Managerial satisfaction with subsidiary performance; the influence of the parent MNE's capabilities and the subsidiary's environment

Multinational enterprise performance is one of the most researched topics in the strategic management literature over the last thirty years. Despite the proliferation of studies, the dispute over the relation between firms’ international investment activities and corporate performance has not yet reached a consensus. This paper’s contribution is threefold. First, we focus on entry by West European multinational enterprises into Central and East European countries. Second, we develop a multi-theory argument, combining insights from transaction cost, new institutional, behavioral, resource-based and international strategy theories. Third, we estimate the determinants of managerial satisfaction with subsidiary performance with questionnaire data for a sample of 198 subsidiaries.

A game theory of organizational ecology : a model of managerial inertia and market selection

This paper merges two theoretical perspectives in a mathematical game model: industrial organization on the one hand, which basically is the economic theory of market competition and firm strategies, and organizational ecology on the other, which is a major sociological tradition that studies the evolution of organizational populations. The merger is instrumental in analyzing a key question in organization studies: what is the role of flexibility, inertia and efficiency in facilitating firm performance in a selection environment, in terms of both profitability and survival? Particularly, we argue that game theory can offer a mathematical model of organizational ecology. Such a game-theoretic model reveals that an inert firm may push a flexible rival from the market, even if the inert market leader faces a cost disadvantage. Moreover, this may happen in a munificent environment. That is, cut-throat rivalry can be the result of strategic competition only - being facilitated by organizational inertia. This paper operationalizes relative inertia by modeling managerial resistance against downsizing. The model clearly supports the key claim of organizational ecology that relative inertia facilitates rather than impedes survival chances.industrial organization ;

Managerial satisfaction with subsidiary performance; the influence of the parent MNE's capabilities and the subsidiary's environment

Multinational enterprise performance is one of the most researched topics in the strategic management literature over the last thirty years. Despite the proliferation of studies, the dispute over the relation between firms? international investment activities and corporate performance has not yet reached a consensus. This paper?s contribution is threefold. First, we focus on entry by West European multinational enterprises into Central and East European countries. Second, we develop a multi-theory argument, combining insights from transaction cost, new institutional, behavioral, resource-based and international strategy theories. Third, we estimate the determinants of managerial satisfaction with subsidiary performance with questionnaire data for a sample of 198 subsidiaries.

Adapt or perish? How parties respond to party system saturation in 21 Western democracies, 1945–2011

This study examines whether (and how) parties adapt to party system saturation (PSS). A party system is oversaturated when a higher effective number of parties contests elections than predicted. Previous research has shown that parties are more likely to exit when party systems are oversaturated. This article examines whether parties will adapt by increasing the nicheness of their policy platform, by forming electoral alliances or by merging. Based on time-series analyses of 522 parties contesting 357 elections in twenty-one established Western democracies between 1945 and 2011, the study finds that parties are more likely to enter – and less likely to leave – electoral alliances if PSS increases. Additionally, a small share of older parties will merge. The results highlight parties’ limited capacity to adapt to their environments, which has important implications for the literature on party (system) change and models of electoral competition

STRATEGIC DELEGATION IN OLIGOPOLY: THE MARKET SHARE CASE

In this paper, we consider a two-stage (sequential) game as introduced by Vickers (1985),Fershtman (1985), Fershtman and Judd (1987) and Sklivas (1987). This game models the situation where the owners of competing firms manipulate their managers'' incentive contracts for strategic reasons. Instead of the sales volume as part of these contracts, we introduce market share, besides profit, as a natural part of managers'' incentives. Then we compare the results with those obtained for combinations of profits and sales volume, as well as for the classical Cournot model. Concerning an {\eightit n}-firm oligopoly, and compared to the sales-delegation case, it appears that owners put more emphasis on managerial profit-maximizing behavior, indicated by smaller weights attributed to market share in managerial incentive contracts. Social welfare corresponding to the market share-delegation case almost equals welfare associated with the sales-delegation case. However, its components differ.The case of market share-delegation leads to a higher profitability of incumbent rivals and to a lower consumer surplus, in comparison to the sales-delegation case. One may state that the owner''s strategic use of market share as a managerial incentive leads to a (partial) shift of benefits from consumers to producers.mathematical economics;

Market liberalization in the European Natural Gas Market The importance of capacity constraints and efficiency differences

In the European Union, energy markets are increasingly being liberalized. A case in point is the European natural gas industry. The general expectation is that more competition will lead to lower prices and higher volumes, and hence higher welfare. This paper indicates that this might not happen for at least two reasons. First, energy markets, including the market for natural gas, are characterized by imperfect competition and increasing costs to develop new energy sources. As a result, new entrants in the market are less efficient than incumbent firms. Second, energy markets, again including the market for natural gas, are associated with capacity constraints. Prices are determined in residual markets where the least efficient firms are active. This is likely to lead to price increases, rather than decreases.natural gas, capacity constraints, efficiency, market liberalization

Multinational enterprises, foreign direct investment and trade in China : A cointegration and Granger-causality approach

Multinational enterprises (MNEs) play a dominant role in the international business (IB) literature. Traditionally, by far the majority of IB studies deal with issues at the micro level of the individual MNE, or at the meso level of a sample of individual MNEs. This paper focuses on a macro-level issue: the impact of MNE behavior through foreign direct investment (FDI) on international trade, and vice versa. In so doing, this study responds to a recent plea for more macro-level studies in IB into the effect of MNE behavior on the macroeconomic performance of countries as a whole, particularly developing and emerging economies. In this way, IB research would inform the heated debate about the pros and cons of globalization, where antiglobalization rhetoric emphasizes the negative consequences of the increased dominance of MNEs for the world at large and the Third World in particular. In the current study, we focus on the largest developing or emerging economy of all: China. Applying sophisticated econometric techniques, we unravel the causality and direction of FDI ? trade linkages for the Chinese economy in the 1980 ? 2003 period.

THE GENESIS OF TOP MANAGEMENT TEAM DIVERSITY Selective Turnover among Top Management Teams in the Dutch Newspaper Publisher Industry (1970-1994)

This paper develops and tests a model explaining diversity within top executive management teams from the perspective of selective turnover. We draw on two theoretical perspectives to describe the pull toward team homogenization (low diversity) and the push toward team heterogenization (high diversity). Schneider’s attraction-selection-attrition (ASA) model is used to explain the team’s natural tendency to ‘hire likes and fire unlikes’ (so-called homosocial reproduction), provided it has the power to do so. Rational-economic theory, however, suggests firm-specific countervailing imperatives pulling a team toward heterogeneity in order to cope with the requirements of the environment. We propose that the cycle of homosocial reproduction only gets interrupted when the teams face a compelling need for diversity, particularly when organizational performance is poor, diversification is high and competition is tough, but that the reproduction cycle is maintained if the top executive management team is powerful vis-à-vis the board of directors. We test our hypotheses in a population of top executive teams of the Big Five Dutch publishers over a 25-year period. Interestingly, many of our expectations are not supported. Relating to entry, we find that poor performance and high diversification causes teams to select likes. Moreover, although more powerful teams do tend to select likes, this is even more so when competitive intensity increases. Concerning exit, we find that poor performance increases the overall likelihood of executive exit, and that dissimilar managers tend to leave first. We conclude that homosocial reproduction does occur, particularly when the organizations face conditions that at first glance require more team diversity. Apparently, top management teams tend to close ranks when environmental pressure and complexity increases. Explanations for these findings are discussed, which point the way to new research avenues.Economics ;

Market Liberalization in the European Natural Gas Market - The Importance of Capacity Constraints and Efficiency Differences

In the European Union, energy markets are increasingly being liberalized. A case in point is the European natural gas industry. The general expectation is that more competition will lead to lower prices and higher volumes, and hence higher welfare. This paper indicates that this might not happen for at least two reasons. First, energy markets, including the market for natural gas, are characterized by imperfect competition and increasing costs to develop new energy sources. As a result, new entrants in the market are less efficient than incumbent firms. Second, energy markets, again including the market for natural gas, are associated with capacity constraints. Prices are determined in residual markets where the least efficient firms are active. This is likely to lead to price increases, rather than decreases.