Fabio Arcangeli, Paul David, Frank Engelman, Christopher Freeman, Massimo Moggi, Richard Nelson, Luigi Orsenigo, Nathan Rosenberg, Michele Salvati, G. N. von Tunzelman, two anonymous referees, and the participants at the meeting of the Committee on Distribution, Growth, and Technical Progress of the Italian National Research Council (CNR), Rome, November 16, 1985, have helped with various redraftings. A particularly grateful acknowledgment is for the insightful and patient help of Moses Abramovitz. This work has been undertaken at the Science Policy Research Unit (SPRU), University of Sussex, as part of the research program of the Designated Research Centre, sponsored by the Economic and Social Research Council (ESRC). Earlier support to the research that led to this paper by the Italian National Research Council (CNR) is also gratefully acknowledged. The statistical research has been undertaken with the assistance of Stephano Brioschi, Ilaria Fornari, and Giovannu Prennushi.

https://www.jstor.org/stable/info/2726526

Sources, Procedures, and Microeconomic Effects of Innovation

Theory suggests and results show that firm performance is initially positive but eventually levels off and becomes negative as international diversification increases. Product diversification moder...

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International Diversification: Effects on Innovation and Firm Performance in Product-Diversified Firms

This study examined the relationship between the demography of top management teams and corporate strategic change, measured as absolute change in diversification level, within a sample of Fortune ...

Top Management Team Demography and Corporate Strategic Change

Board of director involvement in restructuring reveals whether restructuring is brought on as an action by the board in its central oversight role or whether managers are purusing positive strategic action or correction Therefore, based on an integration of organization economics (agency theory and market for corporate control) and strategic management theory (internal control and strategic leadership contingencies), this research examines board involvement in restructuring Board involvement is hypothesized to be contingent on the governance mechanisms used by the board to monitor top management, control emphasis used by managers to process strategic information and board and managerial characteristics The basic premise of the paper is that, due to their oversight role, board members (especially outside directors) become involved in restructuring only when managerial strategy implementation appears to be deficient Top management team equity stakes are found to be negatively related to board involvement in restructuring, while outside director ownership is found to be positively related Emphasis on strategic controls by managers was found to be negatively related to board involvement in restructuring Top management team tenure and top management organizational tenure are negatively related to board involvement Outsider representation on the board is positively related to board involvement in restructuring, while board tenure was found to be unrelated Results imply that incentives to monitor (ownership) and emphasis on strategic controls reinforced by higher top management team tenure result in less board involvement in restructuring However, restructuring may be initiated by outsiders on the board when other governance and control mechanisms fail This implies a substitution process between governance tactics (ownership vs board monitoring) and internal controls (managerial vigilance)

Board of director involvement in restructuring: The effects of board versus managerial controls and characteristics

What do we know about entry

In our article published in this Review (volume 78, no. 5, December 1988, pp. 1133–37), we have shown that in the presence of sufficient spillovers of the R&D benefits, duopolists, cooperating in R&D but not in the output, spend more on R&D than noncooperating firms at both stages, and also produce more output, closest to the socially optimal level. A second symmetric result is that for small spillovers, duopolists cooperating neither in R&D nor in output spend more on R&D and produce more output than cooperative firms. However, this result has been obscured by an obvious inequality inversion and other typos implying a modification in the conclusions. Indeed in fn. 13 on p. 1135 one should have that x > x∗ iff

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Cooperative and Noncooperative R&D in Duopoly with Spillovers : Erratum

Contrary to the usual assumption made in most oligopoly models, relations among firms are seldom of a wholly cooperative or noncooperative type: in many situations, they compete in some fields, while they cooperate in others. An important example is the case of cooperative research efforts bringing fierce competitors together. Two types of agreement are observed. First R&D cooperation can take place at the so-called “precompetitive stage”: companies share basic information and efforts in the R&D stage but remain rivals in the market-place.1 A second type of agreement involves an extended collusion between partners, creating common policies at the product level. The usual justifications of this extension are the difficulties of protecting intellectual property. The idea is then to allow partners who have achieved inventions together, to also control together the processes and products which embody the results of their collaboration, in order to recuperate jointly their R&D investments.2 What could be expected from these types of agreement is a reduction in R&D expenditures, because of less wasteful duplication, and a reduction of total production, because of more ∗Reprinted from The American Economic Review, 78(5), 1133-1137, 1988. †Center for Operations Research & Econometrics, 1348 Louvain-la-Neuve, Belgium. We are grateful to Jean

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Cooperative and Noncooperative R&D in Duopoly With Spillovers

During the past decade or more, a number of authors have proposed (and applied) a number of measures of corporate diversification. These have ranged from simple counts of the number of products to measures which assign various weights to the relative importance of each product within the corporation's total product mix.1 For the most part, these measures have direct counterparts in familiar measures of industrial structure. For example, Michael Gort [5] defined, as one measure of corporate diversification, the ratio of the firm's sales within the firm's primary industry to the firm's total sales. This is the equivalent (within the firm) of the primary product specialization ratio reported for 4-digit industries by the Bureau of the Census. A variation of Orris Herfindahl's index of industrial concentration-the sum of the squared shares of each product's contribution to the firm's total output-has been used by one of the authors of this paper [i], [2]. Others have suggested the application to corporate diversification of what has come to be called the entropy measure of industrial concentration.2 There is no axiomatic analysis or general model of diversification which suggests the advantage of any single index; at this stage it is therefore appropriate to ask which particular index performs best empirically. This note outlines a theme common to all these measures, identifies a major advantage of the entropy measure in the analysis of corporate diversification, and provides some comparative applications of the entropy measure and of the Herfindahl index to 460 of the largest US manufacturing corporations.

Entropy Measure of Diversification and Corporate Growth

The gains from cartel formation and the stability of a dominant cartel are investigated for the price-leadership model. We show that there is a general interest in the establishment of a cartel with the competitive fringe reaping a disproportionate share of the benefits. In contrast to results involving a continuum of firms, with a finite number of firms (each with the same cost curve) there is always a stable dominant cartel. A propos de la stabilite d'une structure de marche caracterisee par la collusion de firmes dominantes pour etablir un leadership de prix. Le memoire etudie les gains derives de la formation d'un cartel et la stabilite d'un cartel dominant dans le cadre d'un modele de leadership de prix de la firme dominante. On montre qu'il y a un int6ret general a creer un cartel meme si les firmes satellites A la peripherie du cartel ramassent une part plus que proportionnelle des benefices. Contrairement a ce que l'on observe quand on est en presence d'un continuum de firmes, quand leur nombre est fini chacune avec la meme courbe de couts il y a toujours un cartel dominant stable.

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On the Stability of Collusive Price Leadership

This paper is concerned with modeling the movements in profits of firms over time At the heart of the emp irical model is a latent variables problem which arises from the fact that entry and imitation do not actually have to occur to have an ef fect on profits A solution to this problem is explored, and then emp irical results are presented comparing a sample of firms from the Uni ted Kingdom, France, and West Germany Copyright 1988 by Royal Economic Society

https://www.jstor.org/stable/info/2233373

Alexis Jacquemin

Papers

Cooperative and Noncooperative R&D in Duopoly with Spillovers : Erratum

Cooperative and Noncooperative R&D in Duopoly With Spillovers

Entropy Measure of Diversification and Corporate Growth

On the Stability of Collusive Price Leadership

The Persistence of Profits - a European Comparison