Strategic Motive Research Articles

How Are a Firm’s Strategic Motives for Environmental Innovation Impeded? The Negative Influences of Institutional Pressures

In recent years, firms are intensively being asked to build up the capabilities of dealing with environmental issues. While most firms are proactively inspired by their strategic motives for the environmental innovations, they are also exposed to the external pressures for environmental innovations that are institutionally established. This study is an early attempt to theoretically examine how firms’ strategic motives for environmental innovation are affected by the institutional pressures of environmental issues in a single empirical setting. Based on the institutional theory, this study suggests two types of institutional pressures — regulative and normative pressures— and proposes the conflicting effects of the strategic motive and the institutional pressures in the firms’ activities concerning environmental innovation. In addition to the test of the interrelated effects of strategic motives and institutional pressures, this study also investigates how small and medium-sized enterprises (SMEs) differ in their efforts to realize the strategic motives for environmental innovation, in contrast to large companies. The Korean Innovation Survey was used to test the proposed hypotheses. The findings of the analysis support all the hypotheses about the negative influences of institutional pressures on the effect of strategic motives on environmental innovation actions. Finally, the theoretical contributions and managerial implications are discussed.

Crises as Opportunities for Growth: The Strategic Value of Business Group Affiliation

AbstractWe document a novel strategic motive for family business groups to utilize their internal capital markets (ICMs) during financial crises. We find that crisis-period group ICM activity is targeted toward exerting product market dominance over standalone rivals. Groups make significant post-crisis gains in market share that are concentrated among affiliates (and industry segments within affiliates) operating in highly competitive product markets, where capturing such gains is difficult in normal times. These patterns are observed only in emerging markets, suggesting that ICMs enable groups to exploit crises to realize long-term competitive advantages only when rivals face chronic financing frictions.

The role of product lines in determining the degree and speed of integration: evidence from the pharmaceutical MNCs in cross-border acquisitions

Despite the growing number of acquisitions of Business Units (BUs) by Multinational Companies (MNCs), international business literature is limited to investigating the post-acquisition integration at the firm level. Therefore, this research investigates MNCs' strategic motivation in acquiring BUs and how they manage the post-acquisition integration at the BU level. Specifically, this article focuses on studying the pivotal role of acquired BU's product lines in determining the degree and speed of integration. Using multiple case study method in cross-border acquisitions, the analysis reveals three findings. First, acquired BU's product lines are the strategic motive for the acquirer MNCs and, therefore, become significant in the decisions taken during post-acquisition integration. Second, the three phases of acquired product lines, namely marketed, upcoming, and Research and Development (R&D) pipeline, set the speed of integration from fast to slow. Third, acquired product lines' market relatedness determines the degree of integration between the acquirer and acquired BUs.

For profit or strategic purpose? Chinese outbound energy investments and the international economic regime

Abstract Chinese foreign energy investments are facing increasing opposition based on concerns that they are made with an ulterior strategic motive. Some states have been seeking to block the access of Chinese companies to their market and, for existing investments, to international arbitration, by portraying them as instruments of the government. It is important for China’s participation in the international economic system that its energy companies are not automatically excluded because of suspicion of China’s motives, but are subject to a nuanced assessment in which national and international economic law has a role to play. To distinguish strategic from commercial projects, this article analyses the Chinese regulation of outbound energy investments based on international principles of economic governance. The objective is to identify channels of political interference with investment decisions, by focusing on regulatory approval, state guidance and corporate governance.

The role of product lines in determining the degree and speed of integration: evidence from the pharmaceutical MNCs in cross-border acquisitions.

Despite the growing number of acquisitions of Business Units (BUs) by Multinational Companies (MNCs), international business literature is limited to investigating the post-acquisition integration at the firm level. Therefore, this research investigates MNCs' strategic motivation in acquiring BUs and how they manage the post-acquisition integration at the BU level. Specifically, this article focuses on studying the pivotal role of acquired BU's product lines in determining the degree and speed of integration. Using multiple case study method in cross-border acquisitions, the analysis reveals three findings. First, acquired BU's product lines are the strategic motive for the acquirer MNCs and, therefore, become significant in the decisions taken during post-acquisition integration. Second, the three phases of acquired product lines, namely marketed, upcoming, and Research and Development (R&D) pipeline, set the speed of integration from fast to slow. Third, acquired product lines' market relatedness determines the degree of integration between the acquirer and acquired BUs.

Creditors’ Rights and Strategic Default: Evidence from India

I examine whether stronger creditors’ rights prevent strategic default. Borrowers who cross either of two thresholds are exempt from a creditor-rights law in India. Using a loan-day-level data set, I find that loan performance is better when the law applies and that outperformance increases after a further rise in creditors’ rights. To discern the strategic motive, I use an unprecedented invalidation of the Indian currency whereby holders of high-value currency were forced to declare their cash holdings to banks. Defaulters exempt from the law showed a greater tendency to repay their loans after invalidation.

Gambling in Risk-Taking Contests: Experimental Evidence

This paper experimentally investigates excessive risk taking in contest schemes by implementing a stopping task based on Seel and Strack (2013). In this stylized setting, managers with contest payoffs have an incentive to delay halting projects with a negative expectation, with the induced inefficiency being highest for a mod- erately negative drift. The experiment systematically varies the negative drift (between-subjects) and the payoff incentives (within-subject). We find evidence for excessive risk taking in all our treatment conditions, with the non-monotonicity at least as problematic as predicted. Contrary to the theoretical predictions, this aggregate pattern of behaviour is seen even without contest incentives. Further analysis suggests that many subjects display behaviour consistent with some intrinsic motivation for taking risk. This intrinsic motive and the strategic motive for excessive risk taking reinforce the non-monotonicity. The experiment uncovers a behavioural nuance where contest incentives crowd out an intrinsic inclination to gamble.

Does CSR Engagement Affect BankingEfficiency in the Context of a Stochastic CostFrontier

This paper examines the effect of corporate social responsibility (CSR) on the cost efficiency of banks across countries with the measure of CSR compiled from the EIRIS database. We consider CSR as an environmental variable, which allows us to associate CSR with cost efficiency. The empirical results fail to support the greenwashing hypothesis, but partially support the altruistic and strategic motives. Since it takes time for a bank to achieve a higher CSR score, a bank tends to be altruistic in the short-run, while a bank tends to be strategic in the long-run. Key words: CSR score, stochastic cost frontier, environmental variables, altruistic motive, strategic motive

Targeted search in matching markets

We propose a parsimonious matching model where a person's choice of whom to meet endogenizes the degree of randomness in matching. The analysis highlights the interaction between a productive motive, driven by the surplus attainable in a match, and a strategic motive, driven by reciprocity of interest of potential matches. We find that the interaction between these two motives differs with preferences—vertical versus horizontal—and that this interaction implies that preferences recovered using our model can look markedly different from those recovered using a model where the degree of randomness is not endogenous. We illustrate these results using data on the U.S. marriage market and show that the model can rationalize the finding of aspirational dating.

Historically Black Colleges and Universities, STEM education, and the pursuit for legitimacy?

In this study, we explore Historically Black Colleges and Universities (HBCUs) and the ‘legitimated procedures’ of increasing capacity in science, technology, engineering, and mathematics (STEM) education. Conducting interviews with HBCU presidents, we argue that as HBCUs contend with a conflicting national context, investment in STEM education is perceived as a strategic pathway to address institutional concerns. Our findings suggest a departure from institutional theory, in that HBCUs’ choices demonstrate a strategic motive of survival and adaptability to changes in the organizational field of American higher education. Their unique location in the American higher education system means they have to balance both organizational and institutional pressures to both survive and maintain fidelity to their historic mission.

Post-Acquisition Earnings Forecasts: Unintentional Optimism or Strategic Bias?

I examine whether and why the completion of an acquisition affects the bias in managers’ earnings forecasts, and three disclosure consequences to understand the source of the bias. I find systematic optimism in acquiring firms’ earnings forecasts after an acquisition. Prior research suggests this bias can arise from an intentional, strategic motive by management or an unintentional, psychological bias. To disentangle these possible explanations, I examine whether the bias varies predictably with acquisition characteristics that enhance managers’ perceived commitment and control to an acquisition, and whether the bias is associated with subsequent disclosure costs. I find post-acquisition forecast optimism is more likely for diversifying acquisitions, relatively-larger acquisitions and acquisitions management completed despite a negative market reaction to its announcement. In addition, post-acquisition forecast optimism is associated with negative disclosure consequences, including lower analyst responses to future forecasts, greater likelihood of a class action lawsuit dismissal, and greater likelihood of CEO departure. Together, these tests support the argument that managers’ optimistic bias is related to unintentional, rather than strategic, optimism regarding the recently completed acquisition.

Targeted Search in Matching Markets

We propose a parsimonious matching model where people's choice of whom to meet endogenizes the degree of randomness in matching. The analysis highlights the interaction between a productive motive, driven by the surplus attainable in a match, and a strategic motive, driven by reciprocity of interest of potential matches. We find that the interaction between these two motives differs with preferences – vertical versus horizontal – and that this interaction implies that preferences estimated using our model can look markedly different from those estimated using a model where the degree of randomness is not endogenous. We illustrate these results using data on the U.S. marriage market and finish by showing that the model can rationalize the finding of aspirational dating.

The intra-family division of bequests and bequest motives: empirical evidence from a survey on Japanese households

The division of bequests among family members differs sharply between Japan and the USA. Whereas in the USA, bequests tend to be divided equally among decedents’ children, they tend to be divided unequally in Japan. We start by arguing that certain legal and institutional aspects, which are not present in Japan, lead to equal bequests in the USA. We then investigate unequal patterns of bequest division in Japan to understand parental bequest motives. Utilizing institutional characteristics that are specific to Japan allows us to examine parental motives. We find that while the patterns of bequest division look generally consistent with most of the parental bequest motives suggested in the literature, such as the dynastic and the strategic motive, parents do not necessarily bequeath more to economically disadvantaged children.

Enforcement tool or strategic instrument? The initiation of ex-post legislative evaluations by the European Commission

Whereas the European Commission officially intends to periodically evaluate all major European Union legislation in force, in practice it only evaluates a minority of major regulations and directives. This article tries to explain the variation in the initiation of such ex-post legislative evaluations by the Commission with the help of two theoretical motives: an enforcement motive and a strategic motive. Based on two novel datasets and binary logistic regression analysis, the results show that the type and complexity of the legislation, the presence of an evaluation clause and the evaluation capacity of the responsible Directorates-General enhance the chances of evaluation. These findings indicate that ex-post legislative evaluations are at least partly driven by the Commission's need to enforce legislation.

Cash Holdings, Competition, and Innovation

We demonstrate theoretically and empirically that strategic considerations are important in shaping the cash policies of innovative firms. In our model, firms compete in product markets with uncertain structure using cash as a commitment device to invest in innovation. We show that firms’ equilibrium cash holdings are related to the expected intensity of competition. The sign and magnitude of this relation depends on firms’ financial constraints. Consistent with the strategic motive for hoarding cash, we show that firms’ cash holdings are negatively affected by their rivals’ cash-holding choices, even more so when competition is expected to be intense.

Production standards, competition and vertical relationship

This article investigates the collective choice of production standards by farmer and processor groups within a vertical food supply chain, taking into account their competition behaviours. We develop a general model to analyse the strategic motive of using standards to limit supply and shift rents between farmers and processors in the vertical chain. We find that a stringent standard can raise farmers' profit, but at the expense of processors. This is the case when the standard affects more variable costs than fixed cost of production, when the demand for the final product is inelastic, and when processors have a high degree of oligopoly power.

Reverse supply chain management in consumer electronics: an Indian perspective

The present paper is an attempt to find out the strategic motive of an organisation to undertake reverse supply chain management (RSCM) activities with specific reference to consumer electronics industry in the Indian context. It has identified the facilitating factors as also the inhibiting factors faced by an organisation in pursuing RSCM activities by carrying out questionnaire survey amongst retailers and service providers doing repairing, refurbishing and remanufacturing of consumer electronic goods. This study has attempted to categorise the returned goods in terms of recency, usability and residual value and has tried to find out the percentage figures of individual element within each category of recency, usability and residual value. It has further analysed different return streams in terms of volume and residual value and revealed as to which return stream/s contribute most to the organisations. Finally, this study has analysed each element of RSCM activities in terms of time taken and cost incurred and identified the major activities consuming maximum amount of time and cost.

Analytical performance of a Fujimori method-based system for EEG analysis

Why do some countries in Latin America redistribute too much (“left-wing populism”), while others allow high levels of inequality to persist or even increase over time (“neo-liberalism”)? We argue that when a group's political influence is increasing in its wealth, there is a strategic motive for redistribution: by taking money away from a group, its ability to influence future policy is reduced. Populism arises when the poor respond to this strategic motive, while neo-liberalism results when the rich use their wealth to limit redistribution. Assuming that wealth increases political influence because it enables a group to stage a coup, we find that populism is both more likely and more extreme when the military is biased in favor of the rich. We conclude by discussing the policies of Hugo Chavez in Venezuela and Alberto Fujimori in Peru in light of our findings.

Economic Competition and Nuclear Cooperation

The number of bilateral nuclear cooperation agreements surged during the “nuclear renaissance” of the past decade. This proliferation is only partially explained by the prevailing approaches that focus on strategic imperatives. To supplement these explanations, this study draws on neoliberal models of economic competition to posit that bilateral agreement negotiations also exhibit conditions of “uncoordinated interdependence” and maneuvering to gain market share. Case evidence suggests the contours of supplier state bids for civilian assistance are determined at least as much by considerations about economic competition as they are by positive strategic goals. In addition, this study identifies several cases of cooperation where there appears to be little or no strategic motive for export agreements. The study concludes that patterns of economic competition and the influence of peers in defined competitive spaces alter material payoffs and impact policies. It also identifies a surprising role for principled restraint in dampening strategic and economic competition in some dyads.

Strategic Motive for Introducing Internet Channels in a Supply Chain

Rapid advances of information technology in recent years have enabled both the manufacturers and the retailers to operate their own Internet channels. In this study, we investigate the interaction between the capabilities of introducing the Internet channels, the pricing strategies, and the channel structure. We classify consumers into two segments: grocery shoppers attach a higher utility from purchasing through the physical channel, whereas a priori Internet shoppers prefer purchasing online. We find that when the Internet shoppers are either highly profitable or fairly unimportant, the manufacturer prefers to facilitate the channel separation either through his own Internet channel or the retailer's. In the intermediate region, however, the manufacturer encroaches the grocery shoppers and steals the demand from the retailer's physical channel. With horizontal competition between retailers, a priori symmetric retailers may adopt different channel strategies as a stable market equilibrium. The manufacturer may willingly give up his Internet channel and leverage on the retailer competition. When the manufacturer sells through an online e‐tailer, Internet shoppers may be induced to purchase through the physical channel. This reverse encroachment strategy emerges because selling through the e‐tailer leads to a more severe double marginalization problem.