Knowledge that Transforms

Secondary production is defined and its role in the estimation of an extended vertical market model b examined. Two impacts on the subject industry are identified, called primary product dominance and primary product focus. A simultaneous equations model consisting of a profit equation and two secondary production equations is estimated using data from the interindustry transactions accounts. The profit equation captures the impact on industry profit of secondary production and of extended market structure. The dominance equation captures the relationship between secondary production and industry profit and scale of production. The focus equation captures the relationship between secondary production and industry profit and excess capacity. The model is estimated for all industries, and the common specification is then applied to industries grouped by type.

The paper reviews two streams of work on the issue of industrial regeneration and competitiveness–that from within the management research field, and that from economists, economic historians, and political scientists. It is argued that these streams have in the past been independent but there is much to be gained by sharing insights from each and applying them to the process within firms of generating competitiveness for that firm. By using insights from the newly emerging institutionalist school it is possible both to explain national differences in competitiveness and generate useful ideas for the managers of individual firms. The paper ends by setting out a research agenda, applying the insights from institutional analysis, for furthering our understanding of the strategic processes available to managers for regenerating and enhancing the competitiveness of the individual firm.

This paper uses a transactions cost perspective to examine the development of organizational tendencies that plague the governance of unregulated subsidiaries by regulated parent companies. By focussing on what Williamson (1985) calls the ‘incentive limits’ of firms, conditions that should exacerbate the problems facing these firms as they diversify are identified. Empirical testing of hypotheses drawn from this discussion is conducted using a sample of nonutility, nonregulated subsidiaries of 54 electric utilities. The analysis, using both linear regression and event history methods, confirms the connection between the characteristics of the regulated parent company and subsidiary performance. The paper concludes with a discussion of how further research might extend the state of knowledge on the topic of the economic losses of bureaucracy.

U.S. exporters of high‐technology, ‘dual‐use’ products are competitively disadvantaged in global markets by the complexity, range, and stringency of U.S. national security export controls. This paper demonstrates that fungibility of high technology and lax interpretation of multilateral export control agreements by other advanced countries have made the existing control regime ineffective. It further shows that persistent U.S. restrictiveness of exports in non‐critical, widely available goods and technologies may needlessly and permanently erode U.S. firms' competitive position in existing as well as rapidly‐opening markets worldwide. The need to revise the notion of national security to include not only military security, but also its complement, economic security, is discussed. The pivotal issue of enforceability of multilateral controls is explored, and corporate strategies for U.S. high‐tech firms to achieve export control policy change are suggested.

A decade of observed large differences in productivity driven competitive advantage cannot be explained by traditional productivity notions or conventional strategic analysis. We conclude on both empirical and theoretical grounds that most traditional sources of productivity have encountered diminishing marginal returns. Large competitive differences appear to arise from a new productivity source, nonlinear systems dynamics in business organizations. This has both theoretical and practical consequences for managing toward competitive advantage and requires a new approach to management, control, and organization.

A study of first‐mover effects in semi‐submersible oil‐drilling suggests that first‐entrants in international markets maintain higher market share after controlling for market localization and life cycle. Examining only surviving entrants at a point in time inflates this pioneering‐market share relationship. Pioneering has an inter‐market effect on market share, greater than the intra‐market effect. Multinational firms may use market pioneering to resist localization pressures and enhance survival in foreign markets. The study suggests the importance of careful first‐mover identification and market definition, a wider examination of first‐mover effects over multiple markets, and control for measurement timing.

Previous studies investigating the role of locus of control beliefs in relation to strategy‐making behavior, organizational structure, performance and environment have employed the well known Rotter (1966) I‐E scale. Unfortunately, however, this scale is beset by a number of problems which render it unsuitable for studies of business organizations, namely, that the items comprising the scale lack context‐specificity and its well known tendency to correlate with measures of social desirability response set. This paper describes the development of a new measure designed to overcome these limitations. The measure, intended specifically for investigating locus of control beliefs in relation to issues of strategic management, assesses the extent to which respondents regard their own and other organizations' strategic issues to be resolved by the systematic application of strategic management techniques (e.g. environmental analysis, strategic planning, etc) or through external environmental forces (e.g. the actions of powerful competitors, unforeseen chance events, etc) largely beyond the control of organizations. Data is presented from two samples which indicate that the measure demonstrates acceptable reliability and construct validity.

The purpose of this paper is to argue that the destiny of the firm is closely linked to the evolution of product class in the industry and show that product-class evolution is driven by the variation, retention and selection of dominant designs in the context of lumpy markets. The paper demonstrates that business strategy decisions cannot be undertaken without an intimate understanding of the relationship between the firm's technology trajectory and the opportunity space created by lumpiness in the market. The paper identifies where the major choices facing the executive team, and the processes they implement in response, significantly influence the scope direction and quality of technology strategy decisions.