Effect Of Market Competition Research Articles

Adaptive Firm Structure Under Market Competition: Efficiency, Incentives, and Risk Control

This paper presents a theory on how firm structure responds to market competitiveness. Firms have often been observed to reallocate control rights, sometimes in response to market competition. We develop a theory on the dependence of firm structure on market competition using an incomplete contract approach. We show that a reallocation of control rights can be an effective way of adapting to changing market competitiveness. We find that when market competitiveness changes, depending on demand elasticity, firms may centralize or decentralize control rights to encourage work incentives or to control risk. We present a few case studies in support of this result. We also investigate the effect of changing demand elasticity and production cost on firm structure, as well as the effect of market competition on efficiency, incentives and risk control after taking into account the endogenous, competition-driven firm structure.

Effects of Market Competition on the Sustainability Performance of the Construction Industry: China Case

AbstractAchieving sustainability through the market has been a research topic in the field of sustainable development. Nevertheless, the ways in which sustainability in construction is influenced by the construction market have not been explored explicitly. In the research reported in this paper, hypotheses on the effects of market competition on the sustainability performance of the construction industry were proposed. A structural equation modeling approach was adopted and data from 30 provincial construction sectors in China were collected to test the proposed hypotheses. The results show that market competition can influence industrial sustainability in three ways, namely (1) positive effects on the economic dimension, (2) negative effects on the environmental dimension, and (3) positive effects on the social dimension. The research reported in this paper contributes to the body of knowledge by addressing the role of market competition in institutional drivers of sustainable construction. It is implie...

Photographic architecture in the twentieth century

Photographic Architecture and the Spread of German Modernism is a “picture anthropology” of modern architecture, showing how photography shaped its development, its reception, and its history in the 20th c. At first, architects used photography to promote their practices, even as they doubted its value and efficacy as a means of representation. Unlike other representations, photographs were both too real, and not real enough. Furthermore, the photographic image acted on its subject like an alchemical agent. Photography altered the material that it represented, at the same time shepherding architecture from elite social representation in the nineteenth century to potential mass communicator in the twentieth. In architectural markets, technological development and public self-presentation were at least equally important, and both were affected by photography and the mass distribution of cultural information. The collateral effects of market competition in architecture in the age of printed advertising, however, produced resistance in the architectural profession, as it insisted on the inadequacy of the new medium to adequately represent built things. The book focuses on two interconnected subjects subsumed in the term, “photographic architecture”: on the one hand, architectural photography and its circulation; on the other, the impact of photography on architectural design. In this particular strain of modern architecture, the visible appearance of buildings and the modalities of photographic images overlapped in consequential ways. This book analyzes the formation and impact of such ideas and the discourses that accompanied them.

Corporate governance, product market competition and dynamic capital structure

Although the importance of both product market competition on managerial slack and the impact of corporate governance on capital structure decisions have been widely discussed in many of the prior related studies, it appears that very little attention has been paid to the effect of market competition on the relationship that exists between corporate governance and capital structure dynamics. Based upon an examination of this relationship in the present study, we find that product market competition increases the incentives for firms with weak governance structures to maximize the wealth of shareholders, thereby increasing the adjustment speed toward target leverage. Furthermore, the difference in such adjustment speed between firms with weak and strong governance structures is found to be smaller among firms operating in the highly competitive industries.

Technological Performance and Alliances Over the Industry Life Cycle: Evidence from the ASIC Industry

Technology development in firms is frequently based on a combination of internal and external technological learning. Consequently, firms need to develop both technological capital (a patent portfolio) and alliance capital (a portfolio of technology alliances). This paper examines the relationship between technological capital, alliance capital, and their joint impact on the technological performance of firms, with an application to the application‐specific integrated circuit industry. We find that positive marginal returns to alliance capital are decreasing at higher levels of alliance capital. Technological capital and alliance capital can either augment or reduce each others' influence on innovation performance depending on the stage of the technology life cycle in the industry. A reinforcing relationship related to absorptive capacity requirements and technological uncertainty is present in early stages, while technology leakage and market competition effects render the combination of high levels of technological and alliance capital counterproductive in later stages of the technology life cycle.

Market Competition in Transition Economies: A Literature Review

This paper provides a survey of the effects of market competition in the transition economies of Eastern Europe and Central Asia. The pivotal element of the transition was inter-firm competition, which replaced economic planning as the method to identify demand. Pro-competitive policies that facilitated the transition are discussed, including international trade, attracting foreign direct investment and firm entry. Research topics with respect to competition changed as the transition advanced. The focus shifted from churn and macroeconomic shock-management in the initial phases toward firm entry, privatisation and restructuring of incumbents. In the later phases of transition, differentials in aggregate economic performance became obvious, pointing at institutional differences and their interplay with transitions. These are equally reflected by the degree of competition of the business environment. Also the methods changed with the evolution of the research agenda. Early case studies were displaced by large-scale, cross-country econometric studies as survey data became increasingly available.

Investigating Pedestrian Behavior Differences of Walking Streets and their Effect Factors with Three Wuhu Cases

It is found that the use of pedestrian streets varies widely in Chinese cities. This paper was intended to compare the pedestrian behavior characteristics and to discuss the effects of market competition, built environment and mobility governance of walking streets, taking three cases in Wuhu city for study. Except pedestrian flow, trip purpose, trip frequency, travel distance, dwelling time and mode share was compared based on sampling questionnaire survey. It further investigated pedestrians’ satisfaction and dissatisfaction with the streets, as well as main factors affecting pedestrians’ behavioral preferences, including the scale and types of business activities, landscape, circulation and transit service of the streets. The author concludes that market comparative advantage, pleasant walking environment and good transit accessibility are keys to enhancing the vitality of walking streets.

War, selection, and micro-states: Economic and sociological perspectives on the international system

Much International Relations theory explains the dominance of the sovereign state within the international system by a process of competitive selection. By analogy, the selection effects of market competition in promoting better-adapted firms are said to illustrate the selection effects of security competition under anarchy in promoting better-adapted units, specifically sovereign states. In critiquing this analogy, the article argues instead that the historical diffusion and current dominance of sovereign states is better explained by a sociological institutionalist logic. Units secure social acceptance, and incidentally survival, through conformity to promote legitimacy. This position is justified on three grounds. First, survival and violent elimination from the international system over the last two centuries are unrelated to military capacity, but highly correlated with legitimacy. Second, selection-by-learning rests on a series of highly demanding and unrealistic assumptions; the sociological alternative requires much less heroic assumptions. Finally, a qualitative study of micro-states, most-likely cases for competitive elimination, demonstrates their attempts to conform to idealized templates of the modern state.

Does Competitive Pressure Spur or Hinder Corporate Basic Research?

Corporate basic research is of great economic relevance. However, since potential payoffs of basic research activities are so long-term, firms facing competitive pressure may focus on more near-term, hence more applied research and development projects. This paper addresses the effect of market competition on firms’ in-house R&D investment and on its components basic research as well as applied research and development. We use the stated number of competitors as an indicator for competitive pressure. Our results indicate that increasing competitive pressure leads to a reduction of basic research activities and boosts firms’ expenditures in applied research and development.

The effects of own- and other-prior entry modes in the internationalization of Japanese multinational companies in the electronic sector

Purpose – This paper goes above and beyond the prior research on entry mode by considering the organizational approach and examines entry mode selection between wholly-owned subsidiaries and joint venture by taking into account the existence of different types of joint ventures. In this way, this paper seeks to investigate whether or not a relationship exists between the first entry strategy decision of a particular firm and the prior foreign market entries made by other firms. Moreover, considering that foreign market entry is not a one-time decision, this study analyses whether or not prior entry in a particular country has influence on the choice of repeated entries in the same country. Design/methodology/approach – This paper uses data of 1,470 subsidiaries established by Japanese electronics firms in 64 countries. The propositions are tested by applying a statistical t-test to compare the mean differences between the analyzed cases. Findings – The findings revealed the legitimacy effect on the entry mode selection. Firms tend to follow the prior entry strategies of its rivals in the case of first time investors, while for subsequent investments, both prior entries made by the parent firm and competitors have great influence on the market access in a particular country. It suggests that the effect of market competition cannot be neglected when examining entry mode selection. Furthermore, there is a need to consider entry strategy as a dynamic rather than a static decision-making process. Originality/value – The findings from this study are useful for scholars interested in advancing the knowledge on entry mode strategies of multinational companies.

Technology Spillover and Market Competition of Foreign Firms in China

This paper examines the impacts of foreign direct investment for the case of China. We focus on the following two main effects that have important impacts on the productivity of factors in the industries: technology spillover and market competition. Technology spillovers, both within the sectors and across sectors from foreign firms to domestic firms, help improve the domestic firms' production, while the inflow of foreign firms tend to drive domestic less productive and smaller firms out of the industries. The departure of these local firms will raise the average firm sizes, affecting the factor productivity of the sectors. Using data of 27 industries in China from 2001 and 2006, we found evidence of within-sector and across-sector technology spillovers. The results also suggest the presence of market competition effects, which for the group of Chinese industries in that period of time were negative.

How Do Consumer Buzz and Traffic in Social Media Marketing Predict the Value of the Firm?

Consumer buzz in the form of user-generated reviews, recommendations and blogs signals consumer attitude and advocacy can influence firm value. Web traffic also affects brand awareness and customer acquisition, and is a predictor of the performance of a firm’s stock in the market. The information systems (IS) and accounting literature have treated buzz and traffic separately in studying their relationships with firm performance. We consider the interactions between buzz and traffic, as well as competitive effects that have been overlooked heretofore. To study the relationship between user-initiated web activities and firm performance, we collected a unique data set with metrics for consumer buzz, web traffic and firm value. We employed a vector autoregression with exogenous variables (VARX) model that captures the evolution and interdependence between the time-series of dependent variables. This model enables us to examine a series of questions that have been raised but not fully explored to date, such as dynamic effects, interaction effects and market competition effects. Our results support the dynamic relationships of buzz and traffic with firm value, and the related mediation effects of buzz and traffic. They also reveal significant market competition effects, including effects of both a firm’s own and its rivals’ buzz and traffic. The findings also provide insights for e-commerce managers regarding website design, customer relation management, and how to best respond to competitors’ strategic moves.

Studying the Effect of Market Competition on the Auditing Fees and the Operational Costs Efficiency as the Agency Costs Indexes

In the study the effect of market competition on the agency costs was examined in the companies listed in Tehran stock exchange; hence, 56 companies were examined in 2005-2010. The selected approach benefits from Panel Data to test the hypotheses and the natural logarithm of auditing fees and operational costs ratio were considered to calculate the agency costs. The findings indicate that there is significant relation between the competition effect in the product market and agency costs when the confidence rate is 95 percent; also the findings indicate that the debt rate has no significant effect on the agency costs.

Outsourcing with long term contracts: capital structure and product market competition effects

This paper analyzes how capital structure and product market competition affect the firms’ strategic choice between outsourcing with long term contracts and outsourcing to the spot market. When outsourcing to the spot market firms are exposed to price uncertainty, whereas a long term contract allows them to set in advance the outsourcing price. We show that, to the extent that leverage and uncertainty can lead to financial distress costs in bad states of nature, firms may use long term contracts as a risk management device to hedge input price uncertainty. With a monopoly in the final product market, the outsourcing decision involves a trade-off between a positive convexity effect of input price uncertainty under the spot regime and the option to avoid financial distress costs under the long term contract regime. Moreover, product market competition among buyers can lead to an increase in financial distress costs not only for firms outsourcing to the spot market but also for firms outsourcing with a long term contract. We examine the monopolist’s outsourcing decision and derive the equilibrium for an oligopoly, and show that the equilibrium depends on the magnitude of these costs and on the level of efficiency of the supplier.

Environmentally friendly facility location with market competition

Many traditional facility location models assume spatial monopoly where market competition is ignored. Since facility locations affect the firm’s market exposure and subsequently its profit, accounting for the impact of the location decisions on customers while anticipating the reaction of competitor firms is essential. In this paper, we introduce a competitive facility location problem where market prices and production costs are determined through the economic equilibrium while explicitly considering competition from other firms. In order to accommodate for the growing efforts on limiting carbon emissions, the presented model includes constraints on the amount of carbon emissions that are due to transportation, while allowing carbon trading. The problem is formulated as a mixed integer non-linear model. Through numerical examples, we illustrate the effect of market competition on the location decisions and discuss the impact of emission limits and carbon trading on customers.

Market competition, differences in technology, and productivity improvement: An empirical analysis based on Japanese manufacturing firm data

In this paper we examine empirically the effect of market competition on firm productivity improvements using data drawn from the Japanese manufacturing sector. We find that a non-linear relationship between competition and productivity growth induced by R&D activity as suggested by Aghion et al. (2005) holds for Japanese manufacturing firms. We also show that greater market competition widens technology differences across firms, and firms facing more intense competition are more productive than other firms. Our empirical results imply that productivity improvement through R&D activity depends on not only a competitive environment but also technological differences between firms.

Using Bank Mergers and Acquisitions to Understand Lending Relationships

We study how firm-bank lending relationships affect firms' access to and terms of credit. We use bank mergers and acquisitions (M&As) as exogenous events that affect lending relationships. Bank M&As lead to organisational changes at the involved banks, which may reduce the amount of soft information encompassed in the firm-bank relationship. Using a unique Norwegian dataset, which combines information on companies' bank accounts, annual accounts, bankruptcies, and bank M&As for the years 1997-2009, we find that domestic bank mergers increase interest rate margins by 0.24 percentage points for opaque small and medium sized firms, relative to less opaque firms. Since, due to information asymmetries, opaque firms are typically more dependent on bank lending relationships, our results indicate that these relationships are advantageous for such borrowers, and the destruction of a relationship during the merger process has adverse effects for the firm. Conversely, the results are not consistent with a lock-in effect due to an information monopoly by the relationship lender that on average increases a firm's borrowing costs over its life cycle. The results are robust to the inclusion of variables that control for effects of market competition.

Hospital competition and patient-perceived quality of care: Evidence from a single-payer system in Taiwan

To examine the effects of market competition on patient-perceived quality of care under a single-payer system in Taiwan. Data came from two nationwide surveys conducted on discharged patients and National Health Insurance (NHI) hospital claim datasets in 2002 and 2004. Competition was measured by the Herfindahl-Hirschman Index (HHI). Quality of care was measured by patient-rated hospital performance including interpersonal skills and clinical competence domains. We used the instrumental variable approach to address the endogeneity between competition and patient-perceived quality of care. The results showed that HHI was significantly associated with a decrease in the perceived interpersonal skills (coefficient of -0.460; p<0.001), indicating that the interpersonal skill level increases in competition. A similar association was found for the perceived clinical competence (coefficient of -0.457; p=0.001). Quality of care from the patients' perspective is sensitive to the degree of competition. By using patient-reported data, this study provides new evidence concerning competition and quality of care.

Outsourcing with Long Term Contracts: Capital Structure and Product Market Competition Effects

This paper analyzes how capital structure and product market competition affect the firms’ choice between outsourcing with long term contracts and outsourcing to the spot market. When outsourcing to the spot market firms are exposed to price uncertainty, whereas a long term contract allows them to set in advance the outsourcing price. We show that, to the extent that leverage and uncertainty can lead to financial distress costs in bad states of nature, firms may use long term contracts as a risk management device to hedge input price uncertainty. With a monopoly in the final product market, the outsourcing decision involves a trade-off between a positive convexity effect of input price uncertainty under the spot regime and the option to avoid financial distress costs under the long term contract regime. Moreover, product market competition among buyers can lead to an increase in financial distress costs not only for firms outsourcing to the spot market but also for firms outsourcing with a long term contract. We examine the monopolist's outsourcing decision and derive the equilibrium for an oligopoly, and show that the equilibrium depends on the magnitude of these costs and on the level of efficiency of the supplier.

The Effects of Market Competition and International Orientation on Management Control Systems’ Use by Emerging Market Publicly Listed Companies

The 33rd Annual Congress of European Accounting Association (EAA 2010), Istanbul, Turkey, 19-21 May 2010.