International Update, March/April 2010

International Business news from the Iowa International Office

Risk assessment and relationship management: practical approach to supply chain risk management

The literature suggests the need for incorporating the risk construct into the measurement of organisational performance, although few examples are available as to how this might be undertaken in relation to supply chains. A conceptual framework for the development of performance and risk management within the supply chain is evolved from the literature and empirical evidence. The twin levels of dyadic performance/risk management and the management of a portfolio of performance/risks is addressed, employing Agency Theory to guide the analysis. The empirical evidence relates to the downstream management of dealerships by a large multinational organisation. Propositions are derived from the analysis relating to the issues and mechanisms that may be employed to effectively manage a portfolio of supply chain performance and risks

Risks affecting supplier-distributor relationships : evidence from Middle Eastern companies

DBAFor many manufacturers of fast moving consumer goods (FMCG), Middle Eastern markets are viewed as emergent economies with high growth potential. Some countries of the Middle East are witnessing a rise of modern trade channels such as hypermarket and supermarket formats, others are still dominated by traditional retailers such as wholesale and grocery store formats. Within this context, the decision to outsource the sales and distribution activities of a firm results in significant benefits but it also entails many dyadic risks between suppliers and their distributors. The purpose of this research is to understand how FMCG suppliers/manufacturers and distributors perceive relevant dyadic risks and how these risks are mitigated. The research examines the dyadic risk mitigation strategies adopted by both suppliers and distributors using relevant propositions based on transaction cost economics and agency theories. The propositions are explored by analysing 15 multiple dyadic cases which focus on the FMCG industry in three representative markets of the Middle East: Iraq, Kingdom of Saudi Arabia (KSA), and United Arab Emirates (UAE). Semi structured interviews have been conducted with 30 experts from the FMCG industry in the Middle East, split between suppliers and distributors. The research shows that FMCG suppliers in the Middle East are affected by dyadic risks that hinder their ability to control their performance. Distributors also face dyadic risks that are due to their dependency on suppliers, which affects their future sustainability. Dyadic Risk Mitigation strategies include deploying a control system and reviewing the formal contracting structure, as suggested by agency theory, while another strategic approach relates to a partial or vertical integration of assets of high specificity, as proposed by transaction cost economics theory. The research shows that trust plays a pivotal role in the relationship between suppliers and distributors. From a practical perspective, the research contributes to proposing a transformation road map that encapsulates guidelines and tools that managers can use to diagnose their dyadic risks and map their optimal dyadic risk mitigation strategy

Internationalization and business model decisions: A business case in mobile telecommunication industry

In a world characterized by hyper-competition (Gunther and D'Aveni 1994) and globalization (Knight 2000), the business model concept is becoming more and more popular. From the literature review arises a lack of a generally accepted definition of what it is, despite the growing importance of this concept. The paper is structured in five main sections. In the first one we present a review of the business model literature. The literature on business models is not exhaustive and moreover many authors often mixed up the business model with other concepts such as strategy and finance. Two main streams of literature are identifiable: the first one emerged in the mid Nineties and generally focused on e-business contexts; the second one emerged at the beginning of this decade and is not exclusively ascribable to high-tech companies. In the second paragraph we underline how relevant the decisions are about location; since in the literature on international entrepreneurship does not emerge a business model perspective of the matter the analysis is a lacking. In the third paragraph we focus our attention on Onetti and Zucchella’s business model (2008). The authors proposed a business model framework characterized by two main aspects: the clear separation among the business model, strategy and finance, and the emphasis on the relevance of location decisions. The outputs of the business model are the focus, locus and modus of companies activities. In the fourth section we try to apply this business model to Fi.Mo.Tec.’s business case, trying to explain the company’s past and to devise a way to manage the future. The conclusions complete the paper.Business model - International Entrepreneurship

Process issues in alliance management: A panel discussion.

The purpose in this series of papers is to examine different perspectives on the evolution of the process of collaboration and the management challenges therein by focusing on a single case experience. The literature on alliance and collaboration has grown immensely in the last few years. Much attention has been given to the economic rationale for intermediate organizational forms, the so-called «swollen middle» (Hennart, 1993) that lies between market and hierarchical solutions, and to the conditions under which such structures are optimal (Hennart, 1988; Balakrishnan & Koza, 1993; Buckley and Casson, 1996). More recently, there has been a virtual explosion in the treatment of the managerial challenges involved in inter-firm collaboration, ranging from issues of negotiation and conflict resolution to the role of strategic intent or prior experience, as well as numerous attempts to conceptualize and measure that most ephemeral and over-abused concept, trust. The initial paper in the series introduces the specifics of the case on which our discussion is based, and presents a view on the role that perceptions of efficiency and equity between the partners within a relationship have on the evolution of their collaboration. As elaborated in the paper, efficiency perceptions refer to the partners' views on the potential for value creation within the alliance, relative to other organizational choices. Equity perceptions relate to the expected balance between the partners' relative costs and benefits in the alliance, that is, the potential for fairness in value appropriation. The paper starts by summarizing the facts of a failed international joint venture, and chronicles the process of its disintegration through a series of events in its 3-year history. The concepts of efficiency and equity are then defined and formalized. Next, the authors provide their own interpretation of the case data and propose a structure for the analysis of the inter-partner relationship. Finally, they offer a model of the evolution of collaboration that is driven by the maintenance of relational quality among the partners, including the accommodation of changes in both the business environment and the strategies of the partners over time. The three other papers in the series elaborate on this interpretation and bring a broader set of concerns derived from each author's own research trajectory. Since two of these were responsible for earlier models on which the initial case analysis was based, they have a unique opportunity to revisit their original thinking and reinterpret it in view of the facts presented. They take a more dynamic view and incorporate more recent theoretical insights from the management process literature to the collaborative process. The last paper ventures beyond the dyadic framework of the original analysis to examine the lessons that can be drawn for broader networks of collaborative alliances. A final section on conclusions summarizes the arguments and suggests where there may be convergence, as well as proposing new avenues for research.alliances; evolution process collaboration; management challenges;

The first global entertainment company: Explaining Pathe's dominance in the pre-Hollywood film industry

For almost a decade before Hollywood existed, French firm Pathe towered over the early film industry with estimates of its share of all films sold around the world varying between 50-70%. Pathe was the first global entertainment company. This paper analyses its rise to market leadership by applying a theoretical framework drawn from the business literature on causes of industry dominance, which provides insights into how firms acquire and maintain market dominance and in this case the film industry. This paper uses evidence presented by film historians to argue that Pathe "fits" the expected theoretical model of a dominant firm because it had a marketing orientation, used an effective quality-based competitive strategy and possessed the six critical marketing capabilities that business research shows enable the best performing firms to consistently outperform rivals

Transmission Expansion in Argentina 5: The Regional Electricity Forum of Buenos Aires Province

This paper supplements analyses of Argentine transmission expansions at the federal level by looking at experience in Buenos Aires province. A Regional Electricity Forum of distribution companies has drawn up and begun to implement a ten-year transmission expansion plan. Contrary to previous fears, getting agreement between the members on investment and cost sharing has not been unduly problematic. More challenging was getting approval of the provincial government on funding. Deferring tariff reductions and using the revenues for investment facilitated the process, and now some innovative financing arrangements are underway. Again contrary to some previous suggestions, the controversial Area of Influence method was extended rather than replaced. This overcame concerns about free-riding. Progress and investment have been severely curtailed by the economic crisis in 2001 and subsequent federal government policy. The arrangements nonetheless appear to be working well, and to be conducive to more efficient transmission expansion. This confirms that it is practicable and advantageous to allow users rather than the transmission company or the regulator to propose and determine transmission investment, even in a meshed rather than radial system. An appropriate regulatory framework is needed to approve that part of the total budget to paid by distribution business consumers, but this does not require the regulator to lead or monitor the detail of the process

Energy Saving Obligations and White Certificates : Ideas and Considerations for the Transport Sector

Peer reviewedPreprin

Channel governance of chinese liquor firm: the case of Sichuan Luzhou Laojiao

JEL Classification: M31Channel governance is an important research topic in marketing. Both channel governance and control mechanisms will directly influence the behavior of channel members, and thus will affect the outcomes of channel governance. With the transformation of Chinese economy, people's ideology also will change. The effectiveness of traditional unilateral incentives, monitoring and enforcement mechanisms from one channel members against another is also being challenged, while the bilateral incentives, monitoring and enforcement mechanisms based on both parties have been paid more and more attention by channel members. In addition, as the impact of interdependence between channel members on the outcomes of channel governance is slowly perceived by scholars and validated with the resulting data, channel members are more inclined to reduce dependence on counterparties. Recently, Chinese liquor manufacturers represented by Luzhou Laojiao have embarked on innovative channel mode to resolve the conflict between channel members, and thus improve coordination between channel members. All these phenomena indicate that the mechanisms and instruments of channel governance are constantly extended in the channel governance practice. However, the effectiveness of these mechanisms and instruments on the governance outcomes has not been fully investigated, and the impact of the channel mode, the degree of interdependence between the manufacturers and distributors and other such factors on the relationship between channel governance mechanisms and governance outcomes also needs further clarification. This thesis takes Luzhou Laojiao and its distributors system for the studying the following three issues. First, we simultaneously include unilateral and bilateral channel governance mechanisms in the framework of channel governance to study the impact of the six channel governance mechanisms (unilateral and bilateral incentive, monitoring and enforcement) on the outcomes of channel governance. Second, based on the findings of existing literature, the relative dependence between manufacturers and distributors will also affect the outcomes of channel governance and will also moderate the relationship between specific channel governance mechanisms and the corresponding governance outcomes. Therefore, this thesis also studies the impact of such relative dependence between manufacturers and distributors on the outcomes of channel governance in Luzhou Laojiao and the moderating role of such interdependence on the relationship between channel governance mechanisms and outcomes investigated. Third, there are two typical channel modes in Luzhou Laojiao. One is traditional channel model and the other is innovative mode - QIQUAN model. The QIQUAN channel mode is significantly different from the traditional channel model in management, administration, operations and profits sharing, and in turn will have an impact on the outcomes of channel governance. Therefore, this thesis also studies the impact of channel model on the outcomes of channel governance in Luzhou Laojiao and the moderating role of the channel mode on the relationship between channel governance mechanism and outcomes investigated. The results show that: 1) whether the unilateral or bilateral governance mechanisms, they all have a significant impact on the coordination among channel members. Among them, the unilateral incentive has a significant negative correlation with the coordination among channel members; while the bilateral incentive and enforcement mechanisms have a significant positive correlation with the coordination among channel members. In addition, the bilateral enforcement mechanism has a significant negative correlation with the conflict among channel members. 2) The channel mode has a significant positive correlation with the coordination among channel members, which shows that the QIQUAN channel mode facilitates coordination among channel members. However, the relationship between the channel mode and the conflict among channel members is not significant. In addition, the QIQUAN channel mode also enhances positive correlation between the bilateral monitoring mechanism and the coordination among channel members and weakens the negative correlation between the unilateral enforcement and the conflict among channel members. 3) Neither dependence of manufacturers on distributors nor the dependence of distributors on the manufacturer is conducive to coordination among channel members, which will also increase the conflict among channel members. Moreover, such a relative dependence will also moderate the relationship between the channel governance mechanism and the corresponding outcomes. Through this study, it can complement the deficiency in study of a single or unilateral channel governance mechanism of the governance outcomes and broaden the depth and width in the study. Second, while examining the impact of the channel governance mechanism on the channel governance outcomes, we also study in an innovative manner the impact of the channel mode on the channel governance outcomes and explore the moderating role of the channel mode on the relationship between the governance mechanism and governance outcomes, which makes our results more realistic and our findings have more applications.A governança dos canais de distribuição é um tópico importante na pesquisa em Gestão de Empresas. Quer a governança dos canais de distribuição quer os mecanismos de controlo irão influenciar o comportamento dos membros envolvidos, e deste modo irão afetar os resultados da governança do canal. A transformação da economia chinesa provoca mudanças na ideologia do povo chinês. A eficácia dos incentivos unilaterais tradicionais, os mecanismos de monitorização e “enforcement” por parte de um membro sobre outro membro estão a ser questionados, enquanto os incentivos bilaterais e os mecanismos de monitorização e “enforcement” discutidos pelas partes envolvidas têm recebido cada vez mais atenção. Por outro lado, como o impacto da interdependência entre os membros do canal e os resultados da governança são lentamente percebidos pelos académicos e necessitam de validação empíricas, os membros do canal estão mais inclinados para reduzir a dependência de contrapartes. Recentemente, os produtores chineses de licor representados pela Luzhou Laojiao iniciaram um modelo de canal de distribuição inovador para resolver os conflitos entre os membros, e deste modo melhorar a coordenação entre os diferentes membros participantes. Todos estes fenómenos indicam que os mecanismos e instrumentos de governança dos canais estão constantemente a ser postos em prova e melhorados na prática diária da governança dos canais. Contudo a eficácia destes mecanismos e instrumentos nos resultados da governança não foram totalmente investigados, e o impacto deste novo modelo de canal de distribuição, o grau de interdependência entre os produtores e os distribuidores e outros fatores que influenciam a relação entre os mecanismos de governança do canal e os resultados da governança também necessitam de maior clarificação. Esta tese toma a Luzhou Laojiao e o seu sistema de distribuição como base para investigar as seguintes três questões. Primeiro, incluímos em simultâneo mecanismos unilaterais e bilaterais de governança de canais no quadro da governança para estudarmos o impacto de seis mecanismos de governança (incentivos bilaterais e unilaterais, monitorização e “enforcement”) nos resultados da governança do canal. Segundo, tomando como base a literatura existente, a dependência relativa entre os produtores e os distribuidores afeta os resultados da governança do canal e irá moderar a relação entre mecanismos específicos da governança do canal e os resultados correspondentes da governança. Deste modo, esta tese estuda também o impacto dessa dependência relativa entre produtores e distribuidores nos resultados da governança do canal de distribuição da Luzhou Laojiao e o papel moderador dessa interdependência na relação entre a governança do canal e os resultados investigados. Terceiro, existem dois modelos típicos de canais na Luzhou Laojiao. Um é o modelo tradicional e o outro é modelo inovador – o modelo QIQUAN. Este modelo é significativamente diferente do modelo tradicional em termos de gestão, administração, partilha de operações e de lucro, e por isso vai ter um impacto nos resultados da governança do canal. Deste modo esta tese também estuda o impacto do modelo de canal nos resultados da governança na Luzhou Laojiao e o papel moderador do modelo de canal na relação entre os mecanismos de governança do canal e os resultados investigados. Os resultados mostram que: 1) os mecanismos unilaterais e bilaterais de governança têm um impacto muito importante na coordenação entre os membros do canal. Entre eles, o incentivo unilateral tem uma forte correlação negativa com a coordenação entre membros do canal; enquanto os incentivos bilaterais e os mecanismos de “enforcement” têm uma forte correlação positiva com a coordenação entre os membros do canal. Além disso, o mecanismo de “enforcement” bilateral tem uma forte correlação negativa com o conflito entre membros do canal. 2) O modelo de canal tem uma forte correlação positiva com a coordenação entre os membros do canal, o que mostra que o modelo de canal QIQUAN facilita a coordenação entre os membros. Contudo, a relação entre o modelo de canal e o conflito entre os seus membros não é muito significante. Por outro lado, o modelo de canal QIQUAN melhora também a correlação positiva entre os mecanismos bilaterais de monitorização e a coordenação entre os membros do canal e enfraquece a correlação negativa entre o “enforcement” unilateral e o conflito entre os membros. 3) Nem a dependência dos produtores nos distribuidores nem a dependência dos distribuidores nos produtores conduz à coordenação entre os membros do canal, o que aumenta o conflito entre os membros do canal. Além disso, esta dependência relativa irá moderar a relação entre os mecanismos de governança do canal e os resultados correspondentes. Este estudo, ao incluir simultaneamente mecanismos unilaterais e bilaterais de governança aprofunda e alarga os estudos existentes. Por outro lado, ao estudamos o impacto dos mecanismos de governança do canal nos resultados da governança, estamos a estudar de uma maneira inovadora o impacto do modelo de canal nos resultados da governança e a explorar o papel moderador do modelo de canal na relação entre os mecanismos de governança e os resultados da governança, o que faz com que os nosso resultados estejam relacionados coma realidade e sejam úteis ao mundo empresarial

Challenges of Exporting Differentiated Products to Developed Countries: The Case of SME-Dominated Sectors in a Semi-Industrialized Country

This paper surveys four Argentinean industries—light ships, television programs, wines, and wooden furniture—that have experienced substantial export growth in recent years, particularly to developed countries. The case studies first describe the structure of the industries, then characterize the emergence of export pioneers and the subsequent process of diffusion. Finally, they analyze the role played by public institutions. Across sectors, the appearance of a pioneer is largely explained by a knowledge advantage relative to other industry participants regarding foreign markets, which the pioneer acquired previously and independently of his decision to export. Diffusion occurs across as well as within sectors, as pioneers’ knowledge is relevant to other industries. Since diffusion does not necessarily hurt the pioneer, public policy has a potentially important role in fostering diffusion within and across sectors.Small and Medium Enterprises, Exports, Argentina