Two Faces: Effects of Business Groups on Innovation in Emerging Economies

This paper argues that business groups in emerging economies exert dual effects on innovation. While groups encourage innovation by providing institutional infrastructures, groups also discourage innovation by creating entry barriers for small and non-group firms and inhibiting the proliferation of new ideas. Using OLS and panel data estimation techniques, followed by nonparametric analysis and semiparametric kernel regression, we find evidence of an inverted-U relation between group market share and innovation in industrial sectors of both Korea and Taiwan, during the 1981-1995 period. Institutional differences between Korea and Taiwan in terms of market structure and industrial policies provide useful conceptual implications from the empirical comparison.

Where Can Capabilities Come From? How the Content of Network Ties Affects Capability Acquisition

While strategy researchers have devoted considerable attention to the role of firm-specific capabilities in the pursuit of competitive advantage, less attention has been directed at how firms obtain these capabilities from outside a firm's boundaries. This study analyzes how firms' network ties represent one important source of capability acquisition. Theoretically, we go beyond the traditional focus on network structure and offer a novel contingency model that specifies how differences in the content of network ties (e.g., buyer-supplier, equity, and director ties) will differentially affect the process of R&D capability acquisition. Empirically, we also seek to provide an original contribution to the capabilities literature by utilizing a stochastic frontier estimation to rigorously measure firm capabilities, and we demonstrate the value of this approach using longitudinal data on business groups in emerging economies. The supportive results of our analysis show that the effect of network ties on the acquisition of new affiliate capabilities is clearly and predictably contingent on the content of the ties.

Two faces: Effects of business groups on innovation in emerging economies

October 15, 2001 (Version: two_faces1n.doc) -- Work in progress: Please do not citeThis paper argues that business groups in emerging economies exert dual effects on innovation. While groups encourage innovation by providing institutional infrastructures, groups also discourage innovation by creating entry barriers for small and non-group firms and inhibiting the proliferation of new ideas. Using OLS and panel data estimation techniques, followed by nonparametric analysis and semiparametric kernel regression, we find evidence of an inverted-U relation between group market share and innovation in industrial sectors of both Korea and Taiwan, during the 1981-1995 period. Institutional differences between Korea and Taiwan in terms of market structure and industrial policies provide useful conceptual implications from the empirical comparison.33 p

Inter-industry differences in profitability: the legacy of the structure-efficiency debate revisited

This study presents a simple model on the sources of inter-industry variation in profitability and tests its empirical implications in order to shed new light on the long-lasting debate over industry profitability. The model identifies four key factors that jointly influence an industry's price-cost margin: (i) the intensity of strategic investment (e.g. R&D and advertising), (ii) the skewness of the distribution of market share or market concentration, (iii) the appropriability of strategic investment, and (iv) the extent to which firms' market shares are determined by the intensity of their strategic investment. These factors are expected to be positively related to industry profitability, and our empirical analysis provides supportive evidence. The model also suggests that the conventional, single-dimensional hypotheses on profitability-the market-power (or market-structure) hypothesis and the efficiency hypothesis-are overly simplified. More importantly, existing empirical results allegedly supporting each of these hypotheses are spurious to the extent that the distribution of firm-specific strategic competence reflects firm heterogeneity in efficiency and, at the same time, underlies the distribution of market share or market concentration. Copyright 2009 , Oxford University Press.

CHANDLER REVISITED: INTERFACE BETWEEN STRATEGY AND STRUCTURE DURING INSTITUTIONAL TRANSITION

Research Paper Series (National University of Singapore. Faculty of Business Administration); 2003-0261-3

Firm restructuring during an economy-wide shock across institutional environments

NUS Business School Research Paper Series; 2012-0061-4