Firm-level Strategies Research Articles

Export Dynamics, Strategies and Performance within Japan's Machine-Tool Industry

Despite increased global market competition, Japan remains a leading producer of metal-cutting machinery. Exporting plays an important role in firm-level strategies, an approach that has occurred with much success in many of Japan's capital goods sectors. This article examines the dynamics of exporting within Japan's machine-tool sector in the context of recent industry changes and in terms of evolving product make-up. Evidence from a recent series of interviews mainly conducted in 2006 suggests that firms use a variety of strategies to succeed in export markets, with an emphasis on increased precision and service. These strategies continue to keep many Japanese producers in prominent market positions, despite spatial redistributions of world manufacturing activities.

Structural source enabling firm revitalization innovation of sector—An empirical analysis of Japanese 31 industrial Sectors

During the “lost decade” of the 1990s, a significant number of Japanese sectors experienced critical business circumstances. However, by adopting a variety of strict disciplinary measures, a number of these sectors have been able to reconstruct their operations, and several of them were able to revitalize themselves since 2004. This paper attempts to empirically analyze and identify the structural sources that have enabled sectors to succeed in their revitalization efforts. First of all, on the basis of a comprehensive review of Japan's 31 sectors over the last 13 years, this paper demonstrates that the structure which includes many strategy paths to activate sectors is useful for the firm revitalization innovation at the sector level ( FRI-s). In Japan, it was especially verified that three independent strategies contributed to FRI-s. Second, by examining the empirical rate of FRI-s, this paper demonstrates that the high possibility of FRI-s strengthens the revitalization structure of a sector. Finally, it could be assumed the existence of a circulation mechanism at three layers (a national level strategy, a firm level strategy, and a sector level accumulation) in the revitalization structure.

The Regional Environment and a Firm’s Innovative Performance: A Plea for a Multilevel Interactionist Approach

Following the recent critical debate on the role of the firm versus that of the region, this article contends that for a true test of the importance of the role of the region for a firm’s innovative performance firm-specific heterogeneity needs to be minimized. Empirical studies have tended to deduce that the region matters from the macrophenomenon of regional clusters of economic activity. This deduction has led to an ecological fallacy, in which global phenomena or data aggregates that are actual representations of lower-level phenomena cannot be generalized to those lower levels. This article argues that if researchers want to analyze how a firm’s environment affects its performance, they need to include firm-level strategy and structure. As an empirical illustration of this argument, the article presents a test—controlling for a number of firm-specific factors—of whether regional characteristics like the intensity of regional research and development (R&D), the number of R&D workers in the region, and the presence of a research institute are significantly related to a firm’s ability to produce innovations. The findings suggest that the firm-specific drivers of innovation are more important than is a firm’s regional environment. The article concludes that a renewed focus on the main actors and their interrelationships is needed, particularly those that involve the exchange of knowledge, to assess the extent to which such interactions are carried out within bounded territories.

Surviving at the Margins? Deindustrialisation, the Creative Industries, and Upgrading in London's Garment Sector

In this paper we examine trajectories of change in London's garment industry set within the contexts of deindustrialisation, increasing competitive pressures, and discursive shifts in public policy towards the ‘creative industries’. We emphasise the diversity of firm-level strategies that have been implemented to cope with increasing competitive pressures, liberalisation, and outsourcing in the industry. We identify a dominant trajectory of factory closure, job loss, and deindustrialisation as firms are unable to compete on the basis of the kinds of contracting requirements of buyers and retailers in a high-cost location such as London. We also identify a range of strategies that firms continuing to operate in London have adopted, including the development of new functions in the supply chain, repositioning in relation to specific market niches, coordinating the relocation of production offshore, upgrading towards more design-intensive, small-batch production, and spreading risk across a range of activities. While some of these strategies connect to wider public policy discourses concerning the creative industries in London, they also suggest the need for a broader framing of firm-level trajectories set within the context of the power of major buyers and retailers. Consequently, in the paper we raise concerns over the extent to which creative industries can contribute to enhancing social inclusion and economic development.

Successful e-marketplaces: An institutional perspective

Since their inception, e-marketplaces have witnessed a major shakeout and have undergone tremendous change with regard to their business models and products/service offerings. Only a few marketplaces survive, tend to grow and consolidate in this turbulent environment. This development represents an interesting challenge to prevailing institutional theory, which views the performance of organizations as strongly influenced by the orientation and characteristics of a number of key institutional frameworks. Our research, based on a case survey methodology, attempts to identify the characteristics underlying successful e-marketplaces. Results indicate the success of a marketplace strongly influenced by number of key institutional frameworks and firm-level strategies. Ownership and bias, service focus, value impact, market opaqueness, rapidity of response, complementary assets and appropriability, and industry regulations emerge as key variables.

Introduction to Special Topic Forum: Perspectives onHowGoverments Matter

This special topic forum explores how governments matter in a number of ways: the extent to which government action can foster industry creation and economic development, the impact of corrupt governments on firm-level decision making by managers of multinational enterprises, the concept of the attractiveness of political markets and the impacts they can have on firm-level strategies, and how deregulation can affect the governance mechanisms of firms. Here we offer readers four views on research issues intended to complement the STF articles and to suggest other avenues for fruitful research.

FROM BIG PUSH TO BIG PULL: THEORY AND EVIDENCE.

We consider the interaction between governmental institutions and firm-level strategies in shaping the process of economic development. On the basis of conceptual models of technological catch-up and innovation, we show that the relationship between institutions and development varies over the development process. When a country is far from the technological frontier, governments can unleash a

Relationships as entry barriers: a network perspective

Recent literature on the European Union has focused to a great extent on the growing competition that the creation of the union was expected to generate on the former national markets. And yet, as we have moved into the new millennium, cross-border competition in many sectors is still at modest levels. One explanation for this could lie in firm-level strategies that involve relationship-building on the home-market and abroad with a view to creating new entry barriers to deregulated national markets. However, entry barrier literature, is dominated by economics-oriented frameworks in which relationships and collaboration take second place to horizontal competition. The adoption of a network perspective helps to reveal what happens when a market is deregulated. Anyone in Europe can become an actor overnight, whereas previously all kinds of regulations limited the number of actors, essentially, to the national ones. However, to be able to establish itself on the new market, a firm needs to establish relationships. The main aim of a defending firm is then to strengthen its relationships to prevent entrants from establishing a position in the national network. This article, mainly theoretical and using a network perspective, seeks to develop a framework for analysing relations as entry barriers. It also presents some general propositions as to how relationships, as entry barriers, may influence firm strategies in general, and discusses some implications for mainstream entry barrier research and for policy-makers. The empirical material, namely strategic developments in the Swedish food industry during the 1990s, has had a purely illustrative function.

Assessing Finland's Wireless Valley: can the pioneering continue?

Internationally, the success of Finland's Wireless Valley, i.e., the Finnish telecom/mobile cluster, has often been credited to Finnish industry competitiveness, population dispersion, and pro-technology attitudes. Yet, the number of competitors has been low, while demographic dispersion and technology attitudes have not been that different from those in other Nordic countries. In effect, the cluster performance during the second-generation rivalry has been a function of geopolitics (Finland's special relationship with Tsarist Russia and Soviet Union), public strategies (Nordic cooperation, EU strategies and Finnish liberalization in the 1970s and 1980s), and first-mover advantages (firm-level strategies of Finnish mobile vendors and operators). In the emerging 3G competition, the importance of geopolitics and public strategies has become secondary to that of the marketplace. As a result, the Finnish success drivers are dissipating in the new environment.

Dynamic capabilities in international expansion

This article articulates a dynamic capability perspective on international business. The three essential ingredients of dynamic capability—capability possession (distinctive resources), capability deployment (resource allocation), and capability upgrading (dynamic learning)—have become increasingly fundamental to international expansion and global operations. Capability possession is critical to gaining competitive advantages and determining firm-level strategies to exploit such advantages. Capability deployment is crucial to mitigating the disadvantages of foreignness and preempting emerging opportunities. Capability upgrading is essential to the evolutionary development of sustainable advantages and creating new bundles of resources. Each of these capabilities is a necessary condition for sustained success in today’s world economy characterized by increasing technological advancement and business globalization.

Reintermediation Strategies in Business-to-Business Electronic Commerce

:The literature on electronic commerce and electronic marketplaces has long recognized the importance of intermediaries and the functions they serve. The Internet is most often discussed in connection with digital intermediaries as the displacement of traditional intermediaries. This article proposes a new conceptual framework for understanding how competition in business-ta-business (B2B) electronic commerce in the presence of information technology (IT) innovations changes firm-level strategy choices and the structure of the marketplace. It also identifies and discusses the economic forces that lead to these changes, and in this context describes a recurring pattern of intermediation, disintermediation, and reintermediation through an “IDR framework.” The article explains the impetus for technological reintermediation, where a disenfranchised traditionol player is able to compete again by leveraging technological innovations with cospecialized assets. This perspective is built with the support of relevant literature from several reference disciplines and with evidence from a field study of intermediation on the Internet in the corporate travel industry. The analysis reveals that traditional travel firms hove access to a range of strategies thot enable them to avoid disintermediation and retain highly profitable central roles in the marketplace in the long run.

The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage

In this article we offer a view that suggests that a firm's critical resources may span firm boundaries and may be embedded in interfirm resources and routines. We argue that an increasingly important unit of analysis for understanding competitive advantage is the relationship between firms and identify four potential sources of interorganizational competitive advantage: (1) relation-specific assets, (2) knowledge-sharing routines, (3) complementary resources/capabilities, and (4) effective governance. We examine each of these potential sources of rent in detail, identifying key subprocesses, and also discuss the isolating mechanisms that serve to preserve relational rents. Finally, we discuss how the relational view may offer normative prescriptions for firm-level strategies that contradict the prescriptions offered by those with a resource-based view or industry structure view.

Technology strategies of large enterprises in Indian industry: Some explorations

A firm's technology strategy is influenced by the “technology regime” in which it operates. The regime is broadly defined by a combination of variables capturing industrial structure, nature of technical knowledge and the policy environment. Together, these variables determine the opportunity and appropriability conditions faced by a firm in a well-defined industry. Given these broad relationships, a heuristic framework is developed to analyze firms' technology strategies across industry groups. Four firm-level strategies are identified: 1. (a) undertake research and development; 2. (b) purchase disembodied foreign technology; 3. (c) combine (a) and (b); 4. (d) remain technologically inactive i.e., do neither (a) nor (b). The framework is translated into a multinomial logit model to explore empirically the determinants of technology choices made by Indian firms in two different industries: non-electrical machinery and chemicals.The impact of the following determinants is explored: firm size, capital and material imports, foreign equity participation, and foreign/domestic technology spillovers.

The Interplay of Industrial Policy and International Strategy: Japan's Machine Tool Industry

Japanese firms obtained a dominant share of the U.S. numerical control (NC) machine tool market due to a carefully planned and executed long-term global strategy. Japanese industrial policy was helpful, primarily through MITI encouragement to the industry to refocus product line on new technology machine tools, with funding for joint research and encouragement of mergers and product-line rationalization. In turn, Japan's largest machine tool companies initiated firm-level strategies of continued upgrading of capital equipment through investment, with a concurrent reduction in the use of labor, leading to lowered costs and increased productivity. They evolved into low-cost, high-volume producers and, just as important, introduced new lines of inexpensive, standardized, off-the-shelf NC machine tools particularly suited to the needs of smaller businesses. These machines were then introduced in the U.S., taking advantage of delivery periods of over a year for tools ordered from U.S. manufacturers. By 1986, machine tool imports accounted for over 50% of U.S. demand, even as Japanese manufacturers began establishing a manufacturing presence in the U.S. Possible corporate and U.S. government responses are examined.