http://repub.eur.nl/res/concept/jel-L11/ Recent publications classified by JEL Code L11 en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/26036/ 2012-06-01T00:00:00Z Small- and medium-sized enterprises (SMEs) are informationally opaque and bank dependent. In SME lending, banks largely rely on soft information, because the scale and scope of hard information are limited. We analyze whether and how hard and soft information affects the borrower's bargaining power vis-à-vis its bank. We use the fact that, for a given credit rating, certain borrowers obtain better loan terms than others to define measures of relative bargaining power. Using SME loan data from the USA and Germany, we find that more favorable soft information (management skills and character) increases borrower bargaining power. We also show that more favorable soft than hard information improves borrower bargaining power. The results are not driven by manipulation or statistical limitations of the credit ratings. Our study suggests that soft information represents an important and direct determinant of borrower bargaining power, affecting the outcomes of the loan contracting process. Grunert, J. Norden, L. http://repub.eur.nl/res/pub/22338/ 2011-01-20T00:00:00Z Empirical evidence suggests that sectoral export growth decreases exporters' survival probability, whereas this is not true for non-exporters. Models with firm heterogeneity in total factor productivity (TFP) predict the opposite. To solve this puzzle, we develop a two{factor framework where firms differ in factor intensities. Thus, export growth increases competition for the factor used intensively by exporters, eliminating some of them, while non-exporters benefit. Interacting heterogeneity in factor shares with heterogeneity in TFP we show that factor market competition reduces the growth in average TFP brought about by trade liberalization... Emami Namini, J. Facchini, G. Lopez, R.A. http://repub.eur.nl/res/pub/21427/ 2010-12-01T00:00:00Z We consider a government auctioning off multiple licences to firms that compete in an aftermarket. Firms have different costs, and cost-efficiency is private information in the auction and in the aftermarket. If only one licence is auctioned, standard results say that the most efficient firm wins the auction as it has the highest valuation for the licence. We analyse conditions under which this result does and does not generalise to the case of auctioning multiple licences and aftermarket competition. Strategic interaction in the aftermarket is responsible for the fact that auctions may select inefficient firms. Janssen, M.C.W. Karamychev, V.A. http://repub.eur.nl/res/pub/17492/ 2009-11-10T00:00:00Z This paper studies asymmetric price responses of individual firms, via daily retail prices of almost all gasoline stations in the Netherlands and suggested prices of the five largest oil companies over more than two years. I find that 38% of the stations respond asymmetrically to changes in the spot market price. Hence, asymmetric pricing is not a feature of the market as a whole, but of individual firms. For asymmetrically pricing stations, the asymmetry is substantial directly after a change but disappears after one or two days. I study station-specific characteristics and conclude that asymmetric pricing seems to be a phenomenon that is randomly distributed across stations. I also find that none of the five largest oil companies adjust their suggested prices asymmetrically. Faber, R.P. http://repub.eur.nl/res/pub/21650/ 2009-03-01T00:00:00Z This paper analyzes the risk of exit for privately-owned manufacturing establishments in a small African economy. It shows that changes in the structure of ownership following an economic reform have important implications on stablishment survival. The risk of exit is lower for establishments that belong to multi-unit firms as compared to single-unit establishments suggesting the presence of information and risk sharing mechanisms within a group. Although female-owned businesses tend to be smaller in size, they have better chances of survival than male-owned establishments. The probability of exit also declines significantly in establishment size and productivity. Shiferaw, A. http://repub.eur.nl/res/pub/14946/ 2009-02-26T00:00:00Z This paper presents a trade model with capital and labor as factors of production. The main contribution of this paper is that it considers a new type of firm heterogeneity, which is empirically relevant: firms in this paper differ with respect to their factor shares in production. Therefore, this paper addresses the following four empirical facts on globalization, firms’ factor shares and factor prices: (i) firms within narrowly defined industries exhibit a large degree of heterogeneity in factor shares in production; (ii) exporters are, on average, more capital intensive than non—exporters; (iii) globalization decreases labor’s share in national income; (iv) the larger the share of exporters in the industry, the larger the increase in the industry’s wages due to globalization. Emami Namini, J. http://repub.eur.nl/res/pub/16417/ 2009-02-01T00:00:00Z An important role of informative advertising is to inform consumers of the simple fact that the shop that advertises sells a particular product. This information may help consumers to save on their search activities: instead of wandering around, a consumer can simply visit the shop that has advertised, knowing that there he can find the commodity he is looking for. The implications of this simple fact have not been studied before. Using game theoretic reasoning in a model that combines consumer search and firms' advertising we show that firms may find it optimal to advertise prices that are higher than nonadvertised prices. The important mechanism underlying this result is that advertising lowers the expected search cost for consumers. Through this analysis we provide a new insight into the role of informative advertising. Janssen, M.C.W. Non, M.C. http://repub.eur.nl/res/pub/14081/ 2008-12-05T00:00:00Z Within the realm of globalization of R&D, offshoring is a relatively recent and still emerging phenomenon. Rooted in the notion of comparative advantage, offshoring of R&D involves disaggregation and global distribution of the firm’s R&D value chain activities to leverage innovation capacity of low-cost countries. Characteristically different from market- and technology-seeking globalization of R&D, offshoring is motivated by the intertwining competitive needs to gain efficiency and access knowledge resources. This study represents a systematic, grounds-up attempt to explore the terrain of the phenomenon of offshoring of R&D and its influence on the competitive advantage of firms. Specifically, going beyond structural cost savings, the research examines the link between offshoring of R&D and the firm’s innovative capability and organizational flexibility—the two most important organizational capabilities of high technology firms. Employing an interpretive approach, the research includes multiple case studies of intra-firm and inter-firm offshoring of software R&D across a range of industries. The study demonstrates that by strategically organizing and managing offshoring of R&D, firms can significantly enhance their innovative capability and organizational flexibility. The findings suggest that offshoring of R&D is a new global organizational form that not only serves as an adaptive device but also allows firms to achieve ambidexterity. Moitra, D. http://repub.eur.nl/res/pub/13943/ 2008-11-20T00:00:00Z How do incumbent firms strategically renew in regulatory environments? Assuming that regulation can both constrain and enable a firm’s strategic renewal opportunities, we investigate how and to what extent incumbent firms undertake exploitative and explorative strategic renewal actions in order to remain competitive. Exploitative strategic renewal involves those actions that strengthen or optimise a firm’s current resource deployments, whereas explorative strategic renewal relates to actions that generate new sources of value creation for the firm. Based on old institutional theory, new institutional theory, neo-institutional theory and institutional entrepreneurship literature, a multi-level framework that combines selection and adaptation arguments has been developed and applied to investigate strategic renewal behaviour of a sample of European energy incumbents. At industry level of analysis, results show how inter-organisational institutional forces significantly impact firms’ choices of exploitative and explorative strategic renewal actions through regulative, normative and cognitive forces. At organisational unit level of analysis, we find that the extent of intra-organisational regulative forces is positively related to exploitative strategic renewal actions. In addition, entrepreneurial proclivity appears to be a catalyst of both exploitative and explorative strategic renewal actions. Finally, our results provide insights how environmental selection and firm level adaptation are interrelated in the context of regulation. The extent of inter-organisational regulative forces positively moderates the relationship between intra-organisational regulative forces and exploitative strategic renewal actions. Stienstra, M. http://repub.eur.nl/res/pub/13876/ 2008-11-17T00:00:00Z The measurement of productivity change (or difference) is usually based on models that make use of strong assumptions such as competitive behaviour and constant returns to scale. This survey discusses the basics of productivity measurement and shows that one can dispense with most if not all of the usual, neoclassical assumptions. By virtue of its structural features, the measurement model is applicable to individual establishments and aggregates such as industries, sectors, or economies. Balk, B.M. http://repub.eur.nl/res/pub/14055/ 2008-11-17T00:00:00Z This article analyzes the role of suggested prices in the Dutch retail market for gasoline. Suggested prices are announced by large oil companies with the suggestion that retailers follow them. There are at least two competing rationales for the existence of suggested prices: they may either help retailers translate changes in international gasoline spot market prices into retail prices, or they may coordinate retail prices. We show that there is, next to the international spot market prices, additional information in suggested prices that explains retail prices. Therefore, we conclude that suggested prices help to coordinate retail prices. Faber, R.P. Janssen, M.C.W. http://repub.eur.nl/res/pub/12900/ 2008-07-22T00:00:00Z Many high-tech products and durable goods exhibit exactly one significant price cut some time after their launch. We call this sudden transition from high to low prices the price landing. In this paper we present a new model that describes two important features of price landings: their timing and their speed. Prior literature suggests that prices might be driven by sales, product line pricing, competitor’s sales or simply by time. We propose a model using mixture components that identifies which of these explanations is the most likely trigger of price landings. We define triggers as thresholds after which prices are significantly cut. In addition, price landings might differ across products and therefore we model their heterogeneity with a hierarchical structure that depends mainly on firm, product type and seasonal effects. We estimate our model parameters applying Bayesian methodology and we use a rich dataset containing the sales and prices of 1195 newly released video-games (VG’s). In contrast with previous literature, we find that competition and time itself are the main triggers of price landings while past sales and product line are less likely triggers. Moreover, we find substantial heterogeneity in the timing and speed of price landing across firms and product types. Hernández-Mireles, C. Fok, D. Franses, Ph.H.B.F. http://repub.eur.nl/res/pub/12244/ 2008-04-25T00:00:00Z In this paper, we explain how Internet retailers can learn from proven revenue management concepts and use them to reduce costs and enhance service. We focus on attended deliveries as these provide the greatest opportunities and challenges. The key driver is service differentiation. Revenue management has shown that companies can do much better than a one-size-fits-all first-come-first-serve strategy when selling scarce capacity to a heterogeneous market. Internet retailers have strong levers at their disposal for actively steering demand, notably the offered delivery time windows and their associated prices. Unlike traditional revenue management, these demand management decisions affect both revenues and costs. This calls for a closer coordination of marketing and operations than current common practice. Agatz, N.A.H. Campbell, A. Fleischmann, M. Nunen, J.A.E.E. van Savelsbergh, M.W.P. http://repub.eur.nl/res/pub/12103/ 2008-04-03T00:00:00Z Responsible for running a $2.5 billion HP computer factory in a high-cost country like Germany, the author perceived constant pressure defining new manufacturing strategies to keep a competitive advantage for the factory over all internal and external manufacturing alternatives around the world. However, it was clear that a competitive advantage does not last for ever but is rather limited by time, and that it is vital to recognize when an old competitive advantage has lost its strength. This uncertainty could be reduced by a better understanding of long-term market and technological trends and how local factories need to adapt their capabilities over time. Inspired by the HP experience we developed in our research a conceptual model to explain why switching of capabilities during the TLC is needed for success and how it should be done. Two more qualitative cases are presented and used to test and refine the conceptual model. As a result we propose in this thesis detailed guidelines for capability switching in local manufacturing over the lifetime of a factory. These guidelines also provide valid and reliable measures of the phases of a technology’s status within the Technology Life Cycle and the corresponding type of local factory which are necessary for developing successful manufacturing capabilities. Brumme, H. http://repub.eur.nl/res/pub/10072/ 2007-05-10T00:00:00Z Small firms face distinct problems and opportunities when procuring IT resources. Whereas previous work focused at the level of firm or buyer-supplier dyad, we address portfolios of buyer-supplier relationships at an online marketplace for IT services. Using the portfolio approach, we develop a buyers taxonomy and analyze properties of resulting clusters. Our investigation reveals four clusters of buyers with distinct mixes of long-term and short-term supplier relationships. Although reverse auctions are found to be associated with short-term relationships and negotiations support long-term relationships, buyers in different clusters use the two mechanisms in combination to a different extent. Radkevitch, U.L. Heck, H.W.G.M. van Koppius, O.R. http://repub.eur.nl/res/pub/8345/ 2007-01-04T00:00:00Z This paper considers a government auctioning off multiple licenses to firms who compete in a market after the auction. Firms have different costs, and cost efficiency is private information at the auction stage and the market competition stage. If only one license is auctioned, standard results say that the most efficient firm wins the auction (license) as it will get the highest profit in the aftermarket, i.e., it has the highest valuation for the license. This paper argues that this result does not generalize to the case of multiple licenses and aftermarket competition. In particular, we determine conditions under which auctions may select inefficient firms and therefore lead to an inefficient allocation of resources. Strategic interactions in the aftermarket, in particular firms’ preferences to compete with the least cost-efficient firms rather than with the most efficient firms, are responsible for our result. Janssen, M.C.W. Karamychev, V.A. http://repub.eur.nl/res/pub/7916/ 2006-08-01T00:00:00Z The search literature assumes that consumers know which firms sell products they are looking for, but are unaware of the particular variety and the prices at which each firm sells. In this paper, we consider the situation where consumers are uncertain whether a firm carries the product at all by proposing a model where in the first stage firms decide on whether or not to carry the product. Firms may advertise, informing consumers not only of the price they charge, but also of the basic fact that they sell the product. In this way, advertising lowers the expected search cost. We show that this role of advertising can lead to a situation where advertised prices are higher than non—advertised prices in equilibrium. Janssen, M.C.W. Non, M.C. http://repub.eur.nl/res/pub/14388/ 2006-04-16T00:00:00Z In this paper we consider the uncapacitated economic lot-size model, where demand is a deterministic function of price. In the model a single price need to be set for all periods. The objective is to find an optimal price and ordering decisions simultaneously. In 1973 Kunreuther and Schrage proposed an heuristic algorithm to solve this problem. The contribution of our paper is twofold. First, we derive an exact algorithm to determine the optimal price and lot-sizing decisions. Moreover, we show that our algorithm boils down to solving a number of lot-sizing problems that is quadratic in the number of periods, i.e., the problem can be solved in polynomial time. Heuvel, W. van den Wagelmans, A.P.M. http://repub.eur.nl/res/pub/7639/ 2006-03-29T00:00:00Z In this study indicators of agglomeration economies and their effect on entrepreneurship in the ICT industry are analysed in diverse urban contexts. Agglomeration economies have a stronger impact on new firm formation than on the growth of incumbent firms. Concentration and diversity both have a positive effect on new firm formation as well as on the growth of incumbent firms, while competition only has a positive effect on new firm formation. It is especially the effects of industrial diversity that are revealed to be sensitive to urban contexts: positive effects on new firm formation are attached to the connected cities and to the highly urbanized Randstad, and positive effects on firm growth to the intermediate zone, the connected cities and urban municipalities. Oort, F.G. van Stam, F.C. http://repub.eur.nl/res/pub/6927/ 2005-09-16T00:00:00Z Network shares and retail prices are not symmetric in the telecommunications market with multiple bottlenecks which give rise to new questions of access fee regulation. In this paper we consider a model with two types of asymmetry arising from different entry timing, i.e. a larger reputation for the incumbent and lower cost of servicing for the entrant as a result of more advanced technology. As a result firms have divergent preferences over the access fee. In case of linear and non-linear prices the access fee might still act as the instrument of collusion, but only if a side-payment is permitted which is generally welfare decreasing. Moreover, in contrast with the European regulatory framework, the access fee on the basis of termination cost might not necessarily be a socially preferable solution. Kocsis, V.