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Advertising and the Evolution of Market Structure in the US car industry
Investments in recessions
We argue that the strategy literature has been virtually silent on the issue of recessions, and that this constitutes a regrettable sin of omission. A key route to rectify this omission is to focus on how recessions affect investment behavior, and thereby firms stocks of assets and capabilities which ultimately will affect competitive outcomes. In the present paper we aim to contribute by analyzing how two key aspects of recessions, demand reductions and reductions in credit availability, affect three different types of investments: physical capital, R&D and innovation and human- and organizational capital. We point out that recessions not only affect the level of investment, but also the composition of investments. Some of these effects are quite counterintuitive. For example, investments in R&D are more sensitive to credit constraints than physical capital is. Investments in human capital grow as demand falls, and both R&D and human capital investments show important nonlinearities with respect to changes in demand
Business experience and start-up size: buying more lottery tickets next time around?
This paper explores the determinants of start-up size by focusing on a cohort of 6247 businesses that started trading in 2004, using a unique dataset on customer records at Barclays Bank. Quantile regressions show that prior business experience is significantly related with start-up size, as are a number of other variables such as age, education and bank account activity. Quantile treatment effects (QTE) estimates show similar results, with the effect of business experience on (log) start-up size being roughly constant across the quantiles. Prior personal business experience leads to an increase in expected start-up size of about 50%. Instrumental variable QTE estimates are even higher, although there are concerns about the validity of the instrument
A panel analysis of UK industrial company failure
We examine the failure determinants for large quoted UK industrials using a panel data set
comprising 539 firms observed over the period 1988-93. The empirical design employs data
from company accounts and is based on Chamberlain’s conditional binomial logit model,
which allows for unobservable, firm-specific, time-invariant factors associated with failure
risk. We find a noticeable degree of heterogeneity across the sample companies. Our panel
results show that, after controlling for unobservables, lower liquidity measured by the quick
assets ratio, slower turnover proxied by the ratio of debtors turnover, and profitability were
linked to the higher risk of insolvency in the analysis period. The findings appear to support
the proposition that the current cash-flow considerations, rather than the future prospects of
the firm, determined company failures over the 1990s recession
Innovation and growth in the UK pharmaceuticals: the case of product and marketing introductions
New drug introductions are key to growth for pharmaceutical firms. However, not all innovations are the same and they may have differential effects that vary by firm size. We use quarterly sales data on UK pharmaceuticals in a dynamic panel model to estimate the impact of product (new drugs) and marketing (additional pack varieties) innovations within a therapeutic class on a firm’s business unit growth. We find that product innovations lead to substantial growth in both the short and long run, whereas a new pack variety only produces short-term effects. The strategies are substitutes but the marginal effects are larger for product innovations relative to additional packs, and the effects are larger for smaller business units. Nonetheless, pack introductions offer a viable short-term growth strategy, especially for small- and medium-sized businesses
prior shared experience and survival of spin-offs from restructured state enterprises
Many organizations, especially in emerging economies, trace their origins to restructured state enterprises, and this study explores the implications of such origins for organizational adaptation to changing environmental conditions. We compare the activity choices and survival chances of spin-offs from restructured state enterprises with those of de novo organizations. We argue that prior shared experience of spin-offs’ managers and employees facilitates the redeployment of routines developed in parent state enterprises. This should predispose spin-offs to pursue familiar activities, but this choice is not completely predetermined, and its survival implications depend on the environmental conditions. Our empirical findings suggest that spin-offs from restructured state enterprises are less likely to engage in new activities than de novo organizations. However, those restructuring spin-offs that do engage in new activities before the regulatory regime shift significantly improve their survival chances after the shift. Moreover, we find that the detrimental effect of the regulatory regime shift and the beneficial effect of engaging in new activities are stronger for spin-offs from restructured state enterprises than for de novo organizations.authorsversionpublishe
Selection of workers and firm heterogeneity
A model based on differences between workers regarding their preferences for wage and leisure drives the heterogeneity of firms result. The more industrious workers are driven to small firms due to free riding in large firms. An industry consisting of small and large firms turns out to produce more output than an industry consisting of only large firms. Some comparative statics results are derived with respect to the size of large firms, the productivity difference between firms, and monitoring capabilities
An evaluation of the stimulants and impediments to innovation within PFI/PPP projects
This paper identifies the theoretical stimulants and impediments associated with the implementation of PFI/PPP (Private Finance Initiative/Public Private Partnership) projects. A current defect of this procurement approach is the unintentional constraint upon the innovations incorporated into the development of PFI projects. A critical evaluation of the published literature has been utilized to synthesize a theoretical model. The paper proposes a theoretical model for the identification of potential innovation stimulants and impediments within this type of procurement. This theoretical model is then utilised to evaluate four previously completed PFI projects. These project case-studies have been examined in detail. The evaluation demonstrates how ineffective current procedures are. The application of this model before project letting could eliminate unintentional constraints and stimulate improved innovation within the process. The implementation of the model could improve the successful delivery of innovation within the entire PFI/PPP procurement process
Target company cross-border effects in acquisitions into the UK
We analyse the abnormal returns to target shareholders in crossborder and domestic acquisitions of UK companies. The crossborder effect during the bid month is small (0.84%), although crossborder targets gain significantly more than domestic targets during the months surrounding the bid. We find no evidence for the level of abnormal returns in crossborder acquisitions to be associated with market access or exchange rate effects, and only limited support for an international diversification effect. However, the crossborder effect appears to be associated with significant payment effects, and there is no significant residual crossborder effect once various bid characteristics are controlled for
Interdependence and spillovers: is firm performance affected by others’ innovation activities?
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