998 have prompted calls for japanese corporations to embrace the corporate governance principle of maximizing shareholder value

commercialization of patents and external financing during the r d phase abstract using a unique database on swedish patents owned by small firms and individuals survival models estimate how different factors influence the decision to commercialize the patents such an analysis has seemingly never previously been undertaken since the owners know more about the patents than potential external financiers problems related to asymmetrical information are present to overcome these problems when inventors and small technology based firms need financing sweden has for a long time relied on government support rather than private venture capital firms the empirical results show that the larger is the share of patent owners costs covered by government financial support during the r d phase the lower is the probability of patents being commercialized this lower degree of commercialization is likely to depend on 1 the soft terms of the government loans where the patent owner can avoid paying back the loan if the patent is never commercialized and or 2 that the government is not able to select promising projects the first explanation is related to moral hazard and the second one to adverse selection the policy suggestion is for government to change the design of the loans to base them on firms rather than projects

schumpeterian dynamics an evolutionary model of innovation and imitation abstract this paper develops a simple evolutionary model of innovation and imitation it analyzes how dynamic interactions between equilibrating force of imitation and disequilibrating force of innovation mold the evolutionary pattern of an industry s state of technology and shows that in this schumpeterian world the industry will never approach a neoclassical equilibrium with perfect knowlwdge even in the long run the paper also examines the steady state efficiency distribution of firms that characterizes the industry s long run and obtains some comparative dynamics results

gain loss and asset pricing we develop an approach to asset pricing in incomplete markets that bridges the gap between the two fundamental approaches in finance model based pricing and pricing by no arbitrage we strengthen the absence of arbtrage assumption by precluding investment opportunities whose attractiveness to a benchmark investor exceeds a specified threshold in our framework the attractiveness of an investment opportunity is measured by the gain loss ratio we show that a restriction on the maximum gain loss ratio is equivalent to a restriction on the ratio of the maximum to minimum values of the pricing kernel by limiting the maximum gainloss ratio we can restrict the admissible set of pricing kernels which in turn allows us to restrict the set of prices that can be assigned to assets we illustrate our methodology by computing price bounds for call options in a black scholes economy without intermediate trading when we vary the maximum permitted gainloss ratio these bounds can range from the exact prices implie

a survey of the literature on human capital intensive firms the aim of this paper is to provide an exhaustive survey of the academic research dedicated to the study of human capital intensive firms hcifs we use a bibliometric analysis based on the three widely used databases econlit science direct and wiley over the period 1992 2015 we are adapting a methodology developed in previous works to our specific object of study and we generate a bottom up clustering on keywords titles and abstracts our examination of the data sheds a light on five main clusters of works that respectively focus on 1 critical human resource management 2 intellectual capital assessment 3 funding risk and innovation 4 high skilled employees supporting economic development and 5 internal and external valuable social networks in a critical appraisal of our results we stress that the bibliometric analysis remains silent on how the different clusters are linked with each other based on our own appreciation of the hcifs literature we propose a further step in the identification of a central question linking up these clusters a transversal review of the five clusters reveals that hcifs appear as a network of specialized agents whose complementary human resources are decisive for the value creation process

research and development cash flow agency and governance uk large companies this paper investigates the determinants of r d expenditure using a sample of uk listed companies with the highest spend from 2000 to 2005 we investigate the effect of corporate governance and ownership on r d using panel data the results provide some evidence that more governance tends to depress r d activity a finding that is robust to whether a composite or disaggregated index of governance is used one innovation of the paper is that we treat agency and finance effects interactively the ownership stake of the ceo appears to be supportive for r d

credit markets and the control of capital traditional discussions of the role of capital markets have identified a number of distinct functions which they perforrn they allocate scarce capital among competing users and uses l and they provide signals to guide managers in making their investment decisions 2 in this lecture i wish to focus on a rather different function of the capital market what i shall refer to as the control of capital 3 conventional theory treats the typical firrn in an anthropomorphic manner it acts as a single rational individual doing what it is supposed to be doing maximizing stock market value that may have been well and good in those nostalgic bygone days of small firrns each run tightly by their owners who were single mindedly pursuing their lust for wealth but today a majority of production occurs in large corporations in which no shareholder owns more than a small fraction of the shares in which the separation of ownership and control that frank knight was so concerned with in his writings some sixty five years ago has become a reality those

the effects of state and federal background checks on state level gun related murder rates the purpose of the present study was to determine whether firearm background checks are significantly related to gun related murder rates the present study differs from prior research in several ways first a large longitudinal data set is used data for 50 states for the period 1980 2011 are examined second the effects of both federal and state background checks including state mandated private sales background checks are estimated finally a fixed effects model that controls for both state level and year specific effects is used results suggest that states that require dealer background checks have lower gun related murder rates than other states in addition after implementation of the brady act gun related murder rates fell however the results also suggest that for the entire period in question states with private sales background checks had higher gun related murder rates than states with no such background checks if one only looks the brady act period however then the private sales

r d investment and financing choices a comprehensive perspective abstract we posit that the effects of r d investment on financing choices depend on the degree of intervention barriers and appropriation discrepancy between capital providers and the firm based on these two contingencies we categorize financing instruments into four types common equity common stock convertible securities preferred stock and convertible debt transactional debt corporate bonds and relational debt bank and commercial loans from the experiences of 39 petroleum firms during the period 1976 2005 we found r d investment has a positive effect on the use of common equity a u shaped effect on the use of convertible securities and an inverted u shaped effect on the use of relational debt to raise capital these effects are sustained over several years

integrating finance into the multi level perspective technology niche finance regime interactions and financial policy interventions abstract any major socio technical transition requires a fundamental re direction of financial capital from incumbent to new technologies and practices while the transitions literature conceptually covers financial markets the role of finance is marginalized and has scarcely been analysed empirically to address this gap here we build on the multi level perspective mlp which considers financial markets as part of the existing regime we argue that the role of finance is highly relevant for the niche regime interaction redirecting finance towards new niche technologies requires that either the niche is fit for and conforms to the financial regime s expectations or the financial regime is stretched and transformed in order to accept and finance niche technologies based on 56 interviews we identify factors that determine interactions between the financial regime and technology niches these include acceptable risk and transaction size an abundance of knowledge and heuristics in both the regime and niche and an extensive existing industry network we further analyse how state investment bank sib interventions in germany the uk and australia aimed to mobilise private finance into low carbon project development affect the interaction between the technology niche and financial regime i e whether they resulted in fitting and conforming the technological niche for the financial regime or stretching and transforming the financial regime our results point to several important effects of sib interventions with most effects fitting the niche to the regime however we also detect effects that stretch and transform the financial regime through evolutionary processes importantly some effects occur as a consequence of the primary effects based on our findings we discuss policy implications on how to accelerate transitions through policies aiming at finance as well as theoretical insights gained through our analysis

information and economic analysis a perspective ten years ago i delivered a paper before this group with the title information and economic analysis i chose the title deliberately i did not call the subject on which i was speaking the economics of information because to do so would have been to suggest that my topic like the economics of agriculture or the economics of industry or the economics of labour represented another branch of specialisation within economics i wanted to suggest that informational considerations were in fact central to the analysis of a wide variety of phenomena that they constituted a central part of the foundations of economic analysis at the time though economists had long paid lip service to the importance of information there was little formal literature the last decade has seen a burgeoning of the literature it has become to the late 7o s and early 8o s what growth theory was to the early 6o s and it has been greeted with some of the same scepticism there seems to be a myriad ofspecial cases and few general principles the little examples are often contrasted unfavourably with the generality of general equilibrium theory what have we learned have diminishing returns set in are there fruitful directions for future research and if so what are they these are the questions which i wish to address here the work of the past decade has made i think a fundamental and lasting contribution to economic analysis the contributions have been both negative and positive we have learned that much of what we believed before is of only limited validity that the traditional competitive equilibrium analysis though having the superficial appearance of generality in terms of superscripts and subscripts is indeed not very general the theory is not robust to slight alterations in the informational assumptions it is but a special and not very plausible example among the possible set of informational assumptions which can be employed to characterise an economy at the same time the theory has been able to provide insights into phenomena about which the traditional model had nothing to say or which seemed inconsistent or inexplicable within the competitive paradigm it has provided some of the micro foundations for macro economics it has provided the basis of a new theory of the firm of a new new welfare economics and of a theory of economic organisation including a comparison of economic

the political economy of a global ban on mercury added products positive versus negative list approaches the main objective of this paper is to discuss and compare two regulatory options commonly used in multilateral environmental agreements the analysis is largely conceptual but we focus in particular on the recent global efforts to gradually phase out the use of mercury added products in the first regulatory approach no mercury added products would be allowed unless they are listed in an annex the negative list while in the second case all mercury added products would be allowed unless they are listed in an annex the positive list in both cases countries may have time to make the transition away from these products through the use of exemptions the paper provides first a conceptual discussion of bans as regulatory instruments and of the use of technology forcing standards to attain deep reductions in the reliance on hazardous substances we outline a simple theoretical framework within which different regulatory options for mercury added products can be analyzed this framework is employed to analyze some overall pros and cons of the negative and the positive list approaches specifically we address a number of generic factors that may differ across the two options such as a the potential presence of different types of information inefficiencies b the flexibility in compliance measures granted by the two approaches c the significance of administration costs as well as other relevant policy implementation issues the analysis indicates that the negative list approach could facilitate a more cost effective phase out of mercury in part since in this case an individual country seeking exemption would bear the burden of identifying the need for the exemption this requires though the use of long term compliance periods for selected product groups with the positive list approach the one currently adopted in the so called minamata convention on mercury it may be more difficult to induce mercury users to reveal their true costs of substituting to other products further empirical analysis is however needed to clarify the pros and cons of each option in different contexts

finance innovation and industrial change abstract this paper investigates the impact financial structures upon industrial dynamics whenever the system is permanently characterized by unexploited opportunities for innovation highly bounded rationality and trial and error search processes in these circumstances it is argued specific financial set ups such as market based vs credit based mechanisms of allocation control and ownership transfer are likely to exert different influences on the rates and modes of industrial innovation relatedly one suggests some hypotheses on the links between financial systems and features of industrial evolution and some tentative taxonomies

does the right to carry concealed handguns deter countable crimes only a count analysis can say abstract an analysis of the effects of right to carry laws on crime requires particular distributional and structural considerations first because of the count nature of crime data and the low number of expected instances per observation in the most appropriate data least squares methods yield unreliable estimates second use of a single dummy variable as a measure of the nationwide effect of right to carry laws is likely to introduce geographical and intertemporal aggregation biases into the analysis in this paper we use a generalized poisson process to examine the geographical and dynamic effects of right to carry laws on reported homicides rapes and robberies we find that the effects of such laws vary across crime categories u s states and time and that such laws appear to have statistically significant deterrent effects on the numbers of reported murders rapes and robberies

will rationing guns reduce crime abstract reducing the supply of guns does not necessarily decrease crime as many economists support this article explores hazards of gun control and offers an alternative solution for reducing crime that of enacting laws to permit the carrying of concealed handguns

the principal principle i analyze optimal loan modification schemes in a stochastic home price and stochastic interest rate environment lenders maximize loan values by managing the borrower s option to default on the loan and prepayment option given negative equity controlling for the borrower s ability to pay rate reductions and maturity extensions result in a higher probability of redefault by homeowners even after modification of their loans in contrast loan write downs the principal principle not a favored recipe are value maximizing for the lender a shared appreciation mortgage enhances the ability to pay mitigates adverse selection and reduces the present value of expected deadweight foreclosure costs

the dynamics of rapid industrial growth evidence from sweden s information technology industry 1990 2004 sweden s information technology it industry expanded through an inflow of new entrants during the 1990s its evolution was analyzed using ecological models of organizational founding and disbanding controlling for the effects of economic conditions this study analyzed the effects of density dependence age imprinting rate dependence and the origin of new entrants on the industry the results indicate that the inflow was comprised of start ups that proved to be relatively short lived in contrast new entrants that originated as part of incumbent firms that were diversifying in it stabilized the industry by depressing its disbanding rate and facilitating the entry of new firms in explaining the dynamics of the industry the analysis supports the established models of density dependence age dependence imprinting and organizational origin copyright 2009 the author 2009 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

capital market myopia abstract the purpose in writing this article is to focus attention on a phenomenon we call capital market myopia a situation in which participants in the capital markets ignore the logical implications of their individual investment decisions viewed in isolation each decision seems to make sense when taken together however they are a prescription for disaster capital market myopia leads to overfunding of industries and unsustainable levels of valuation in the stock market we use the winchester disk drive industry to elucidate the phenomenon we argue that capital market participants should have seen the problem coming they should have known that valuation levels were absurd based in large part on the greater fool theory the data necessary to anticipate the problem were readily available before the industry shakeout began and stock prices collapsed there are several lessons which we believe can be learned by careful examination of the disk drive experience in the period under study these include taking the broad view of the industry is the key to profitable investment the investment mania visited on the hard disk industry contained inherent assumptions about long run industry size and profitability and about the future growth profitability and access to capital for each individual company these assumptions had they been stated explicitly would not have been acceptable to the rational investor certainly there are valuations which arise which cannot be justified under any circumstance these are the times for the manager to raise money from the public capital markets those managers who took advantage of unsustainable valuation levels now have a chance to survive the shakeout growth is not equivalent to profitability the high growth rate in the industry made it the focus of considerable managerial investor and technological attention the industry attracted so many resources that the growth had high probability of being unprofitable excesses in the capital market turned an opportunity into a disaster profits for some are not equivalent to a good business many players made high profits by investing in the hard disk drive business including the investment bankers and certain of the venture capital groups which invested early enough to catch the wave of euphoria in the stock market and still sell under rule 144 many others rode the cycle up and down without liquidity for many buyers of disk drive stocks in 1983 losses were massive short term successes of some gave the illusion of long term profitability for all investors should not be fooled by such invevitably ephemeral successes market instability can be all bad news very rapid change often creates entrepreneurial opportunity it also creates risk analysis of the hard disk drive industry reveals the dark side of rapid technological evolution and of customer instability early players are often preempted by changes in technology and in customer needs early birds are not always winners in product markets but late comers are almost always losers recognizing the chain one of the more important lessons to be learned from the tale of the disk drive industry is that all players entreprenuers venture capitalists investment bankers industry analysts and investors must recognize the chains involved in such a process first there was a technological chain a series of bets on technological advances in disk drive components disk drive designs and end user designs then there was a financial chain a series of related bets on the internal financial health of each player in the technological chain and on the nature of access to capital in the private and public markets the likelihood that any player in the disk drive industry would prosper without a serious setback due to a weak link was effectively zero indeed weaknesses in the chain were created by exactly the same people whose financial success depended on an unbroken series of favorable outcomes during this same period the public capital markets were also a large supplier of funds to the disk drive industry the total amount of money raised in public offerings of common stocks for participants in the industry was over 800 million during the middle part of 1983 the capital markets assigned a value in excess of 5 billion to 12 publicly traded venture capital backed hard disk drive manufacturers the strong market valuation of these companies paralleled the boom in other high technology stocks and rising valuation levels in the stock market in general table 2 contains data on stock prices and valuation levels for some disk drive manufacturers and table 3 provides general data on the economy and capital markets

sensitivity analyses of the deterrence hypothesis let s keep the econ in econometrics abstract leamer and mcmanus applied extreme bound analysis eba in an empirical study of the deterrent effects of capital punishment and other penalties their analysis has questioned the validity of the deterrence hypothesis the thrust of our paper is twofold first by applying eba to well known econometric models of demand production and human capital investment our analysis exposes and illustrates the inherent flaws of eba as a method of deriving valid inferences about model specification second since the analysis shows leamer and mcmanus s inferences about deterrence to be based on a flawed methodology we offer an alternative theory based sensitivity analysis of estimated deterrent effects using similar data our analysis supports the deterrence hypothesis more generally it emphasizes the indispensable role of theory in guiding sensitivity analyses of model specification

industry evolution in varieties of capitalism a comparison of the danish and us wind turbine industries in this study we combine klepper s framework on the evolution of industries with the varieties of capitalism approach to argue that industry evolution is mediated by institutional differences we expect that new industries will evolve with a stronger connection to established industries in coordinated marked economies than in liberal market economies our assumptions are supported by the survival analysis of us and danish wind turbine manufacturers from 1974 to 2014

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

r d and ceo departure date do financial incentives make ceos more opportunistic the purpose of this article is to examine whether research and development r d expenditure is biased downward because of self serving behavior of highly incentivized managers this offers an insight into the general relationship between incentives and opportunism using instrumental variables and panel data methods for a sample of high r d spenders in the uk we examine whether r d is reduced in cases of imminent departure of the ceo results show evidence for this but only for the sample above the median in intensity of stock and options in the compensation package this suggests that opportunism is enhanced by inappropriately strong incentives the main results are robust to the inclusion of a number of corporate governance variables jel classification g30 o30

preemptive patenting and the persistence of monopoly this article takes a different tack and inquires whether institutions such as the patent system create opportunities for firms with monopoly power to maintain their monopoly power the results apply to other situations such as brand identification spatial location and capacity expansion which share the characteristic that early or preemptive actions may lower the returns to potential competitors

dynamic capabilities and sustained innovation strategic control and financial commitment at rolls royce plc rolls royce plc is currently a powerful competitor in the turbofan engine industry notwithstanding its own troubled history and the relative lack of international success of british companies in high technology manufacturing over the past halfcentury this paper seeks to contribute to the development of a theory of innovative enterprise by analyzing the roles of strategy and finance in sustaining the innovation process at rolls royce over four decades from the mid 1960s through an analysis of strategic control and financial commitment as conditions of innovative enterprise at different stages in rolls royce s evolution we adduce evidence that innovation depends in part on who strategic managers are and how they gain control over financial resources

innovation and inter firm linkages new implications for policy abstract this article discusses the implications for competition innovation and learning of different forms of inter firm linkage ways to govern them different generic systems of innovation and government policy it employs a transformed theory of transactions that can deal with innovation and learning and brings in trust next to opportunism nooteboom b 1996a trust opportunism and governance a process and control model organization studies 17 6 985 1010 nooteboom b 1996b towards a learning based model of transactions in groenewegen j ed tce and beyond kluwer deventer pp 327 349 nooteboom b 1999a inter firm alliances analysis and design routledge london while trust has its limits and should not be blind it can lower transaction costs for learning and innovation it takes the resource competence perspective supported by a theory of knowledge developed in earlier publications according to this theory people perceive interpret and evaluate the world according to cognitive categories that have developed in interaction with the physical and social environment as a result people will perceive understand and evaluate differently to the extent that they have developed in different environments without interaction nooteboom b 1992 towards a dynamic theory of transactions journal of evolutionary economics 2 281 299 nooteboom 1999a this theory yields the notion of external economy of cognitive scope people and firms need outside sources of cognition and competence to complement their own that is the fundamental reason why inter firm linkages are important especially for innovation in order to produce high added value and novelty by utilizing the opportunities of complementary competencies firms need to make relation specific investments which creates risks of hold up and spill over building on earlier work the article identifies different instruments for the control of those risks nooteboom 1996a nooteboom 1996b nooteboom et al 1997 effects of trust and governance on relational risk academy of management journal 40 2 308 338 nooteboom 1999a it identifies two generic kinds of innovation systems in terms of the mix of instruments for relational governance and discusses their merits and flaws with respect to quality of products diffusion incremental and radical innovation one is close to practices in continental europe and japan another is close to anglo american practice there is a certain tendency for the first to gravitate to the second the article warns about the dangers involved and explores a possible third way

theorizing path dependence a review of positive feedback mechanisms in technology markets regional clusters and organizations the concept of path dependence has often been criticized as vague and only narrowly applicable although we can find some very refined definitions of the concept we also find a wide range of empirical phenomena being described as path dependent we argue that more detailed accounts of the positive feedback mechanisms that form paths can take path dependence beyond this state of being overdetermined but under specified reviewing three well described cases of path dependent dynamics in technology markets regional clustering and organizations we define a core set of positive feedback mechanisms that constitute path dependence at different analysis levels and clarify the relationship between positive feedback and increasing returns we show that path dependent processes that is processes driven by positive feedback that veer toward rigidity or lock in can be but do not have to be found under many labels including structural inertia coevolution or institutional persistence we conclude that a precise definition of path dependence does not need to be at odds with the concept s widespread use in understanding organizational and industrial development processes copyright 2013 the author 2012 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

dimensioning the housing crisis the author argues that more than one borrower in every five could face foreclosure absent stronger policy measures the solution is to 1 reduce the housing supply through a modification program that explicitly addresses negative equity and 2 increase housing demand by expanding the availability of credit to investors

the architecture and dynamics of industrial ecosystems diversification and innovative industrial renewal in emilia romagna the paper aims at advancing our understanding of the architecture and diversification dynamics of industrial ecosystems and identifying policies for the innovative industrial renewal of mature economies industrial ecosystems are here defined as multi tiered production systems involving heterogeneous agents operating in sectoral value chains and contributing to the capability domains of the ecosystem and its participants with closely complementary but dissimilar sets of resources and capabilities the geographical boundaries of the industrial ecosystem are shaped by the evolving interdependencies linking organisations within the ecosystem and by the new linkages consolidating beyond that thus the industrial ecosystem is a structured production space centred mainly on its productive organisations as well as other institutions intermediaries and demand side actors purposefully involved in co value creation processes along various types of diversification and innovative industrial renewal trajectories drawing on a five year research programme in the emilia romagna industrial ecosystem a number of case studies are introduced to highlight these trajectories and the underpinning structural learning dynamics the paper concludes by identifying a number of policy implications focusing on strategies for enhancing the structural readiness of the industrial ecosystem and promoting smart diversification and innovative industrial renewal policies jel classifications d20 o25 o30

market structure and innovation a survey economics we all recite deals with allocation of limited resources towards satisfaction of unlimited wants resources are typically identified as land labor and capital plus a technology that determines their transformation into consumer goods disparity between the available goods and services and the desired gives rise to scarcity and the question of what how and for whom to produce the focus then shifts to description and evaluation of alternative resource allocation mechanisms for making the choices the pareto criterion by which an allocation of resources is deemed efficient if any reallocation improving the position of some individual worsens the position of others is a commonly employed gauge of a mechanism s performance in the absence of externalities increasing returns to scale and uncertainty a perfectly competitive market system yields a pareto optimal allocation of resources this underlies the view that individual self interest is compatible with society s interest the further conclusion that pareto optimality may not be achieved via the market system in the presence of monopoly elements provides an economic rationale for antitrust laws the objective of a resource allocation mechanism appears to be according to the analysis described above to make the best of available resources the alternative objective of relaxing constraints through expanding the resource base or developing new technology seems to be beyond its scope thus until rather recently technical advance had been regarded in the mainstream of economic theory as unmotivated by the quest for profits and substantially unaffected by resource allocation instead as j schmookler observed technology had been viewed as a parameter like the weather affecting the outcome of resource allocations but itself unaffected by them 84 1965 evidence that technological progress has significantly contributed to growth in productivity together with a substantial increase in research and development activity largely financed by government and carried out by industry see f machlup 51 1962 may have spurred reconsideration of this view once technical advance is regarded as an economic variable it is natural to in

takeover threats and managerial myopia this paper examines the familiar argument that takeover pressure can be damaging because it leads managers to sacrifice long term interests in order to boost current profits if stockholders are imperfectly informed temporarily low earnings may cause the stock to become undervalued increasing the likelihood of a takeover at an unfavorable price hence the managerial concern with current bottom line the magnitude of the problem depends on a variety of factors including the attitudes and beliefs of shareholders the extent to which corporate raiders have inside information and the degree to which managers are concerned with retaining control of their firms

strategic loan modification an options based response to strategic default abstract this paper presents a parsimonious barrier model for the optimal principal reset in a loan modification thereby maximizing the loan value to the lender bank and minimizing the likelihood of strategic foreclosure by the homeowner writing down the loan to value ltv ratio will reduce the present value of future payments on the loan but will also reduce the probability of default thereby saving foreclosure losses the optimal trade off of these two countervailing effects will pinpoint the optimal ltv at which the loan must be reset we present a simple barrier option decomposition of the loan value that makes the optimization of ltv easy to implement an extension of the model is shown to account for varying growth rate assumptions about house prices the model in this paper specifically accounts for the homeowner s willingness to pay and uses the framework to model shared appreciation mortgages sams

how organizational resources affect strategic change and performance in turbulent environments theory and evidence this study examines how historical resource endowments and competencies affect strategic change and its outcomes amid environmental turbulence drawing from both behavioral and economics based literatures we develop four distinct perspectives regarding the likely effect of resources on strategic change these four perspectives offer alternative predictions about how and why resource endowments should affect the likelihood or magnitude of strategic change and how and why they should moderate the relation between strategic change and performance we examine the predictive power of these four alternative arguments using extensive longitudinal data from a single industry context characterized both by substantial resource heterogeneity and environmental turbulence results indicate that organizations possessing greater stocks of historically valuable resources were much less likely to engage in adaptive strategic change but also that this resource driven disinclination towards change tended to have a benign or even beneficial effect on performance we discuss the implications of our theory and findings for the strategic change literature and also for the literature on the resource based view of the firm

the stock market and innovative capability in the new economy the optical networking industry the purpose of this paper is to analyze the impact of the stock market on the innovative capabilities of high technology companies that have been central to what in the last half of the 1990s came to be called the new economy the empirical focus is on equipment suppliers in optical networking an industry that integrates the bandwidth potential of fiber optics with the data communications potential of the internet the study covers the period from 1996 to 2003 during which the optical networking industry was first central to the new economy boom and then from 2001 ensnared by the bursting of the new economy bubble this paper shows how responding to the new economy business model brought into the industry by cisco systems three old economy companies nortel networks lucent technologies and alcatel sought to use their corporate stock as a currency to acquire technology companies and compensate talented people and thus accumulate innovative capability to understand the relation between the stock market and innovative capability in the cisco growth through acquisition and integration model and in the creative responses of the old economy companies to the cisco challenge we apply an analytical framework that links four functions of the stock market control combination compensation and cash with three social conditions of innovative enterprise strategic control the abilities and incentives of strategic decision makers to allocate resources to uncertain investments in innovative capabilities organizational integration the structure of incentives that motivates employees to apply their skills and efforts to collective learning processes and financial commitment the availability to the enterprise of resources to sustain cumulative learning processes until by accessing markets they can generate financial returns using this framework we show that the ways in which the old economy companies used their stock to accumulate innovative capability in the new economy boom of 1998 2000 made them more vulnerable to the stock market collapse and the slowdown in the optical networking industry in 2001 2003

technological pre adaptation speciation and emergence of new technologies how corning invented and developed fiber optics this article investigates how established firms innovate and even initiate new technological trajectories we build on and expand the notion of technological speciation to describe how a new technology emerges when a firm leverages its technological knowledge into a new application domain current research on technological speciation does not investigate how firms accumulate the technological knowledge which they eventually redeploy into different domains nor does it clarify the precise role of luck historical accidents and foresight strategy in shaping the overall process this requires a finer grained investigation of the microprocesses and evolutionary forces underlying the dynamics of technological speciation to this end we use a longitudinal case study of corning s invention and development of fiber optics technology we focus less on testing theory and more on describing a phenomenon to generate new theoretical insight

changing sources of competitive advantage cognition and path dependence in the finnish retail industry 1945 1995 in this study we analyze the finnish retail industry in 1945 1995 triangulating the major developments in society technology and firm level strategic choices we identified extensive variation in the sources of competitive advantage over time we found that the structural and cognitive cultural dimensions of firms that offered opportunities for success in some specific historical situations turned to be disadvantageous in other situations we propose a research framework that parcels managerial cognition into the elements of structure ideology and systemic and technical properties of the firm especially the notion of ideology is novel in the context of path dependence and cognition copyright 2006 oxford university press

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

structural cycles and industrial policy alignment the private public nexus in the emilian packaging valley the article investigates changes in the interaction between business organisations local governments and public technology intermediaries resulting from business organisations shifts towards higher value product segment opportunities specifically we analyse how local governments can or not align their industrial policies to the industrial transformations both technological and organisational underpinning firms value creation capture dynamics the concept of structural cycle is introduced here to study the two interdependent processes of technology transition and organisational reconfiguration characterising those firms shifting towards higher value product segments this private public nexus is investigated in the emilian packaging valley context the mixed method study focuses on the case of ima spa its shifts from the food to the pharmaceutical value product segment of the packaging machine industry and its changing relationships with regional public policies and institutions a number of industrial policy implications for sustainable value creation dynamics in local production systems are finally derived

the chandlerian corporation and the theory of innovative enterprise through the synthesis of business history into a coherent and powerful analytical framework alfred chandler made an enduring intellectual contribution to the social sciences this essay outlines the implications of chandler s perspective for the theory of innovative enterprise embeds that theory in the social conditions of innovative enterprise analytical framework demonstrates the illogic of the neoclassical monopoly model and contends that the analysis of the dynamics and performance of industrial capitalism requires a methodology that integrates theory and history

towards an economic theory of the multiproduct firm this paper outlines a theory of the multiproduct firm important building blocks include excess capacity and its creation market imperfections and the peculiarities of organizational knowledge including its fungible and taut character a framework is adopted in which profit seeking firms are seen to diversify in order to avoid the high transactions costs associated with using various markets to trade the services of various specialized assets neoclassical explanations of the multiproduct firm are shown to be seriously deficient

financing technology based small firms in europe what do we know this paper reviews the evidence on financing technology based small firms tbsfs in europe european tbsfs finance new investments by relying primarily on internal funds due to capital market failures induced by asymmetric information european venture capital has caught up with us venture capital but this is mainly because of the growth in uk venture investments it is unclear whether european venture capital has been able to certify the quality and enhance the growth of funded companies compared with the nasdaq there is little development of trading in high tech stocks in europe the so called new markets established in the 1990s collapsed in the wake of the internet bubble crash public venture capital and research and development r d tax incentives seem to have positively affected high tech firms

supermarket competition the case of every day low pricing every day low pricing edlp strategy has proved to be a successful innovation resulting in higher profits to supermarkets adopting it in competition with promotional pricing promo conventional wisdom attributes this success either to lower costs or to edlp better serving time constrained consumers while discouraging cherry pickers who seek promotions however it is unclear that such cost savings are being fully realized since edlp stores also engage in price promotions also continued existence of promo stores means that costs are not the only factor and they compete effectively without relying just on the cherry pickers furthermore experimental evidence suggests that a supermarket cannot obtain higher profits by merely setting constant low prices leading to the question exactly what makes edlp successful this question is of particular relevance to both academics and practitioners who have been intrigued by the success of this retailing strategy more generally the retailing issues addressed in this paper the economic analysis of competition and the empirical findings should be of interest to the broader community of researchers and managers we investigate the factors contributing to edlp s success by analyzing the competition between supermarkets through a game theoretic analysis of a market consisting of both time constrained consumers and cherry pickers key features of our model are consumers shop and purchase a basket of goods based on price announcements by stores and rational expectations of unannounced prices stores carry more than one good and compete through prices service convenience and appropriate communication strategies and no exogenous cost asymmetries we derive the conditions under which retailers choosing different strategies edlp and promo is a perfect nash equilibrium our analysis shows that the edlp store s offering of constant every day low prices is an equilibrium outcome endogenously determined successful implementation of the edlp strategy involves communication of relative basket prices implying that merely setting constant low prices is not viable we further demonstrate that while time constrained consumers find every day low prices at edlp attractive and cherry pickers the promotions at promo clientele effects are in fact more complicated specifically in equilibrium the promo store offers a higher service level as desired by time constrained consumers and the edlp store a lower service level in keeping with the needs of cherry pickers this choice of service by the two stores results in a cleaner segmentation of the market the higher relative basket price and service at the promo store results in a larger base of time constrained consumers to shop at the promo store and a larger base of cherry pickers to shop at the edlp store even though some cherry pickers continue to visit the promo store to avail of the price specials in this way our results contradict the conventional wisdom on edlp strategy as being mainly geared towards time constrained consumers finally industry profits are higher in an edlp promo equilibrium than when stores adopt identical strategies our analysis and results also offer a more complete characterization of the edlp and promo strategies indeed we show that edlp and promo strategies are positioning strategies rather than merely pricing strategies with different elements price promotions service and communications while the edlp store uses basket prices to attract both segments the promo store uses service and price specials to compete in the time constrained and cherry picking segment respectively given these different approaches of the two stores the communication strategies of the edlp and the promo stores emphasize these differences as well in this way we show as suggested by corstjens and corstjens 1994 that positioning in a retail context involves developing multidimensional strategies appealing to all segments while each element of the strategy may focus on a different consumer segment this is in contrast to the traditional view of segmentation in which different products in a product line for example are designed to appeal to different segments we complete the analysis by examining the data from the trade press and a survey conducted in a major metropolitan area these data while limited in scope support our theoretical results

the vanishing hand the changing dynamics of industrial capitalism alfred chandler s portrayal of the managerial revolution of the late nineteenth and early twentieth centuries does not extend well into the late twentieth century when widespread vertical disintegration began replacing the classical multi unit managerial enterprise this paper attempts to explain the new economy in a manner consistent with chandler by providing an enlarged theoretical account of industrial evolution in this account clusters of chandlerian firms appeared as a temporary episode within a larger smithian process of the division of labor

technology entrepreneurship and path dependence industrial clustering in silicon valley and route 128 silicon valley and route 128 have been the centers of innovation and commercialization for the electronics computer and data communications industries in the postwar period however since the 1960s silicon valley has grown more rapidly and from approximately 1985 through 1995 route 128 experienced retarded growth their success had diverged dramatically in the last decade the most common explanations for this divergence are differing cultures interfirm relations or and internal organizational style organization this paper builds upon path dependent and dominant design explanations of technical and industrial change arguing that the technological trajectories of the industries underlying the two regions were different and this led to their differential destinies to explain the dynamics of the two regions and analytical separation is made between the economy of the existing firms and a separate economy of institutions that evolved to nurture new firm formation copyright 1999 by oxford university press

the competitive characteristics of u s manufacturers in the machine tool industry this paper examines the competitive characteristics of u s manufacturers in the machine tool mt industry after several decades of decline this industry has recently shown signs of a modest but sustained recovery empirical evidence from a national survey of 104 mt producers suggests that the revival of this sector has been driven by a combination of factors including renewed export involvement improved customer support and better product design although most mt companies are small to medium sized enterprises smes the survey data show that very small smes are poorly represented in the recovery thrust of the industry as a whole our principal conclusion is that the mt industry has been following an export led path toward stabilization but that certain types of small producers are unlikely to thrive for very long the most serious problems facing small producers include shrinking local markets import competition shortages of skilled labor and cyclical demand

beyond arbitrage good deal asset price bounds in incomplete markets one often wants to value a risky payoff by reference to prices of other assets rather than by exploiting full fledged economic models however this approach breaks down if one cannot find a perfect replicating portfolio we impose weak economic restriction to derive usefully tight bounds on asset prices in this situation the bounds assume that investors would want to buy assets with high sharpe ratios good deals as well as pure arbitrage opportunities we show how to calculate the price bounds in one period multiperiod and continuous time contexts we show that the multiperiod problem can be solved recursively as a sequence of one period problems we calculate bounds in option pricing examples including infrequent trading and an option written on a nontraded event and we use the bounds to explore the economic significance of option pricing predictions we find that much variation in s p 500 index option prices over time and across strike prices fits within the bounds

understanding complex organization the role of know how internal structure and human behavior in the evolution of capabilities this article begins with some notes on the intellectual climate in which the article of winter 1968 towards a neo schumpeterian theory of the firm the rand corporation 2006 industrial and corporate change 15 1 was first written it identifies core ideas and contentions sidney winter helped put on the research agenda for scholars interested in complex business organization we point out that winter s early contentions have implications for strategic thinking in both business and military contexts and that a promising research agenda lies in the further development of notions of organizational capability copyright 2006 oxford university press

finance capital in chandlerian capitalism alfred chandler wrote a great deal on finance capital in the development of big business in making bold and provocative statements he provided scholars with a variety of stimulating ideas to a large extent however we still do not know whether chandler s assertions were correct ultimately the value of revisiting chandler s research on finance capital in the rise of us big business is to understand how much research needs to be done and the questions it needs to address copyright 2010 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press