This paper develops a dynamic capabilities-based theory of the multinational enterprise (MNE). It first reviews scholarship on the MNE, with a focus on what has come to be known as "internalization" ...theory. One prong of this theory develops contractual/transaction cost-informed governance perspectives; and another develops technology transfer and capabilities perspectives. In this paper, it is suggested that the latter has been somewhat neglected. However, if fully integrated as part of a more complete approach, it can buttress transaction cost/governance issues and expand the range of phenomena that can be explained. In this more integrated framework, dynamic capabilities coupled with good strategy are seen as necessary to sustain superior enterprise performance, especially in fast-moving global environments.Entrepreneurial management and transformational leadership are incorporated into a capabilities theory of the MNE. The framework is then used to explain how strategy and dynamic capabilities together determine firm-level sustained competitive advantage in global environments. It is suggested that this framework complements contract-based perspectives on the MNE and can help integrate international management and international business perspectives.
Tackling the questions that systems designers care about, this book brings queueing theory decisively back to computer science. The book is written with computer scientists and engineers in mind and ...is full of examples from computer systems, as well as manufacturing and operations research. Fun and readable, the book is highly approachable, even for undergraduates, while still being thoroughly rigorous and also covering a much wider span of topics than many queueing books. Readers benefit from a lively mix of motivation and intuition, with illustrations, examples and more than 300 exercises – all while acquiring the skills needed to model, analyze and design large-scale systems with good performance and low cost. The exercises are an important feature, teaching research-level counterintuitive lessons in the design of computer systems. The goal is to train readers not only to customize existing analyses but also to invent their own.
We investigate the role that transaction fees play in the bitcoin blockchain's evolution from a mining-based structure to a market-based ecology. We develop a game-theoretic model to explain the ...factors leading to the emergence of transactions fees, as well as to explain the strategic behavior of miners and users. Our model highlights the role played by mining rewards, transaction fees, price, and waiting time, discusses welfare issues, and examines how microstructure features such as exogenous structural constraints influence the dynamics of user participation on the blockchain. We provide empirical evidence on the model's predictions and discuss implications for bitcoin's evolution.
Brouthers, Chen, Sali and Shaheer argue that recent increases in economic integration coupled with technological advances, such as digitization, have led to the use of new foreign market entry modes ...which they say have not been sufficiently acknowledged nor satisfactorily explained by an extant literature dominated by transaction cost theory (TCT). To make sense of these new entry modes, they introduce a framework based on the exploitation–exploration distinction and on embeddedness. I first outline current thinking on the TCT theory of foreign entry modes and then review Brouthers et al.’s four novel entry modes, identifying what is genuinely new about them, and what is similar to what we already know. I conclude that these four modes constitute changes in kind rather than substance, and show that they have already been satisfactorily explained using TCT. In contrast, Brouthers et al.’s exploitation–exploration–embeddedness framework is unconvincing, because (a) exploration is not an appropriate term to describe the motivation of most resource and strategic asset acquisition foreign direct investment; (b) there is considerable variation in embeddedness within some of their four novel entry modes; and (c) the availability of intermediaries breaks the hypothesized one-to-one correspondence between need for embeddedness and entry mode.
A buying firm attempts to seek economic and social benefits through supply chain collaboration. Successful collaboration is predicted not only to strengthen a buying firm performance but also to ...reduce transaction costs. Establishment of an appropriate governance is of a great help in stabilizing a relationship and strengthening performance. Therefore, this study aims to identify underlying factors that constitute collaboration and transaction cost advantage, to explore effects of supply chain collaboration on firm performance and transaction cost advantage, and to examine the moderation effect of governance mechanisms in the proposed relationships. Data were obtained via a web survey of Korean manufacturing firms across different industry sectors. Confirmatory factor analysis was performed to assess the unidimensionality, reliability, and validity of a large-scale survey and hierarchical regression analysis was conducted for the hypotheses testing. The results indicated that supply chain collaboration leads to better firm performance and transaction cost advantage and that performance results in transaction cost advantage. A further analysis of the moderation effect of governance mechanisms indicated that firm performance with contractual governance yields better transaction cost advantage and that supply chain collaboration with contractual governance results in better transaction cost advantage than with relational governance. The findings contribute to the supply literature by providing theoretical and empirical implications. In theory, various collaborative practices in the supply chain and types of transaction cost are identified. Valid and reliable scales are also confirmed through successive stages of measurement analysis. In practice, clear definition of supply chain collaboration offers guidance in designing appropriate and effective collaborative activities which can result in a better performance. Managers are also advised to identify contexts in which either a contractual governance or a relational governance can be best utilized.
The business enterprise is the prime institution in economic development and growth; yet, until recently, mainstream economics has mostly treated firms as homogeneous black boxes managed by ...untrustworthy agents. Using economic principles, the field of strategic management has developed a nuanced approach to understanding how firms are created, organized, and grow; how they innovate and compete; and how managers manage. That approach has yielded a theoretical framework known as ‘dynamic capabilities’. Contrasts are drawn between dynamic capabilities and other approaches to the theory of the firm, including transaction cost economics and agency theory. The application of capability theory allows intellectual blinders to be removed and an understanding of differential firm-level resource allocation and performance to emerge. This brings a richer conceptual understanding of the nature of the business enterprise and its management consistent with evolutionary and behavioural economics. Policy insights into governance, inequality, economic development, and the wealth of nations follow.
•Research suggests international collaboration and atypical knowledge recombination tend to produce higher impact research.•Research has yet to examine whether international collaboration produces ...atypical, novel, or conventional research.•This article shows that international collaboration tends to produce conventional rather than novel or atypical research.•Transaction costs and communication barriers may suppress novelty, while an audience effect may explain the higher impact of international work.•The findings suggest nuanced support for international research collaboration, incentivizing creativity rather than reputation-seeking.
Research articles produced through international collaboration are more highly cited than other work, but are they also more novel? Using measures developed by Uzzi et al. (2013), and replicated by Boyack and Klavans (2014), this article tests for novelty and conventionality in international research collaboration. Scholars have found that coauthored articles are more novel and have suggested that diverse groups have a greater chance of producing creative work. As such, we expected to find that international collaboration tends to produce more novel research. Using data from Web of Science and Scopus in 2005, we failed to show that international collaboration tends to produce more novel articles. In fact, international collaboration appears to produce less novel and more conventional knowledge combinations. Transaction costs and communication barriers to international collaboration may suppress novelty. Higher citations to international work may be explained by an audience effect, where more authors from more countries results in greater access to a larger citing community. The findings are consistent with explanations of growth in international collaboration that posit a social dynamic of preferential attachment based upon reputation.
Business enterprises lie at the core of ecosystems that drive economic development and growth in market economies; yet, until recently, mainstream economics has mostly treated firms like homogeneous ...black boxes run by opportunistic managers. The field of strategic management has developed a more nuanced approach to the understanding of how firms are created, organized and grow, how they innovate and compete and how managers manage. One of the leading paradigms in the field is the dynamic capabilities framework. In this paper, contrasts and complementarities are drawn between dynamic capabilities and economic theories of the firm, including transaction cost economics and agency theory. Connections to the Cambridge school are highlighted, including the duality between Keynes's 'animal spirits' and the dynamic capabilities entrepreneurial owner/manager. Leibenstein's x-inefficiency is juxtaposed here with d-ineffectiveness. Knowledge-based theories of the firm consistent with Cambridge conventions emerge. Intellectual exchange between strategic management and economics is encouraged to help improve the intuition behind models of firms and the economy.
We add to the emerging literature on empirical asset pricing in the Chinese stock market by building and analyzing a comprehensive set of return prediction factors using various machine learning ...algorithms. Contrasting previous studies for the US market, liquidity emerges as the most important predictor, leading us to closely examine the impact of transaction costs. The retail investors’ dominating presence positively affects short-term predictability, particularly for small stocks. Another feature that distinguishes the Chinese market from the US market is the high predictability of large stocks and state-owned enterprises over longer horizons. The out-of-sample performance remains economically significant after transaction costs.
We investigate how transaction costs change the number of characteristics that are jointly significant for an investor’s optimal portfolio and, hence, how they change the dimension of the ...cross-section of stock returns. We find that transaction costs increase the number of significant characteristics from 6 to 15. The explanation is that, as we show theoretically and empirically, combining characteristics reduces transaction costs because the trades in the underlying stocks required to rebalance different characteristics often cancel out. Thus, transaction costs provide an economic rationale for considering a larger number of characteristics than that in prominent asset-pricing models.
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