Voluntary disclosure of corporate strategy: determinants and outcomes. An empirical study into the risks and payoffs of communicating corporate strategy.

Business leaders increasingly face pressure from stakeholders to be transparent. There appears however little consensus on the risks and payoffs of disclosing vital information such as corporate strategy. To fill this gap, this study analyzes firm-specific determinants and organisational outcomes of voluntary disclosure of corporate strategy. Stakeholder theory and agency theory help to understand whether companies serve their interest to engage with stakeholders and overcome information asymmetries. I connect these theories and propose a comprehensive approach to measure voluntary disclosure of corporate strategy. Hypotheses from the theoretical framework are empirically tested through panel regression of data on identified determinants and outcomes and of disclosed strategy through annual reports, corporate social responsibility reports, corporate websites and corporate press releases by the 70 largest publicly listed companies in the Netherlands from 2003 through 2008. I found that industry, profitability, dual-listing status, national ranking status and listing age have significant effects on voluntary disclosure of corporate strategy. No significant effects are found for size, leverage and ownership concentration. On outcomes, I found that liquidity of stock and corporate reputation are significantly influenced by voluntary disclosure of corporate strategy. No significant effect is found for volatility of stock. My contributions to theory, methodology and empirics offers a stepping-stone for further research into understanding how companies can use transparency to manage stakeholder relations

The Interaction Effect of Rivalry Restraint and Competitive Advantage on Profit: Why the Whole Is Less Than the Sum of the Parts

Rivalry-restraint-based theoretical mechanisms predict that an industry's profits will increase when its firms engage in less price competition, or less direct competition, with each other. Competitive-advantage-based theoretical mechanisms predict that a firm's profits will increase when it creates superior economic value that direct and indirect competitors cannot fully compete away. But what is the interaction effect on profit of simultaneously restraining rivalry and increasing competitive advantage? Do they positively amplify/reinforce each other, or negatively dampen/undermine each other? This paper's theoretical model predicts a negative interaction effect, with potentially significant implications for theory, practice, and pedagogy.business strategy, competitive advantage, rivalry, collusion, industrial organization economics, horizontal differentiation

Grow or die: The evolution of the money market fund industry

Two separate schools of thought--evolutionary economics and organizational ecology--have used the metaphor of the evolution of biological species to understand the evolution of industries. Despite this superficial commonality between these two schools of thought, their different research agendas and methodologies force them to make very different--and usually conflicting--underlying assumptions about the natural selection processes that drive industry evolution. This dissertation attempts to synthesize the conflicting approaches of evolutionary economics and organizational ecology by posing the central research question: Does an organization\u27s level of competence at making a living in the particular way characteristic of the population (Winter, 1990) influence its chances of survival? In order to answer this question, the methodologies of both schools of thought must be synthesized: Intra-industry variations in firms\u27 levels of strategic competence can only be gauged in the context of an evolutionary-economics-style model, and the effect of this strategic competence on survival can only be measured in an organizational-ecology-style model. Data from the money market mutual fund industry are used to conduct such a synthesis, which is the first of its kind (and also, coincidentally, the first time that any evolutionary economics model has been estimated and tested with real-world data). The results indicate that: (1) an organization\u27s strategic competence does indeed influence its chances of survival, but (2) the effect of strategic competence on survival does not eliminate the effect of standard organizational ecology variables. So, both evolutionary and ecological dynamics are essential to explaining the selection process

Customer-specific synergies and market convergence

We use an analytical model to study the effects of customer-specific synergies – i.e. synergies that arise when firms sell multiple products to the same customers. At the firm level, we show that the profitability of a customer-specific synergy depends upon cross-market correlation of customer preferences, differs when the synergy is cost-based versus differentiation-based, and can be negative even when the synergy is kept proprietary to a single firm. We also show that returns to imitating such a synergy may decline as it strengthens. At the industry level, we find that exploiting customer-specific synergies causes endogenous market convergence at a point that depends upon whether the synergy is cost-based or differentiation-based and whether it is imitated

Strategic Factor Market Intelligence: An Application of Information Economics to Strategy Formulation and Competitor Intelligence

This paper develops a model of information-acquisition decisions by firms that are competing in a "strategic factor market" (Barney 1986) to purchase a scarce resource whose value is unknown and differs across firms. The model builds on the argument that more accurate expectations about the firm-specific value of resources is, other than luck, the only way for firms to obtain the specific resources required for competitive advantage. We address the more specific question of what types of information firms should gather to accomplish this goal. The model generates a series of testable hypotheses about how a firm's optimal mix of different types of information is affected by a number of factors, including the level of uncertainty about the value of the resource being acquired; the rarity, imitability, and nonsubstitutability of that resource; the level of inscrutability of firms' pre-existing stocks of resources; and firms' information-gathering and information-processing capacities.Resource-Based View, Competitor Intelligence, Information Acquisition, Competitive Advantage, Strategic Factor Market

Compete, Cooperate, or Both? Integrating the Demand Side into Patent Deployment Strategies for the Commercialization and Licensing of Technology

Profiting from innovation typically involves a choice between commercializing a patented technology in the product market to exploit proprietary advantage (i.e., competition) or licensing the technology to an incumbent in the market for ideas (a form of cooperation). A firm may thus deploy a patented technology in ways that may differ in their aggressiveness toward, or accommodation of, competitors. We analyze the deployment of patented technology employing either competition or collaboration modes, or both together (i.e., coopetition), as well as switching among them across demand states or over time, or delaying these choices until more information is available. We thus view a patent as a bundle of real options that enables a firm to manage not only the classic tension between commitment and flexibility but also the tension between competition and cooperation. We develop theory and propositions to predict which of these patent deployment modes will be chosen by an innovator facing an established firm as a function of the strength of the technology, market or bargaining power, and other market conditions, particularly the level and volatility of market demand