Strategic Behavior Of Firms Research Articles

After the transition - before the eu joining: Competitive strategies of Hungarian food industrial enterprises

After the transformation process and privatisation a rather specific dual structure has been formed in the Hungarian food industry: large food industrial enterprises, dominantly in foreign ownership, fulfilling locally the global strategy of the international firm, and micro - and small - scale firms in domestic ownership. The strategic behaviour of Hungarian food industrial firms have been examined by direct-question surveys and interviews. Based on enterprise- and business-level strategy theories, the objective was to create a taxonomy of strategic patterns of Hungarian food industrial firms. On basis of investigations four characteristic groups of small and medium scale enterprises could be separated from each other. The high cost of technology development, the uneven quality and quantity of agricultural raw material, the concentration of food trade organisations are important hindrance factors of development of food industrial enterprises. The small and medium scale enterprises consider the activity of chambers of producers as an important tool in improving their economic position. In opinion of food industrial entrepreneurs the most important factor of success in privatisation was the knowledge of legal loops and good social network. Under these conditions, the promotion of preparation of newly formed small and medium scale enterprises to meet the demands of EU joining is a necessary precondition of success. The multinational food industrial enterprises forming four groups follow diversified strategies. This variability of multinational firms increases the flexibility and competitiveness of the Hungarian food industry.

THE CHINESE FAMILY FIRM AS A MULTINATIONAL ENTERPRISE

Much of the extant literature on the Chinese Family Firm highlights the unique cultural heritage and social context in which they are embedded as primary determinants of their strategic behavior. In contrast, few studies have examined the strategic behavior of Chinese Family Firms from an economic perspective. In this paper, we address this gap in the literature by applying Dunning's eclectic theory of the MNE to the Chinese Family Firm. In doing so, we generate a series of testable propositions. We suggest that although the strategic behavior of Chinese Family Firms will differ significantly from those of classic Western MNEs, they are nonetheless amenable to interpretation according to Dunning's analytical constructs of ownership (O), internalization (I) and locational (L) advantages. More specifically, we find that like the classic Western MNE, the Chinese Family Firm can be understood as a viable mechanism for capitalizing on particular configurations of OLI advantages in international markets.

The Role of the Management Sciences in Research on Personalization

We present a review of research studies that deal with personalization. We synthesize current knowledge about these areas, and identify issues that we envision will be of interest to researchers working in the management sciences. We take an interdisciplinary approach that spans the areas of economics, marketing, information technology, and operations. We present an overarching framework for personalization that allows us to identify key players in the personalization process, as well as, the key stages of personalization. The framework enables us to examine the strategic role of personalization in the interactions between a firm and other key players in the firms value system. We review extant literature on the strategic behavior of firms, and discuss opportunities for analytical and empirical research in this regard. Next, we examine how a firm can learn a customer's preferences, which is one of the key components of the personalization process. We use a utility-based approach to formalize such preference functions, and to understand how these preference functions could be learnt based on a customers interactions' with a firm. We identify well-established techniques in management sciences that can be gainfully employed in future research on personalization.

Institutional Constraints and Entrepreneurial Responses in a Transforming Economy

Previous research on entrepreneurship has largely focused on start-up firms in the relatively stable environment of developed economies, whereas scholarship on transforming economies has paid primary attention to large and established firms. Entrepreneurial efforts in a turbulent institutional environment during the radical reforms in the formerly centrally planned economies are still relatively understudied. Using a comparative case study method, this study examined how the reforming institutional environment in Bulgaria influenced the strategic behavior of entrepreneurial firms. We identified the key institutional entities/agents, the major characteristics of the institutional environment, and analyzed the strategic responses of the entrepreneurial companies and their performance implications. We found that lawmakers, tax collection agencies, and regional authorities issuing various business permits and licenses are among the key institutional players, and that the current institutional environment is unpredictable, corrupt, hostile, and detrimental to the growth of private entrepreneurial firms. Entrepreneurial responses, as a result, included short-term orientation, informal networking, opportunism, and surplus extraction. Theoretical and practical implications are provided.

Local versus global mimetism: the dynamics of alliance formation in the automobile industry

AbstractThe alliance dynamics among the 35 largest firms in the worldwide automobile industry indicates that the likelihood of an alliance between any two firms depends on the local density of alliances among the members of their strategic groups, rather than on the global density of alliances in the industry. These results suggest that firms most closely observe and imitate the strategic behavior of firms who occupy the same strategic niche rather than the behavior of firms in their industry defined more broadly. Copyright © 2002 John Wiley & Sons, Ltd.

Moving technology from labs to market: a policy perspective

In the 1980s, the USA initiated a set of policy innovations to encourage industrial innovation. Collectively, the policy innovations encouraged collaborative R&D in industry, technology transfer from universities and government laboratories to the private sector and cooperative research and development agreements (CRADAs) between government laboratories and industrial researchers. Patent and antitrust laws were revised and updated to afford inventors and industrial researchers greater protection of their intellectual property rights. These initiatives, along with tax credits, small business innovative research grants and the deployment of numerous university and government manufacturing research and extension centres, have been followed by a resurgence in US patent and industry funded research activities. The process by which the innovations are introduced and diffused throughout industry is examined in detail. The speed and direction of the diffusion path is found to be a function of the degree of complexity of the technology, the strategic behaviour of firms and the experience and core competencies and endowments of the firms. Since these factors differ among the firms, it is argued that adoption rates will vary by type of firm and by industry. Three case studies of start-up companies trying to commercialise environmentally friendly technologies are discussed. The case studies illustrate some of the challenges and problems of the entrepreneur's role in the innovation process. The role of the government in helping to stimulate the growth of environmentally friendly firms and industries is also discussed.

Globalization or National Capitalism: Large Firms, National Strategies, and Political Activities

Does the cross-border strategic behavior of large firms reflect national differences? There is uncertainty about the ways in which expanding markets will influence the activities of large firms and national governments. Some theorists expect market forces to produce increasing pressure for uniform patterns of behavior, while others have argued that the national political economy is more resilient, and that corporate strategies remain identifiably national. Thus far the question, theoretically and empirically, has been posed in terms of economic behavior and consequences. We analyze the persistence of national practices in the political activities of large corporations using data on the Fortune 1000 industrial and service companies for 1988. To increase the sample of affiliates of foreign firms, we include firms in the Forbes ranking of largest U.S. affiliates of foreign firms. This source includes financial and service corporations as well as those in manufacturing industries. Overall, the findings suggest that, contrary to the national capitalism argument, firms adapt to the host political economy.

Strategic Behaviour under European Antidumping Duties

In this paper we develop a dynamic two-period model of imperfect competition to analyse the effects of European antidumping duties on firm behaviour and domestic welfare. Our model is one of the first to complement the European empirical literature on antidumping policy and can usefully be compared with papers dealing with the effects of US antidumping policy. We arrive at three important conclusions: (a) the strategic behaviour of European firms under European antidumping rules may run in the opposite direction compared to the incentives for US firms provided under the US antidumping rules; (b) US antidumping rules perform better than European rules in terms of domestic welfare and in terms of protecting domestic value added and employment; (c) the Strategic Trade Policy argument for protection need not apply for antidumping duties because the level of protection is endogenously determined by the firms involved.

Environmental Research Joint Ventures under Emission Taxes

The effect of environmentalpolicy depends crucially on the strategicbehavior of firms. Firms can undertakepollution abatement innovation cooperativelythrough environmental R&D joint ventures(RJVs). Environmental RJVs have not onlyenvironmental but also economic impacts. Threetypes of environmental RJV are discussed inthis paper: R&D cartelization in which firmschoose R&D efforts to maximize the jointprofit, RJV competition in which firms sharethe R&D fruits to maximize their own profits,and RJV cartelization in which firms share R&Dfruits and maximize the joint profit. An R&Dcartelization minimizes output quantities,maximizes the total emission, and minimizes thesocial surplus. An RJV cartelization with asufficiently high spillover coefficientmaximizes R&D efforts, minimizes the totalemission, and maximizes the social surplus.

Collusion and Price Wars in the Australian Coal Industry during the Late Nineteenth Century

This essay examines the behaviour of coal mining companies in late nineteenth-century Australia in light of recent research on strategic firm behaviour. The Northern Collieries vend explored a number of institutional arrangements designed to increase the amount of public information and raise the costs of cheating. Output apportioning and profit redistribution schemes were employed to increase the costs to any individual firm of over-production. Wage contracts between the coal mining union and collieries included a sliding-scale component linked to the cartel price; the union was an important monitoring agent increasing the amount of public information on firm behaviour. Periodic price wars involved chiselling on the cartel price and bargaining behaviour to influence future agreements.

Exchange Rate Pass‐Through in Vertically Related Markets

The paper provides a theoretical framework which addresses exchange rate pass‐through within the setting of vertically related markets. In particular, foreign firms’ price adjustment in response to an exchange rate shock is evaluated. This permits study of the importance of cost effects of the exchange rate shock. Recent empirical evidence indicated the relevance of these cost effects. It is shown that one can decompose the effects of an exchange rate shock on the final goods market into direct and indirect components. The indirect effect works through the input market. The degree of pass‐through then depends on the relative importance of direct and indirect effects, which in turn depends on the nature of vertical structures and strategic firm behavior. It is shown that the institutional aspects of vertically related markets play a role in explaining incomplete price adjustments in both intermediate and final goods markets and the failure of PPP in the short run.

Modeling Media Markets: How Important is Market Structure?

The traditional approach to studying media markets based on structure-conduct-performance relations has become more complex as the analysis of firms' strategic behavior has emphasized the heterogeneity of possible market outcomes. It is argued that although greater analysis of firm strategic behavior is required, an investigation of market structure and ownership patterns remains critical for the elucidation of the nature and extent of market power. The recent history of television markets in Germany and the United Kingdom provides an example of the significance of trends in concentration and ownership for the development of competition. In addition, a full account of firms' power may require consideration of alternative perspectives on the competitive process, but again market structure remains important.

Price Dynamics and Consumer Learning

This paper studies the price dynamics induced by strategic firm behavior in the presence of consumer learning about the uncertain quality differential of the products offered by a duopoly. It is found that consumers learn slowly and also that prices converge slowly to full-information levels. A consequence is that the incentives of firms to manipulate consumers? beliefs are relatively persistent. Although pricing tends to be aggressive at the early stages, and average prices eventually increase over time, price wars may occur at intermediate stages of the product life-cycle.

Price Dynamics and Consumer Learning

This paper studies the price dynamics induced by strategic firm behavior in the presence of consumer learning about the uncertain quality differential of the products offered by a duopoly. It is found that consumers learn slowly and that prices converge also slowly to full‐information levels. A consequence is that the incentives affirms to manipulate consumers' beliefs are persistent. Although pricing tends to be aggressive at the early stages, and average prices eventually increase over time, price wars may occur at intermediate stages of the product life cycle.

Strategic behaviour of incumbent firms in the UK

The main purpose of this paper is to examine the incidence of strategic behaviour in the UK by means of a questionnaire study performed across three broad manufacturing industries – food, electrical engineering and chemicals. Of the strategies which have received substantial theoretical attention, R&D and advertising appear widely used, patenting, pricing and excess capacity much less so. Vertical instruments such as purchasing policy also stand out as important. But possibly only a minority of firms in our sample actively pursue strategic instruments.

Radical restructuring: the key to survival in Slovenia

The article offers the main results of an empirical research project which has been concentrated on the issues of strategic behaviour of medium and large business firms in five main industrial sectors, after the foundation of Slovenia as an independent state and after the beginning of the transition period in the country in 1990. The most important strategic objectives and goals as well as the main types of radical strategies which have been implemented in the firms are identified and the most significant implementation problems are highlighted. Finally, an assessment is made of how successful the restructuring processes have been on the enterprise level up to now.

Turnaround Time and Bottlenecks in Market Clearing: Decentralized Matching in the Market for Clinical Psychologists

In the context of entry‐level labor markets, we consider the potential transactions that have to be evaluated before equilibrium transactions can be identified. These potential transactions involve offers that are rejected. After an initial phase in which many offers can be proffered in parallel, subsequent potential transactions must be processed serially, since a new offer cannot be made until an outstanding offer is rejected. In many, perhaps most, decentralized labor markets, this means that transactions have to be finalized before there is time for the market to clear, that is, before all the potential transactions that would need to be evaluated in order to reach a stable outcome can in fact be evaluated. This has implications for the strategic behavior of firms and workers. In particular, in deciding to whom to offer a position, a firm may have strong incentives to consider not only its preferences over workers but also the likelihood that its offer will be accepted, since if its offer is rejected ...

Wars of Attrition in Experimental Duopoly Markets

Oligopolists often bear large fixed costs. These fixed costs can change, for example through rising property rents, increased taxes, and renegotiated labor contracts. In this paper, we imagine oligopoly market structures that are identical except for the level of fixed costs. Does this level influence the strategic behavior of firms? Since marginal profits are unaffected by fixed costs, one answer is that there should be no change in behavior. Alternatively, firms may seek more cooperative outputs in order to maintain profits. Enough cooperation can even generate bigger profits. But if fixed costs rise to a level where there are too many firms in the market for any seller to earn an adequate profit, a price war could result. Attrition leaves more profits for the survivors and the higher fixed costs are an increased barrier to later entry. Thus, it also can be argued that greater fixed costs engender less cooperation among rivals because agents are fighting over a smaller profit pie.1 Through the use of experimental markets, this paper shows that fixed costs do have an influence on the level of cooperation after they have reached a relatively high level in a duopoly market structure. Subjects (as rivals) engage in price wars. Outputs are kept large-larger than the Cournot level-until a rival exits the market. By contrast, such behavior does not take place when fixed costs are relatively low. This difference in behavior at low and high fixed cost levels

Strategic Behavior and Competition in Cable Television: Evidence From Two Overbuilt Markets

This article uses evidence from case studies of Montgomery, Alabama and Paragould, Arkansas to examine the strategic behavior of firms in these markets. Incumbents use a variety of tactics including price cutting and litigation to deter entry by a rival. These tactics and their effects impact on the ability of entrants to come into a market and compete. These findings have implications for policymakers particularly in light of the passage of the Telecommunications Act of 1996.

Better Late than Early: Vertical Differentiation in the Adoption of a New Technology

After the initial breakthrough in the research phase of R&D, a new product undergoes a process of change, improvement, and adaptation to market conditions. We model the strategic behavior of firms in this development phase. We emphasize that a key dimension to this competition is the innovation that leads to product differentiation and quality improvement. In a duopoly model with a single adoption choice, we derive endogenously the level and diversity of product innovations. We demonstrate the existence of equilibria in which one firm enters early with a low‐quality product while the other continues to develop the technology and eventually markets a high‐quality good. In such an equilibrium, no monopoly rent is dissipated and the later innovator makes more profits. Incumbent firms may well be the early innovators, contrary to the predictions of the “incumbency inertia” hypothesis.