http://repub.eur.nl/res/concept/jel-D92/ Recent publications classified by JEL Code D92 en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/33018/ 2012-10-01T00:00:00Z We study optimal investment in technologies characterized by the learning curve. There are two investment patterns depending on the shape of the learning curve. If the learning process is slow, firms invest relatively late and on a larger scale. If the curve is steep, firms invest earlier and on a smaller scale. We further demonstrate that learning investment differs greatly from investment in technologies without learning effects. Learning investments generate substantial initial losses and are very sensitive to downside risk. We show that the most susceptible to losses and risk are technologies with intermediate speed of learning. Della Seta, M. Gryglewicz, S. Kort, P.M. http://repub.eur.nl/res/pub/14975/ 2009-02-20T00:00:00Z This thesis investigates two questions: the determinants of capital structure in franchising and its subsequent impact on the franchise financing decisions; and the efficient governance structure choice in franchising. We posit that firms franchise in order to benefit from the reduced franchisees’ operational risks by limiting the debt level, such that the franchisor can bear more debt and gain tax-deduction benefits. Specific hypotheses are based on various theories like resource-based view, agency theory, signaling theory and classical capital structure theories. We empirically find that as the franchisor requires franchisees to put more equity in the initial investment, the franchisor does bear a higher debt level and gains from tax deductibility of interest expenses. This effect is stronger when more units are franchised. Moreover, we also find evidence supporting our prediction that the franchisee’s leverage is positively linked with franchisor’s maturity. This suggests that as the franchisor imposes a higher level of franchisee’s leverage in order to screen capable franchisees, the franchisor also increases their maturity to reduce bankruptcy risks. This thesis also explores the impact of governance structure on the incentives to invest in specific assets for the franchisor as well as the distributors. Wholly-owned, wholly-franchised, and mixed franchise systems are considered. Circumstances are identified when a dual distribution governance structure uniquely allocates efficient ownership over assets. A necessary condition for the efficiency of a dual distribution governance structure is a positive systemic effect, not the value of the brand name or location (or other) differences between outlets. We find that whether dual distribution benefits are realized in a franchise or a cooperative franchise depends on whether most value is added upstream or downstream. Jiang, T. http://repub.eur.nl/res/pub/13645/ 2008-09-01T00:00:00Z Prior research has argued that multinational enterprises (MNEs) prefer to enter culturally distant countries through greenfields rather than through acquisitions, since acquisitions in such countries are costlier to manage. This argument contains two hidden assumptions: (1) the additional costs of acquisitions in culturally distant countries are the same for all MNEs; and (2) such acquisitions have no benefits over their greenfield counterparts. In this paper we relax these two assumptions by arguing that an MNE's preference for greenfields in culturally distant countries depends on its international and host-country experience, and on the level of autonomy it plans to grant the focal subsidiary. Analyzing 171 wholly owned greenfield investments and full acquisitions made by Dutch MNEs in 35 countries, we find that these MNEs prefer to enter culturally distant countries through greenfields, but that this preference is lower when they have little international experience, or plan to grant the focal subsidiary considerable autonomy in marketing. Slangen, A.H.L. Hennart, J-F. http://repub.eur.nl/res/pub/10538/ 2007-09-11T00:00:00Z Prior research has argued that multinational enterprises (MNEs) prefer to enter culturally-distant countries through greenfields rather than through acquisitions, since acquisitions in such countries are costlier to manage. This argument contains two hidden assumptions: (1) the additional costs of acquisitions in culturally-distant countries are the same for all MNEs, and (2) such acquisitions have no benefits overtheir greenfield counterparts. In this paper we relax these two assumptions by arguing that an MNE’s preference for greenfields in culturally-distant countries depends on its international and host-country experience, and on the level of autonomy it plans to grant the focal subsidiary. Analyzing 171 whollyowned greenfield investments and full acquisitions made by Dutch MNEs in 35 countries, we find that these MNEs prefer to enter culturally-distant countries through greenfields, but that this preference is lower when they have little international experience, or plan to grant the focal subsidiary considerable autonomy in marketing. Slangen, A.H.L. http://repub.eur.nl/res/pub/10539/ 2007-09-11T00:00:00Z This paper reviews the empirical literature on the determinants of the choice by multinational enterprises between entering foreign countries through greenfields or acquisitions. We discuss and compare the main theoretical perspectives used, provide a detailed overview of the empirical findings, examine why these findings have often been inconsistent, and offer theoretical and methodological suggestions to guide future research. Slangen, A.H.L. Hennart, J-F. http://repub.eur.nl/res/pub/15824/ 2004-10-01T00:00:00Z We investigate the manifold posed question: To what extent does investment in human and social capital, besides the effect of talent, enhance entrepreneurial performance? We distinguish between three different performance measures: survival, profits, and generated employment. On the basis of the empirical analysis of a rich Dutch longitudinal data set of firm founders, we conclude that specific investments indeed affect the three performance measures substantially and significantly. Specific attention is paid to the unobserved talent bias. Moreover, the effect of the emergence of so called "knowledge industries" is explored. Bosma, N. Praag, M. van Thurik, A.R. Wit, G. de http://repub.eur.nl/res/pub/6821/ 2002-03-13T00:00:00Z We investigate the manifold posed question: "To what extent does investment in human and social capital, besides the effect of "talent", enhance entrepreneurial performance?". We distinguish between three different performance measures: survival, profits, and generated employment. On the basis of the empirical analysis of a rich Dutch longitudinal data set of firm founders, we conclude that specific investments indeed affect the three performance measures sub- stantially and significantly. Specific attention is paid to the unobserved talent bias. Moreover, the effect of the emergence of so called "knowledge industries" is explored. Bosma, N. Praag, M. van Thurik, A.R. Wit, G. de http://repub.eur.nl/res/pub/12084/ 2000-02-01T00:00:00Z This article considers the effect on an irreversible investment of a subsidy to investment in combination with a taxation of future profits. It is shown that such a combination raising a zero expected revenue decreases the trigger value of investment. The tax rate for which the stimulus works at zero expected cost decreases as heterogeneity in the group of investors increases. The importance of the result is exemplified by the graduate tax. Pennings, H.P.G. http://repub.eur.nl/res/pub/7780/ 1998-02-09T00:00:00Z We demonstrate the possibility of shake-out of firms and emergence of inter-firm heterogeneity along the (socially optimal) dynamic equilibrium path of a competitive industry with free entry and exit, even when there is no uncertainty and all firms are ex ante identical with perfect foresight. Atomistic firms with upward sloping marginal cost curves undertake investment in firm- specific cost reduction. They earn negative net profit in early periods, compensated later by strictly positive net profits; no entry occurs after the initial time period. Some firms may exit before others even while other firms earn positive net profit. Petrakis, E. Roy, S.