De betekenis van marktstructuren voor de scope van de onderneming

Different market structures and value systems give insight into the changing environment in which companies operate. In this inaugural address the central question is: What is the influence of market structures on the scope of the firm?The objective is to give meaningful contributions to the clear understanding of market structures that are of specific importance at the meso level. To gain more insights into the scope of the firm a framework is constructed based on the three dimensions: product/market, vertical integration and geography. In the framework a tentative expansion in the form of a fourth dimension is suggested: total solutions capability. This framework is relevant because of a relative fixation of dimensions. This means that a change in one of the four dimensions influences the other. So if a company reduces its number of product/market combinations it should go hand-in-hand with geographic expansion. Also the move from stand-alone components, modules, products and services to total solutions should be combined with a reduction of vertical integration. With this framework one can explain the limits of the scope of the firm. The challenge of the scope of the firm is determined by a dynamic balance of both the strategic core of a company and the access to the right strategic networks, which are embedded in more or less open market structures. Companies are supposed to act upon those opportunities, by themselves or in cooperation with others, in which they can achieve economies of scale, scope, span and speed. Harry Commandeur is a professor of Industrial Economics and Business at the Rotterdam School of Economics, Erasmus University Rotterdam. His research interests include the relationship of market structure, corporate strategy and firm performance. In his inaugural address he focuses on the relationship of market structures and the scope of the firm. Harry Commandeur publishes in Journals such as Journal of Product Innovation Management, Journal of Management Studies, Long Range Planning, Industrial Marketing Management and Journal of Business Logistics.Verschillende marktstructuren en typen waardensystemen geven een indicatie in welk veranderend krachtenveld bedrijfshuishoudingen tegenwoordig opereren. In deze rede wordt de volgende vraag gesteld: Wat is de betekenis van marktstructuren (en waardensystemen) voor de ondernemingsscope?De insteek is om zinvolle bijdragen te leveren aan het scherp op het netvlies krijgen van het "vliegwiel van vernieuwingen" dat juist op het meso-niveau manifest wordt. Om meer inzicht te krijgen in de ondernemingsscope wordt een raamwerk geconstrueerd naar drie dimensies: product/markt, verticale integratie en geografie. Het raamwerk kent ook een tentatieve uitbreiding met een vierde dimensie: totaalprobleemoplossend vermogen. Binnen het raamwerk wordt een relatieve dimensiefixatie ondertekend. Dit geeft aan dat een wijziging in een van de vier dimensies niet los kan worden gezien van de overige dimensies. Zo gaat een inkrimping van het aantal product/marktcombinaties idealiter samen met een geografische uitbreiding en het streven om van stand-alone componenten, modulen, producten en diensten naar een integrale probleemoplossing te gera

Baan Company’s Corporate Web Strategy – An Effort To Reach Main Street

During the 1990s Baan Company became a market leader in the enterprise applications industry. Its mission was to become an independent software manufacturer, serving a global market. To speed up growth, Baan developed its Baan Web strategy which implied a far-reaching renewal of its corporate strategy. Burgelman and Grove (1996) define the moment of choosing a new strategy as a strategic inflection point. Their framework named “Dynamic Forces in Firm Evolution” explains that ssuccessful development and implementation of a new corporate strategy is a process of aligning five dynamic forces. The focus of this study is on the vital role of the internal selection environment. This force regulates the allocation of the company’s scarce resources – cash, competences/capabilities and senior management attention – to strategic action. It is the crucial force in the continuing alignment processes that have to take place. Every company has a unique combination of distinctive competences (Burgelman) or dynamic capabilities (Teece). The study explains that to execute a new strategy successfully new competences/capabilities have to be developed based on existent ones. The development of Baan’s corporate strategy is analyzed and discussed with reference to the Technology Adoption Life Cycle (Moore). The study concludes with the management implications of a strategic inflection point

Value Creation and Value Claiming in Make-Or-Buy Decisions

Transaction value analysis (TVA) integrates the concepts of resource heterogeneity and transaction cost economics into a single framework, which emphasizes both value creation and value claiming in firms' vertical integration decisions. Using a TVA perspective, we develop hypotheses to explain the firm's intent to outsource application services. A sample of 178 firms in the publishing and printing industry in The Netherlands is used to test the hypotheses. This paper finds that firms take both value-creation and value-claiming motivations into consideration, with value creation having on average a dominating impact, thus substantiating the TVA framework. However, we also find that if the risks of opportunism in outsourcing contracting are high, value creation becomes the less important factor in make-or-buy decisions. Furthermore, the paper shows that the need for flexibility is a major driver of governance choice for value-creation as well as for value-claiming motivations. Implications and future research directions are discussed

The Effects of Self-Reinforcing Mechanisms on Firm Performance

This study empirically investigates the influence of the market-bound (i.e., interaction and network effects) on the firm-bound (i.e., scale and learning effects) self-r

A Managerial Perspective on the Logic of Increasing Returns

The focus of this study is on the challenges faced by managers in effectively dealing with the new management logic of increasing returns as the information and knowledge intensi

Genetic distance and differences in happiness across nations: some preliminary evidence

Survey studies worldwide have revealed large differences in happiness, both within and across nations. Many of the within-nation differences have a genetic basis, as twin studies have shown. Is there also a genetic component in the large differences across nations? In this paper, we report an initial exploration of this question in 104 nations. We estimate the relative importance of the genetic component in a bilateral analysis, calculating the correlation between the distance in genetic profile and average happiness, measured as satisfaction with life-as-a-whole. In this analysis, genetic distance explains 8.4% of the variance in cross-national differences in happiness. However, after controlling for cultural, institutional, economic, and geographical differences between countries, the explained variance is significantly reduced. We conclude that the direct effect of genetic distance is probably small

How to Determine the Increasing Returns Sensitivity of Your Industry?

Increasing returns means that self-reinforcing mechanisms are at work within firms and markets. These mechanisms come in four forms: scale effects, learning effects, network effects and social interaction effects. Some industries are more sensitive to increasing returns than others. It is important that managers are able to assess the increasing returns sensitivity of their industry. Therefore we have developed an analytical tool that allows managers to assess their industry’s sensitivity to increasing returns. Four case studies are used to illustrate this typology. The analytic tool shows that an industry has high increasing returns sensitivity if a combination of the following situations exists: 1) high fixed costs and low, or even zero, variable costs, indicating a high sensitivity to scale effects, 2) a high level of complexity of the business process and/or the products, indicating a high sensitivity to learning effects, 3) low product utility and high network utility, indicating a high sensitivity to network effects and finally, 4) a high degree of social involvement by customers and potential customers, indicating a high sensitivity to social interaction effects

Food-pharma convergence in medical nutrition

At present, industries within the health and life science sector are moving towards one another resulting in new industries such as the medical nutrition industry. Medical nutrition products are specific nutritional compositions for intervention in disease progression and symptom alleviation. Industry convergence, described as the blurring of boundaries between industries, plays a crucial role in the shaping of new markets and industries. Assuming that the medical nutrition industry has emerged from the convergence between the food and pharma industries, it is crucial to research how and which distinct industry domains have contributed to establish this relatively new industry. The first two stages of industry convergence (knowledge diffusion and consolidation) are measured by means of patent analysis. First, the extent of knowledge diffusion within the medical nutrition industry is graphed in a patent citation interrelations network. Subsequently the consolidation based on technological convergence

Risk in Vaccine Research and Development Quantified

To date, vaccination is the most cost-effective strategy to combat infectious diseases. Recently, a productivity gap affects the pharmaceutical industry. The productivity gap describes the situation whereby the invested resources within an industry do not match the expected product turn-over. While risk profiles (combining research and development timelines and transition rates) have been published for new chemical entities (NCE), little is documented on vaccine development. The objective is to calculate risk profiles for vaccines targeting human infectious diseases. A database was actively compiled to include all vaccine projects in development from 1998 to 2009 in the pre-clinical development phase, clinical trials phase I, II and III up to Market Registration. The average vaccine, taken from the preclinical phase, requires a development timeline of 10.71 years and has a market entry probability of 6%. Stratification by disease area reveals pandemic influenza vaccine targets as lucrative. Furthermore, vaccines targeting acute infectious diseases and prophylactic vaccines have shown to have a lower risk profile when compared to vaccines targeting chronic infections and therapeutic applications. In conclusion; these statistics apply to vaccines targeting human infectious diseases. Vaccines targeting cancer, allergy and autoimmune diseases require further analysis. Additionally, this paper does not address orphan vaccines targeting unmet medical needs, whether projects are in-licensed or self-originated and firm size and experience. Therefore, it remains to be investigated how these - and other - variables influence the vaccine risk profile. Although we find huge differences