Research Summary
Strategy research addresses endogeneity by incorporating econometric techniques, including Heckman's two‐step method. The economics literature theorizes regarding optimal usage of ...Heckman's method, emphasizing the valid exclusion condition necessary in the first stage. However, our meta‐analysis reveals that only 54 of 165 relevant papers published in the top strategy and organizational theory journals during 1995–2016 claim a valid exclusion restriction. Without this condition being met, our simulation shows that results using the Heckman method are often less reliable than OLS results. Even where Heckman is not possible, we recommend that other rigorous identification approaches be used. We illustrate our recommendation to use a triangulation of identification approaches by revisiting the classic global strategy question of the performance implications of cross‐border market entry through greenfield or acquisition.
Managerial Summary
Managers make strategic decisions by choosing the best option given the particular circumstances of their firm. However, researchers had previously not taken into consideration these circumstances when evaluating the outcome of that choice. The Heckman method importantly addresses this situation, but requires that the researcher have some variable that effects the best option for the firm, but not the outcome. We show that researchers frequently do not utilize such a variable, and demonstrate that the Heckman method can exacerbate estimation issues in this case. We then provide an approach that researchers can use to address the challenge of determining the outcome of a strategic decision, and illustrate it with an empirical examination of the performance implications of cross‐border market entry through greenfield or acquisition.
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BFBNIB, FZAB, GIS, IJS, KILJ, NLZOH, NUK, OILJ, SAZU, SBCE, SBMB, UL, UM, UPUK
Due to the serious increase of environmental pollution in China, environmental regulations have become significantly stringent. Such regulations are playing an increasingly important role in the ...development of small enterprises (SEs) in China, especially in SEs' market entry. However, existing studies pay little attention to this issue. This paper investigates for the first time the effect of environmental regulations on SEs' market entry and the mechanism of environmental regulation effects in China. We consider two sets of panel data for the periods 2003–2010 and 2012–2015 in China. We also use the fixed effect model and the instrumental variable method to explore the role of environmental regulations in SEs' market entry. The results show that, overall, environmental regulations play a significantly positive and robust role in SEs' market entry. However, the mechanisms associated with the effect of environmental regulations on different innovative types of SEs differ. Environmental regulations promote the market entry of SEs with product innovation, but this impact is not significant for SEs with research and development (R&D) activities and R&D institutions. Our findings indicate that China's SEs prefer product innovation, which is a lower level innovative type, over R&D innovation, as a means to avoid the negative impact of stringent environmental regulations.
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BFBNIB, FZAB, GIS, IJS, KILJ, NLZOH, NUK, OILJ, SAZU, SBCE, SBMB, UL, UM, UPUK
Market entry performance is critical during internationalisation; prevailing views suggest that firms need to carefully plan their entry before putting the plan into action. This article focuses on ...three attributes affecting the possibility and usefulness of making a pre-planned market entry: unpredictability, improvisation and business network commitment. We develop six hypotheses tested on a sample of 250 entries; our main finding is that improvisation plays a mediating role in relation to performance in unpredictable markets. The analysis reveals that the relationship between unpredictability and network commitment is not significant, while the effect of unpredictability on market entry performance is negative. These findings suggest implications for internationalisation and international entrepreneurship theory. For managers and entrepreneurs, we show that unpredictability weakens market entry performance, a negative effect that can be mitigated if the entrant firm improvises.
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NUK, OILJ, SAZU, UKNU, UL, UM, UPUK
An established firm can enter a new product market through acquisition or internal development. Predictions that the choice of market entry mode depends on 'relatedness' between the new product and ...the firm's existing products have repeatedly failed to gain empirical support. We resolve ambiguity in prior work by developing dynamic measures of relatedness, and by making a distinction between entries inside vs. outside a firm's primary business domain. Using a finegrained dataset on the telecommunications sector, we find that inside a firm's primary business domain, acquisitions are used to fill persistent gaps near the firm's existing products, whereas outside that domain, acquisitions are used to extend the enterprise in new directions.
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BFBNIB, FZAB, GIS, IJS, KILJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBMB, UL, UM, UPUK
Abstract
Drug shortages are becoming more frequent and severe in the United States, especially for generic drugs. A lack of economic incentives has been cited as a root cause. Only few firms choose ...to produce a such drugs, and, if they do, these firms do not allocate large levels of capacity. Hence, total industry supply is limited, increasing the odds of shortages. We develop and analyze a stylized game‐theoretic model of a generic drug market to understand the impact of various governmental interventions on the total industry equilibrium supply. We explicitly consider firm market entry and exit decisions and the participating firms' incentives to allocate productive capacity to the focal drug market. We first characterize sustainable numbers of active drug manufacturers and their equilibrium capacity allocation decisions for a given regulatory environment. We then analyze the effects of different possible policy interventions on these equilibrium decisions and total industry capacity. Finally, we consider the impact of combinations of different interventions and, importantly, the sequence in which such combined interventions are introduced. A key result of our analysis is that the sequence of policy interventions may have an important effect on the resulting equilibrium industry capacity. When changing the regulatory environment, policymakers should be careful never to lead a sequence of changes with an adjustment that adversely affects pharmaceutical firms' incentives to allocate capacity to the focal drug market; we show that starting with capacity‐supporting interventions always is a dominant strategy when aiming to increase total industry capacity.
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FZAB, GIS, IJS, KILJ, NLZOH, NUK, OILJ, SAZU, SBCE, SBMB, UL, UM, UPUK
Buildings are often constructed on a continuous layer of vibration isolation to reduce vibrations and structure-borne noise. There are many vibration isolation products (rubber mats, textiles, ...polymer foams), but none fulfils all requirements in terms of load-bearing capacity, performance, and cost. In previous work, we have shown that silica aerogel particle beds display a low resonance frequency and correspondingly high vibration isolation performance. Loose silica aerogel granules are not a practical vibration isolation solution. In order to guide the future development of dedicated vibration isolation products based on aerogels, we determine the vibro-acoustic properties of a variety of existing commercial and R&D stage mesoporous composites, that have been developed for thermal insulation applications. The sample set includes monolithic aerogels (polyurethane), silica aerogel composites (aerogel – fibers, aerogel impregnated foams, aerogel bound with polymer foam), glued fumed silica-fiber boards, and nanoporous polymer foam composite boards. The silica aerogel and fumed silica composites display low resonance frequencies (down to 8 Hz for 40 mm, strongly dependent on composite type) and a low dynamic stiffness and loss factor over a wide range of static loads. The polymer aerogel, nanoporous foam and polymer-bound silica aerogel granule board all display higher resonance frequencies, consistent with their higher static stiffness. Although optimized for thermal insulation rather than vibration isolation, many of the tested silica aerogel and fumed silica composites are competitive with the best vibration isolation products on the market in terms of vibration isolation performance. The diversity of materials tested informs on which approaches, materials, and materials combinations are most promising to target vibration isolation.
•Vibroacoustic properties of 8 types of mesoporous materials tested.•All materials have a low loss factor and are not effective vibration dampers.•Silica aerogel and fumed silica composites have very low resonance frequencies.•Silica aerogel and fumed silica composites are excellent vibration isolators.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
•Market entry, pricing and emission reduction strategies of manufacturers are optimized.•Game theoretical model are investigated with cap-and-trade policy and heterogeneous consumers.•The impacts of ...four market entry strategies on emission reduction are compared.•Cap-and-trade policy is an effective regulation to motivate new entrant's green investment.•Higher carbon trading price with lower carbon quota can improve the reduction level.
With the carbon emission constraints, manufacturers are under pressure to strike a balance between emissions reduction and economic benefits. To gain a comparative edge in the competitive market, manufacturers should simultaneously consider the heterogeneous demand, the impacts of competitors' strategies, and the carbon emission regulations. Therefore, based on the manufacturer's market entry and green strategies: M&A (Merger and Acquisition) and greenfield investment in green or non-green production, we employ an extended Hotelling model to differentiate consumers' willingness-to-pay and investigate the implications thereof for optimal entry, emission reduction, and pricing strategies. Furthermore, we investigate the impacts of cap-and-trade policy on manufacturers' profits and social welfare, then conduct a comparative study on the optimal decisions and profits obtained under five market entry scenarios. Our results show that the emission reduction and social welfare can be significantly promoted when the new entrant makes M&A investment in green manufacturer. Although the higher carbon trading price can increase reduction level, the profits of green manufacturers decrease in the case of greenfield investment. For the economic and environmental benefits, on the one hand, the government can decrease the carbon trading price and meanwhile subsidize the new entrants to make M&A investment in green production. On the other hand, the government can increase the carbon trading price while reducing the carbon quota lower than a threshold in the case of greenfield investment in green manufacturer.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
•We map the evolution of foreign market entry (FME) research over time (1970–2013).•We examine the contribution of most impactful FME studies.•We provide a critical appraisal of the current ...theoretical diversity in FME research.•The results underscore the need for a multi-theoretical approach in the study of FME.
This paper reviews the theoretical foundations of the equity based foreign market entry (FME) decisions literature. We analyse 1055 academic FME papers published over four decades (1970–2013). We identify and analyse the theories that informed and guided FME research over time. Our review indicates that scholars have recently started to challenge some of the core assumptions of established theories, draw on and integrate insights from multiple theoretical perspectives which, in turn, generated a multiplicity of approaches for studying FME decisions and their performance outcomes. The paper discusses the explanatory power of the different theories, assesses the relevance of the different theoretical perspectives to our understanding of current FME phenomena and recommends directions for further research.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UL, UM, UPCLJ, UPUK, ZRSKP
Two recent trends in international economics have been an increased focus on the geography of trade (e.g. what factors determine where a country exports) and the emergence of new theoretical and ...empirical work examining exporting activity at the firm-level. However, data limitations have prevented much progress in combining these two areas, because very few countries provide firm-level data breaking down firm exports by their destination. This paper uses a unique survey of Irish exporting firms with information on over fifty destinations for a five-year period to fill some of the gaps in this empirical literature. In particular we investigate how well the predications of a model of exporting with firm heterogeneity fits with the patterns of this detailed data source. Amongst our findings are that firm productivity differences are a factor in explaining the number of export markets a firm has but the prediction of a hierarchy of markets could only be weakly upheld by the data. Firm involvement in individual export markets is found to be much more dynamic than export status. Entry and exit to markets is shown to be a quantifiably important component of overall export flows, with this factor becoming more important for less popular markets. The paper also shows how the patterns of entry and exit into export markets combine to determine the overall firm-level distribution of number of markets entered.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UL, UM, UPCLJ, UPUK
In this article we reveal how network-enabled imitation processes impact young small- and medium-sized enterprises (SMEs) internationalization, and how a firm's network position as well as its ...experiential knowledge moderate imitative behavior in internationalization modes. Building on institutional, network, and organizational-learning theory, we suggest that firms imitate the internationalization modes of their peers in their network. Moreover, we argue that a firm's imitation propensity depends on two important boundary conditions: network position and past experience. Applying a longitudinal event history analysis to analyze the complete population of 977 German biotechnology firms between 1996 and 2012 largely supports our hypotheses. Our findings reveal that firms imitate the internationalization modes of their peers in a precise manner. This implies that the imitation of others can initially serve as a presumably convenient low-risk shortcut to a planned or experience-driven internationalization process. Furthermore, our results confirm that this imitation process is channeled through formal network relations and that central network positions that are associated with superior information access, enhanced legitimacy, and status may promote deviating behavior. Acknowledging the interplay of different learning sources, our findings additionally show that initial internationalization mode choices of SMEs can have a lasting effect on subsequent internationalization behavior. Overall, our study contributes to a more nuanced view of imitative behavior of internationalizing SMEs and its boundary conditions, and highlights future research opportunities that exist for considering imitation and its implications in international business research.
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