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Acquiring information from outside firms is crucial for a firms’ innovation output. According to the transaction cost perspective, firms can increase the information flow between them by integratin...

We study how the strength of public intellectual property rights (IPR) protection against software piracy (copyright protection) affects private IPR protection (that software developers may themselves undertake to protect their IPR). There are two software developers that offer a product variety of differing (exogenously given) quality and compete in prices for heterogeneous users, who make a choice whether to buy a legal version, use an illegal copy (if they can), or not use a product at all. Using an illegal version violates IPR and is thus punishable when disclosed. If a developer considers the level of piracy as high, he can introduce a form of physical protection for his software or digital product. The main aim of our analysis is to study how the level and the change of public IPR protection affect the pricing and IPR protection strategies of software developers. In particular, we are interested in establishing when the two forms of IPR protection (public and private) are complements to each other, when are they substitutes and when a change in public IPR has no impact on private IPR protection.

Author(s): Kahrl, Fredrich; Kim, Hyungkwan; Mills, Andrew D; Wiser, Ryan H; Crespo Montanes, Cristina; Gorman, Will | Abstract: Variable renewable energy (VRE) is not yet meaningfully participating in U.S. ancillary services (AS) markets. VRE participation in AS markets could provide a new source of revenues for VRE resource owners to offset declining energy and capacity values and a new tool for power system operators to address emerging system constraints. This paper uses a price-taker dispatch model and historical prices to estimate the economic value of standalone and hybrid (battery-paired) VRE participation in AS markets, from resource owner and electricity system perspectives, in each of the seven U.S. independent system operator and regional transmission organization (ISO/RTO) markets. Across ISO/RTO markets, average (2015-2019) simulated incremental revenues from regulation market participation were $0.0-2.9/MWh (+0-15% of revenue without participation) for standalone VRE owners and $1-33/MWh (+1-69%) for hybrid VRE owners. However, ISO/RTO reserve markets are relatively thin and have the potential to become saturated by energy storage projects that are currently in ISO/RTO interconnection queues. In most markets, standalone and hybrid VRE were able to provide regulation reserves during periods with high regulation prices, suggesting that VRE participation in AS markets could have high system value. The analysis highlights the value of separate upward and downward regulation products and suggests that ISOs/RTOs might consider initially focusing on enabling hybrid VRE provision of AS.

Energy efficiency investments are essential for transitioning to a carbon-neutral economy. Nevertheless, many energy efficiency investment opportunities do not materialise. The existing literature attributes this situation to financial and non-financial factors. Research suggests that many firms focus only on direct energy savings and neglect non-energy benefits that include increased labour productivity. Up to date, due to lack of high-quality data, few studies attempted to quantify the effects of the energy efficiency investments on firm-level outcomes other than the reductions in energy consumption. This paper overcomes this barrier by using novel data from a firm-level survey conducted by the European Investment Bank that covers more than 15,000 firms in 27 European Union member states and the UK during 2018-2019. It studies the relationship between the energy efficiency investment and the labour productivity of the European firms, utilising instrumental variables methodology to account for potential endogeneity. The results show a positive and causal relationship between energy efficiency investment and labour productivity. The findings of the paper suggest that firms can benefit much more from the energy efficiency investment than what is often assumed, and highlight a need for government policies that would increase firms’ awareness of the non-energy benefits.

Spurred by the success of the IBM PC, in the early 1980s, a new form of organization—the digital platform ecosystem—became common in all industries that used digital technology. Digital platform ecosystems were vertically distintegrated organizations, characterized by distributed governance, modularity, and openness. In contrast, semiconductor firms, which were subject to the same rate of technical change as platform ecosystems, remained vertically integrated to a large degree. The purpose of this chapter is to explain this difference in organizational evolution and outcomes. I argue that the technology of the planar process, which made possible high rates of technical change for downstream users, simultaneously rewarded the creation of large-scale flow production processes that became more integrated over time.

The natural gas supply of the Eastern European countries located between Germany and Russia has always been problematic. A historical reliance on Russia has been eased by increased connectivity to the West. Recent developments may lead to a diversified source but via a single supply route, which, in the light of the 2017 Baumgarten explosion, may introduce another type of risk. We propose a novel framework to measure the supply security of natural gas networks, combining a linear programming approach with a risk assessment technique borrowed from finance which measures supply security in European countries. The expected shortfall (ES) is currently the best practice for risk measurement recommended by one of the most important international financial regulators, the Basel Committee on Banking Supervision. ES assigns risks by looking at a fraction of the worst cases of supply disruptions. The latter is modelled as the change in the optimal network flow in the case of one of the pipelines falling out due to certain incidents. Several network configurations are considered along with seasonal scenarios corresponding to the difference in the availability of gas from storage facilities. We find that the construction of Nord Stream 2, that is, doubling the capacity of the direct connection between Russia and Germany alleviates the gas shortage problem if the connection via Ukraine is shut down, otherwise, the construction increases the risk for Eastern Europe.

Problem Definition: Smart contract improves the supply chain efficiency by enabling the supplier's commitment to post-shipment financing that mitigates the bank's lending risk exposure and thereby reduces the financing cost. Invoice trading offers better liquidity and faster transaction speed, which allow the supplier to make the post-shipment financing decision upon liquidity shock in contrast to factoring market. This paper investigates how these two types of FinTech adoptions could facilitate the trade finance activities and create value for supply chain firms. Academic/Practical Relevance: As the emerging FinTechs could potentially reshape the trade financing landscape, understanding the impact of FinTech adoption and its interaction with trade finance activities is practically relevant and of great importance. Methodology: We develop a two-stage game-theoretic model and adopt supply chain finance theory to characterize firms' operations and financing strategies in the presence of various FinTech applications. Results: We find that the value of FinTech adoption depends critically on the trade financing structures, including both pre-shipment and post-shipment financing schemes. Under the baseline trade finance model (with purchase order financing and traditional factoring), smart contract leads to win-win outcome for the supplier and the retailer. When buyer direct financing is adopted for pre-shipment financing, smart contract might demotivate the retailer to offer buyer direct financing, which benefits the retailer but significantly hurts the supplier and therefore reduces the supply chain profit. When on-demand invoice trading is adopted for post-shipment financing, the supplier and retailer profit are increased due to its flexibility. However, it completely wipes out the value of smart contract since there exists no commitment issue. Lastly, though supply chain digitalization facilitated by FinTech helps lower the financing cost, it might either hurt the supplier or the retailer. Managerial Implications: Our findings provide guidelines for and insights into when smart contract and invoice trading should be adopted and their interactions with different trade finance schemes. In particular, such FinTechs do not always enhance the supply chain value.

[Blockchain technology has attracted global attention due to its capabilities in protecting data security and traceability. This has driven the development of practical applications in various fields, particularly in management science, transport and logistics, and supply chain management. Initial coin offerings (ICOs), an emerging start-up fundraising method developed with blockchain technology, are now popular among start-ups that issue initial tokens as the sole exchange medium for their planned products. In addition to the general ICO, the pre-ICO stage is an important phase of many ICO projects. This paper establishes an ICO model with network effects, a common phenomenon in ICOs, to study the effect of institutional investors' participation in the pre-ICO stage of offerings made by cash-strapped entrepreneurs. We find that introducing institutional investors helps mitigate the financing pressure and maintain the total amount of tokens in circulation at a relatively stable level when the initial investment is relatively high. Meanwhile, introducing institutional investors significantly increases the equilibrium price of tokens during the public offering stage and increases the price fluctuation of tokens over time. In addition, we find that the entrepreneur will over-issue tokens when the intensity of network externality is relatively high. Furthermore, we investigate the effect of the entrepreneur's private quality information over the consumers. We find that an entrepreneur that expects high product quality in the future may give up public offering because signaling quality by introducing institutional investors may be inefficient.]

Our study addresses whether integrated report quality, IRQ, is positively associated with greater price informativeness and the extent to which the greater price informativeness is diminished when firms have higher proprietary costs of disclosure. In integrated reports, firms integrate financial and non-financial information to explain how it uses financial, manufactured, intellectual, human, social and relationship, and natural capitals to create value. Financial statements and sustainability information are key to integrated reports. Based on firms in South Africa, which mandates integrated reporting, we find IRQ is significantly negatively related to synchronicity, and, thus, positively related to price informativeness. This finding indicates higher quality integrated reports enable investors to make more informed decisions and, thus, allocate capital more efficiently. All twelve IRQ components are negatively associated with synchronicity, eleven significantly so. Thus, most dimensions of IRQ, and integration of financial and non-financial information, including sustainability information, contribute to greater price informativeness. Synchronicity and IRQ are significantly less negatively related for firms with higher proprietary costs, particularly costs associated with growth opportunities and intangible assets. For firms with these costs, IRQ is insignificantly associated with synchronicity. Our study informs the rapidly changing standard-setting landscape for integrated financial and non-financial information, particularly sustainability information.

New regulations promote the role of Central Counter-Parties (CCPs) as insurers of counterparty risk to stabilize derivative markets. Whereas the US favors monopolistic CCPs, the EU promotes the coexistence of several CCPs for a given asset class. In this paper, we shed light on the competition between CCPs. We start by reviewing their business model and gather public data to show how they differentiate on several dimensions: geographic, product line, and quality. We then study how pairs of dealers choose the CCP on which they clear a given transaction. For that, we use transaction data on three main CDS indices and focus on major dealers who are members of the two main CCPs clearing these indices. We find that differences in transaction size, two indicators of CCP's robustness quality, and market volatility affect this choice but not the collateral costs, proxied by the dealers' positions.

The paper proposes an architecture for implementing the Bank of England's basic principles for the design of a CBDC with a focus on real-time high value, often cross border, enterprise transactions. The use of digital ledger technology makes innovative use of chaincode - smart contracts specifying how transactions are to be conducted - and tokens - providing a convenient mechanism for executing transactions and providing the CB monetary policy management. The proposed approach minimizes counterparty risk, eliminates settlement risk, and enhances transaction efficiency, thereby improving global productivity.

This article characterizes the Herfindahl Hirshman Index and its use by the Department of Justice and the Federal Trade Commission of the United States, in their Horizontal Merger Guidelines. The characterization maps ranges of the index with the level of market concentration and its changes due to horizontal mergers and acquisitions, in terms of the number of firms operating in the market and the market share of the largest active firm. The article aims to provide alternative and graphic approaches that may contribute to analyze horizontal mergers and acquisitions in an easier and expedited way, from a market concentration perspective and before there are any changes in strategic interactions or market equilibria.

With an increasing share of global commerce taking place in digital form or facilitated by digital platforms, it is becoming increasingly important to update the rules-based framework to accommodate and enable the development of the intangibles-based data-driven economy while reconciling the security, privacy and other regulatory issues associated with the flow of data across borders and the application of the new general-purpose technologies of machine learning and artificial intelligence. The development of norms, standards and operational protocols for e-commerce, digital platforms, cloud services and digital products more generally is proceeding apace in various fora, and the most comprehensive template for a trade agreement tailored for the digitally transformed economy is provided by the Digital Economic Partnership Agreement (DEPA). However, numerous areas remain under-developed and the interface with non-economic issues remains to be articulated. This brief sets out the rationale for Canada to join the existing agreement between Chile, New Zealand and Singapore, and outlines the areas where further development of the agreement is particularly needed. Joining the DEPA at an early stage would give Canada the opportunity to participate in the development of this agreement in a way that meets the needs of the small, open economies as well as help to mitigate the extent to which DEPA could limit future Canadian domestic policy space to adopt new laws and regulations to protect privacy, prevent algorithmic bias, protect critical infrastructure, ensure national security or promote domestic innovation. DEPA can also become a template for a much larger agreement, including possibly for the World Trade Organization itself. This brief sets out the rationale for Canada to join the existing agreement between Chile, New Zealand and Singapore, and outlines the areas where further development of the agreement is particularly needed.

In some labour markets, firms and workers are constrained to match with each other via intermediaries that mutually connect them. We study these markets via a model that synthesises tripartite matching with a `trading network' feature, by formulating a simple agency game in which intermediaries first make offers to connected firms and workers, and then firms and workers accept at most one of these offers. We identify restrictions on preferences of intermediaries that restore stability and side-optimality to equilibrium outcomes of the agency game. Our results shed light on the implicit restrictions imposed on clearinghouses in standard two-sided matching models. They also have implications for the design of decentralised recruitment markets.

Funding Information: We thank two anonymous reviewers and associate editor, Prof. Hean Tat Keh, for their constructive feedback and valuable comments, which remarkably improved our study. Data for this study were collected in several research projects over the years. We therefore thank all our research partners who have participated in data collection during these projects, including Dr Katri Kallio, Mikko Riikkinen MSc, and Dr Kaisa Still, in the Redefining Digital Opportunities project (2015?2017) funded by Business Finland, and Professors Maria Holmlund and Tore Strandvik from Hanken School of Economics. Publisher Copyright: © 2022 The Author(s) Digitalization and related transformation in services is disrupting existing businesses and changing the positions and roles of incumbent and new players in the industry, as well as customers. This study aims to create an understanding of how digitalization has driven change in customer value creation, and how companies can enhance customers’ digital value creation in the present situation. For this purpose, we conduct a qualitative inquiry and use inductive logic with rich data from the represented industry – the financial sector – which enables us to detect the evolution of value creation during the last thirty years from an executive perspective. Our contribution is based on defining change processes involved in the evolution of customer value creation due to digitalization and revealing its microfoundations.

In this paper we use the tools and frameworks from Oxford University’s postgraduate diploma in financial strategy to study the performance and benefits of algorithmic trading strategies (algos), and specifically those that use artificial intelligence (AI) and machine learning (ML). We discover using valuation theory from (SBS2, 2020) that algos generate superior returns compared to human discretionary trading both in normal market conditions and during large market drawdowns, such as during the coronavirus (COVID-19) pandemic. Furthermore applying financial strategy techniques from (SBS1, 2020) we find that algos could be combined with existing core competencies at my organization RUS1 to create a sustainable competitive advantage and give RUS an edge over its competitors. Finally considering M&A growth strategies from (SBS4, 2020) we conclude that for RUS algorithmic trading capabilities would be best acquired taking an organic approach as an inhouse build approach would be both cost-effective and allow for a more customized and bespoke integration. Even if only a fraction of the potential benefits are monetized, algo trading could have a significant positive impact on earnings, which in turn would allow for reinvestment to facilitate sustainable growth and maintain a sustainable competitive advantage.

In this paper we study the effects on mobile market outcomes from three specific attributes linked to a flexible spectrum policy: the presence of a secondary market for spectrum trading, a technological neutrality approach, and the possibility of conducting sharing agreements among operators. In terms of market outcomes, we identify four possible variables: capital investment, network coverage, service pricing, and adoption. After designing a precise causal approach linking the above-mentioned variables, we were able to identify a significant impact on the four independent variables from the spectrum policies. When those three policies are jointly adopted, mobile capital investment is 35.9% larger than when that is not the case. In addition, promoting these policies can increase network coverage by 9.8% after two years, bring down mobile broadband prices by -5.8%, and increase mobile broadband unique subscribers’ penetration by 0.9%. When we consider a wider period of 5-years, dynamic effects take over, resulting in mobile broadband prices being reduced in -14.3% and mobile broadband unique subscribers’ penetration potentially increasing in 2.4%. These results were verified to be robust after the addition of control variables and when controlling for potential endogeneities associated to these causal frameworks. In sum, we believe, based on this evidence, that a flexible approach towards spectrum management that allows for secondary trading, technological neutrality and network sharing can contribute significantly to the development of the mobile sector, thereby maximizing socioeconomic welfare.

Scholars have examined the persistent heterogeneity of firm performance from the entry-order effect perspective. In the international business literature, this perspective has been highlighted in research on early internationalization (i.e., the born global strategy). While prior work has focused on the heterogeneity of firm characteristics and capabilities, we present a demand-side view of early internationalization by focusing on network effects. Prior theoretical work on network effects has predicted that when network effects are prominent, survival is challenging for latecomers because of the installed bases of first movers in the global market. However, we see many cases, such as the mobile instant messenger (MIM) market, where no single winner dominates the global market and where many latecomers have survived by implementing early internationalization. We build upon Brian Arthur’s model of demand-side dynamics. The findings suggest that latecomers may overcome their disadvantages by pursuing early internationalization, especially when the direct network effects (i.e., social network effects) are stronger than the indirect network effects (i.e., installed base effects). The underlying rationale is that country borders often demarcate the reach of the direct network effect, limiting the power of installed bases.

How do firms’ IP strategies respond to sudden increases in product-market imitation? Using a 2001 technological shock that enabled rising software piracy, we implement an instrumental-variables estimator to compare a treatment group of at-risk-of-piracy firms with matched not-at-risk control firms. We find that rising piracy increases subsequent R&D spending, copyrights, trademarks, and patents for large, incumbent software firms. Furthermore, copyright and trademark filings precede those of patents, and firms with large patent portfolios disproportionately increase copyrights and trademarks following the shock. We conclude that piracy and similar competitive shocks push firms to innovate to stay ahead of imitator products, and that this effect is moderated by their existing patent portfolios. Our findings have implications for managers seeking to capture value from IP in knowledge-based industries.

Using Spanish confidential supervisory data, this paper examines the effect of geographic and business complexity, their interaction and relative importance for banks’ risk, where the degree of complexity stems from the corporate structure of banking groups affiliates. The results show that while business complexity results in higher risk, geographic complexity gives rise to diversification benefits, thus lowering risk. However, geographic complexity alone is not enough, as its effect depends on how it interacts with business complexity. Higher business complexity abroad in relation to that at home may counterbalance the benefits of diversification. In the same vein, focusing abroad on areas in which the group does not have expertise at home also results in higher risk.

“Equipment as a service” is perhaps one of the most drastic examples of usage-based business model innovation (BMI) in the field today. To date, a systematic analysis of this phenomenon is lacking. This study aims to close this gap and develops a primer for usage-based BMI. Drawing on BMI theory and expert interviews, our contribution is three-fold: We clarify (1) why firms move towards usage-based business models, (2) what the main usage-based business model archetypes are, and (3) how shifting to these archetypes impacts business model components and innovates the business model. Our analysis identifies macro- and firm-level supply- and demand-side drivers and inhibitors which lead to four main usage-based business model archetypes: “Leasing Plus”, “Flexible Contracting”, “Renting/Sharing”, and “Performance Contracting”. The most radical model in terms of its supply-side risk-return profile is “Performance Contracting”. Evidence suggests that two groups of firms are particularly drawn to usage-based models: Firms in “young”, tech-enabled industries and firms in more mature or even declining industries. The former apply usage-based models as a proactive effort to push their products into the market. The latter do so as a defensive move to secure their market position and not lose customers with liquidity problems. Digitalization is likely to reinforce these developments.

The paper examines the characteristics of Broom, a startup/community service that I co-founded. Broom was developed as a startup that provided a domestic help service, however, it never made it to the market. Hence I converted it to a community service where I help connect domestic helpers to potential employers (mostly household owners). In this paper, I have analyzed and evaluated various literature presented on market structures and efficiency. First I read about how market supply and demand affect efficiency, then I found out about the importance of human intelligence, and lastly some factors that affect efficiency. I connected and compared the findings to the characteristics of Broom to gauge how efficient Broom is. The findings show that Broom is a continuous double auction market with characteristics such as profit maximization, and price priority that make Broom efficient. However, there are also factors such as non-binding contracts and no or less knowledge of public transaction prices that make Broom in-efficient.

Small and medium- sized enterprises (SMEs) play an important role in each and every economy. SMEs are significant contributors to economic factors such as multidimensional and output growth, employment generation, poverty alleviation, economic empowerment, and export growth can be considered among them (Harvie 2002; Asasen, Asasen, and Chuangcham 2003). According to Abe et al. (2012), SMEs account for more than 95% of private enterprises in Asia and have generated more than 50% of employment. The classification of SMEs differ from country to country. In the United States, SMEs are defined as SMEs in the manufacturing sector having 500 or fewer employees, while those in the trade and wholesale sectors have 100 or fewer employees while Sri Lanka define SME’s as enterprises that must employ fewer than 300 people and generate an annual turnover of less than $4.41 million. The global value chains (GVCs) is defined as the structure of world production consists of highly integrated global and complex networks of firms involved in the production of intermediate parts and components, assembly, and distribution of the final outputs to consumers worldwide. (De Backer, De Lombaerde, and Iapadre 2018). As a results of GVCs the exchange of goods and services leads to a global production network. In the past decade, global supply chain trade has accounted for over 50% of goods trade and almost 70% of service trade (Gurria 2015). The participation in GVCs in SMEs offer many opportunities through creating a new platform to connect to foreign partners. This benefit SMEs in terms of capabilities and competitiveness enhancement, product quality improvement, financial stability, and market expansion. By being involved in GVCs, SMEs can be exposed to new business partners, especially leading global firms. Through this interaction, SMEs can increase their productivity by meeting international standards and requirements while continuously improving product quality through knowledge and technology transfer. But the SMEs involvement in GVCs can be hindered by requirements including the ability to meet international standards, greater managerial and financial resources, and the protection of in-house intellectual property (UNCTAD 2010). G

This paper explores how technology adoption can shape local innovative activity in the context of the early 20th century rollout of airmail in the United States. Our theoretical framework highlights the mechanism of technological feedback and market incentives through which technology adoption induces local innovation, as well as the role of regional domain-specific capabilities in this process. Using our novel dataset of early 20th-century patents, we quantitatively examine these issues by measuring the effect of local airmail upon aviation innovation. Our results suggest that the establishment of an airmail route in a given county led to an increase in local aviation patenting by approximately 32%. Both individual and corporate inventors in treated counties had higher rates of aviation patenting in broad and diverse areas of aviation technology. We also find that the effect of airmail adoption was stronger in the treated counties with pre-existing local capabilities that specifically catered to, or could be readily applied to, the focal technological domain. This work contributes to the academic literature on antecedents and consequences of technology adoption and innovation. Our findings are also relevant for present-day managers and policymakers who are navigating the potential costs and benefits of new technology adoption.

Globalization is regarded as one of the most major factors that led to rapid global economic growth. This has led to the emergence of new technologies and lowered the transferring costs have allowed corporations to expand their operations to nations that have led to world production chains which are known as the global value chains. However, some groups of individuals or firms, or countries have not been able to take the benefits of globalization and small and medium-sized enterprises are one such group. small and medium-sized enterprises have been identified as the backbone of an economy, but several constraints have blocked the global value chains participation by small and medium-sized enterprises especially in developing countries. Thus, this study attempted to investigate the impact of global value chains on the performances of small and medium-sized enterprises in the developing countries of the Asian Region. The study was conducted based on the qualitative research design with the support of secondary data. Five (5) research articles representing four different countries namely; Indonesia, Thailand, Vet Nam, and Sri Lanka have been selected based on the purposive sampling technique. The gathered data has been analyzed qualitatively by using descriptive analysis. Accordingly, the study concluded that there are several constraints with SMEs in global value chains participation, especially in developing countries. But if they can overcome those constraints and able to participate in global value chains, they can be able to increase the performances of the small and medium-sized enterprises and able to achieve economic development.

Towards understanding what makes a cartel successful, this chapter examines a variety of collusive practices with an eye to how they vary in their efficacy in establishing and sustaining supracompetitive prices and in the legal risk they create for firms. Four conditions for cartel success are reviewed and illustrated with numerous cases. First, firms must achieve a common understanding not to compete and how they are not to compete (coordination condition). Second, a cartel must adopt a collusive arrangement that incentivizes its members to comply (internal stability condition). Third, a cartel must tame the possible expansion of supply by firms not members of the cartel (external stability condition). Fourth, a cartel must avoid detection and penalization by the competition authority and customers (enforcement condition). Also discussed is the efficacy-exposure trade-off which recognizes that practices that are more effective for collusion also tend to come with more legal exposure.

We examine the effect of a firm’s customer-base concentration on two types of firm innovation: radical versus incremental innovation. Drawing on theories of resource dependence and resource allocation, we predict that dependence on major customers will lead a firm to make less investment in radical innovation and more investment in incremental innovation. We test our hypotheses with a sample of 13,546 firm-year observations between 1976 and 2010. We find strong support for a positive association between customer-base concentration and incremental innovation and weak support for a negative association between customer-base concentration and radical innovation. These results hold after controlling for spillover effects from major customers’ innovations. Furthermore, we find that these associations are stronger when a firm faces greater financial constraints and has higher investment irreversibility. Collectively, our results are consistent with major customers shaping firms’ innovation resource allocation decisions.

The CERRE Report makes recommendations to make the Digital Markets Act, recently proposed by the European Commission to regulate large digital platforms, more resilent and effective. To do so, the report, recommends (1) more clarity on the objectives of the DMA, specifically the meaning of contestability and fairness: (2) focus scope to minimise the risks of over and under inclusiveness; (3) a better balance between the ‘administrability’ and flexibility of the DMA; (4) more room and mechanisms within the DMA for learning-by-doing in order to optimise regulation of digital markets in the long run and (5) a role for national authorities in supporting the Commission through their knowledge of local conditions, proximity to businesses and expertise in designing remedies.

In this paper, we examine the determinants and consequences of adopting cloud computing technologies. Using text-based measures of cloud computing and business strategies obtained from 10-K filings, we show that firms focusing on a product differentiation strategy are more likely to adopt cloud computing technologies. We also document that the contemporaneous stock market values the adoption of cloud computing positively. This positive valuation is higher for firms adopting a product differentiation strategy than for those adopting a cost leadership strategy. We further show that cloud-computing-adopters focusing on a product differentiation strategy earn higher future excess returns than those focusing a cost leadership strategy, suggesting that investors fail to fully recognize the value created by cloud computing technology adopted by differentiators. Additional analyses suggest that cloud-computing-adopters with a differentiation strategy exhibit an increase in return on asset and profit margin, while those adopters with a cost leadership strategy do not experience such an improvement. Overall, our study suggests that a company’s strategic positioning affects the adoption decision and the value implication of cloud computing technologies.

The development of e-commerce has greatly facilitated the practice that suppliers encroach upon the retail realm of downstream retailers through direct channels (e.g., online stores). The literature in this area has investigated profit-maximizing firms, but the role of other organizational structures is not well understood. This paper studies supplier encroachment in which the retailer is a dual-purpose corporation that pursues his own profit as well as consumer surplus. We find that the retailer's pursuit of consumer surplus can not only intensify market competition and thus reducing the margin of direct selling, but also motivate the encroaching supplier to set a higher wholesale price compared with the case of no encroachment, which is a contrast to the case of a for-profit retailer where encroachment lowers the wholesale price. The presence of a dual-purpose retailer reduces the effectiveness of using the wholesale price as a lever by the supplier. Therefore, encroaching upon a dual-purpose retailer can hurt the supplier. We examine whether a retailer can benefit from being a dual-purpose corporation and how the retailer's dual objectives affect consumer surplus. We find that a dual-purpose retailer can earn a higher profit than a for-profit retailer as the dual-purpose structure helps deter encroachment. Counterintuitively, we find that consumer surplus in the case of a dual-purpose retailer can be lower than that with a for-profit retailer. This is because the commitment to be a dual-purpose retailer reduces supplier encroachment and thus reduces the total quantity sold to consumers.

The article presents the cooperation model -Science_Education_Business_Power- based on “Smart specialization“ principle emphasizing the possibilities for its application and implementation. The successful functioning model of an organization, especially in the current situation, is partnerships based on the principles of smart specialization. The collaboration aimed at increasing innovation potential should be implemented by components – the educational and research sector, the real sector, the business sector, the government sector and the public sector

Hiring employees from high-performing rivals is a common channel for transferring knowledge and enhancing firm’s capabilities. But while the literature on learning-by-hiring posits that new knowledge can be a powerful source of improvement and rejuvenation for a firm’s knowledge stock, evidence for whether firms actually benefit from hires with knowledge that is very distant from their own is mixed. With the help of a computational model, we explore how the knowledge distance of a new hire shapes the benefits of learning-by-hiring. The analysis of the model allows us to reconcile opposite findings and predictions found in the literature and provides further nuance to our understanding of this important phenomenon. Specifically, we show that knowledge complexity has a critical impact on the benefits of hiring an employee with distant knowledge. We also show that the level of refinement of the hiring firm’s knowledge shapes benefits from hiring, and we identify the mechanisms responsible for these outcomes.

Online service platforms that enable customers to connect with a large population of independent servers have been successfully developed in many sectors, including transportation, lodging, and delivery, among others. We ask a basic, yet fundamentally important, question - who should set the prices on the platform? The platform or the servers? In addition to regulatory implications for the classification of the workers on the platform as either employees or contractors, this choice influences the degree of competition among servers, and in turn determines both the amount of supply available and the overall attractiveness of the platform to consumers. We find that when the platform uses a simple commission contract to earn revenue, the price delegation decision depends on the importance of regulating competition among the large population of servers relative to the value of allowing servers to tailor their prices to their privately known costs. The same tradeoff exists in fully disintermediated platforms, such as those enabled with blockchain technology. However, merely adding appropriate linear quantity discounts or surcharges to the basic commission contract maximizes the platform's revenue and allows all participants to enjoy the benefits of both centralized and decentralized control of prices.

Numerous studies have estimated the technical efficiency and productivity of vertically integrated national and private oil companies in a global context. However, the specialized companies operating in the upstream and downstream segments of the petroleum industry have received scant attention, despite their growing importance. Additionally, few studies have decomposed the performance of integrated companies in the upstream and downstream segments. This study develops a model for computing the technical efficiency and productivity of specialized and integrated companies operating in the upstream and downstream segments of the petroleum industry. Additionally, we sub-categorize the specialized and integrated companies into private and national oil companies (NOC) to compare their performance. For the period 2007-2019, the study sample includes 53 specialized and 29 integrated companies in the upstream segment, and 30 specialized, and 26 integrated companies in the downstream segment. We apply the bootstrapped non-concave meta frontier model to estimate technical efficiency and the non-concave meta frontier malmquist index model to estimate productivity. The results indicate that integrated companies have higher technical efficiency than specialized companies in the upstream segment, and specialized companies have higher technical efficiency than integrated companies in the downstream segment. However, specialized companies have higher productivity than integrated companies in both segments. Our model is beneficial to estimate companies' performance in the upstream and downstream segments of the petroleum industry and design privatization or integration strategy.

Firms’ adaptive innovation processes are derived from their swift and flexible responses to environmental changes. Since firms exhibit heterogeneity in their ability to effectively anticipate market moves, some outperform others in developing appropriate innovation processes. Therefore, we posit that firms’ interpretations of a specific type of market information; that is, dynamic competitive landscapes may impact their innovation patterns. Specifically, firms’ innovative activities change their levels of similarity with rivals, thus affecting their competitive relationships. Such a consequence of innovation implies that firms’ understanding of competitive landscapes may be embedded in their innovative decisions for two reasons. First, fierce competition with their rivals, which stems from high similarity among firms, impedes their collaborative opportunities, and thus decreasing their sustainable growth. Hence, firms will strive to explore novel technologies or strategies to reduce their competitive intensities with rivals in this context. Namely, firms will follow innovation patterns that allow them to achieve prompt renewal of their features. Second, excessive cooperation inhibits firms’ rapid growth as it stops firms from obtaining sufficient value and results in failure to survive in changing environments. Due to differences leading to collaboration, firms will slow their exploration of innovations to lower their distinctions with rivals in such conditions. In summary, firms’ predictions of imbalance in competition and cooperation based on their interpretations of competitive landscapes will promote the development of different innovation processes. Subsequently, such strategies will help firms achieve their innovation objectives quickly by catching up with or staying ahead of their rivals. Since competitive relationships between the same pair of firms are likely to vary at different levels, such as the firm and industry levels, such a multi-level structure will also affect firms’ innovation processes. We conducted two experiments on Chinese enterprises and leveraged their empirical results to support our hypotheses. Our findings provide practical implications and possible directions for future research.

The purpose of this working paper is to delineate the correlation between decarbonization and security of supply, and to assess the sequential effect of these notions on the EU’s external gas relations. It first discusses the contribution of the gas sector to the EU’s decarbonization efforts. It then goes on to determine: a) The role of the Union’s external suppliers in today’s liberalized internal market, as well as in the changing reality for natural gas amidst decarbonization developments (independent variables), b) Whether this twofold role prompts the emergence of a new paradigm for the EU’s relations with its key gas suppliers (dependent variable).

Global value chains (GVC) are undergoing a transformation as business focus on building resilience. Services and data are already adding value to GVC, particularly manufacturing GVC. Global data flows and digital technologies such as cloud computing and AI enable growth in digitally enabled service exports and further opportunities to add value to manufacturing GVC. Moreover, services-only GVC are evolving as businesses use digital services and technologies sourced globally. • All countries have some comparative advantage in services and as GVC become increasingly services driven and rely on data, new opportunities for GVC participation by developing country and small and medium sized enterprises (SMEs), are emerging. As manufacturing GVC mature, served used are increasingly being sourced globally as business seek best-in-class inputs to maintain overall competitiveness. Yet, services trade barriers remain high – higher than for goods. In addition, countries are increasingly restricting global data flows and requiring data localization. There is also the risk that divergent standards in areas such as 5G, a technology which will underpin new digital services and GVC, will create additional barriers. Trade policy has an important role to play in supporting growth in services and data in GVC. Trade policy should also priorities addressing barrier to services trade and data flows. The failure of the WTO in further liberalizing services trade has had the perverse effect that for many countries services restrictions are becoming the key barriers to growing trade in manufactured goods. Services trade restrictions are also higher in developing countries, placing them at a disadvantage when it comes to participating in GVC.

In this research paper, it is widely recognized that innovation plays a central role in the competitiveness of companies and countries. Innovation is understood to be the key driver of productivity. Innovation helps businesses improve the way products and services are delivered and delivered, or introduce entirely new ones. The author can say that an entrepreneur is a person who is willing to take risks at his own risk, applying new ideas (production, trade, management) to undertake and implement new economic projects with a profitable orientation. The entrepreneur prepares, implements, and controls his project and usually makes his own decisions.

B2B markets are increasingly shifting toward online channels, but online transactions still only represent only a small fraction of total sales. This creates a hybrid channel, where some products exist in a multi-channel environment and others do not (i.e., offline exclusive, mixed channel, online exclusive). The implication of these hybrid environments on the sales transactions that remain offline is unknown and important strategic question for B2B firms. This paper explores this phenomenon by leveraging a unique market shock where a focal firm introduced an online sales channel for one of its two major product categories. One product category existed in a multi-channel environment whereas the other product category remained exclusively offline. The results demonstrate a critically important B2B phenomenon in regard to transactions; customers exposed to online product category were able to capture key pricing knowledge that allowed them to negotiate lower prices in the offline product category. This effect was exacerbated by customers with more product knowledge. However, the firm was able to win-back a portion of the margin loss by through stronger salesforce capabilities.

Internet technology has broken the boundaries of traditional geographical space, greatly shortened the space-time distance between regions, and maximized the integration of various resources. Therefore, in the era of the digital economy, the rapid development of network information technology, the energy internet and other new forms of the network economy may affect energy consumption. This paper mainly studies how internet development affects China's energy consumption and the associated transmission mechanism. Specifically, this paper constructs an evaluation system of China's internet development level from four perspectives: internet popularity, internet infrastructure, internet information resources and internet application. On this basis, the relationship between internet development and China's energy consumption is investigated and found to be significantly positive; moreover, internet development promotes the energy consumption scale through economic growth. The relationship between internet development and the energy consumption structure is significantly negative, and internet development affects the energy consumption structure through economic growth, R&D investment, human capital, financial development, and the industrial structure. Interestingly, there is also empirical evidence that the nexus of internet development and energy consumption intensity is significantly negative, and internet development helps to accelerate the decline in energy consumption intensity through economic growth, R&D investment, human capital, financial development, and industrial structural upgrading.

In this paper, we study how a profit-maximizing platform implements a new policy, from which a representative retailer also experiences a private externality. Our analysis suggests that: (1) when the policy is highly valuable for the platform’s own interest, the platform may charge a fee from the retailer and then promise a less aggressive policy coverage; (2) when the policy is considerably expensive, in order to implement it, the platform may compensate the retailer and then share the full pie of the latter’s revenue; (3) when the policy is mediocre to the platform, a hybrid occurs, where the platform may either charge a fee from the retailer or compensate to capture a portion of the retailer’s realized revenue. Lastly, we carry out a series of comparative statics to show the impact on policy implementation when the externality distribution and the platform’s self-interest change.

This paper analyzes whether institutional ownership affects the rate and nature of corporate innovation. We explicitly consider the heterogeneity of firm innovation by differentiating upstream scientific research from downstream development using novel scientific publication and patent indicators. Our analysis shows that greater presence of institutional owners has a negative impact on long-term oriented scientific research, whereas there is no effect on downstream inventions. Consistent with a short-term orientation of institutional owners, we further show that scientific research is associated with lower short-term operating performance but higher long-term firm value. These findings support the view that capital markets in general, and institutional owners in particular, can induce myopic firm behavior.

Pharmaceutical markets are complex. Multiple agents, including doctors, insurers, and pharmacies, play critical roles that affect competition between manufacturers and patient choice between drugs. This complexity, however, is neglected in standard antitrust analysis. In evaluating proposed mergers, the antitrust agencies have focused almost exclusively on whether the merging firms have potentially competing products in specific drug markets in the firms’ portfolios. If they do, the remedy sought in nearly every case is divesture of the overlapping products. A recent comprehensive report by the American Antitrust Institute (AAI) found that between 1994 and 2020, the Federal Trade Commission (FTC) “challenged 67 drug mergers worth over $900 billion, moved to block only one, and settled virtually all of the remainder subject to divestitures.” As AAI explained, the result of this narrow focus on drug-specific markets has been “the swapping of assets within a relatively small group of large and increasingly powerful firms.” This Essay examines the inadequacies of the traditional merger analysis by evaluating the firm-wide effects of mergers, particularly those involving large firms. By focusing on individual product markets in isolation, the agencies ignore the advantages of overall firm size and the potential for spillover effects across product markets. Size, reflected in a firm’s number of products and sales value, conveys significant advantages in negotiations, marketing, and financing that a large firm can exploit to impede entry and thwart competition in multiple drug markets. Mergers and acquisitions (hereinafter “mergers”) involving large firms exacerbate these size advantages. But they are ignored in the standard antitrust analysis that focuses narrowly on increased concentration in individual drug markets to determine whether – as the Clayton Act provides – the merger threatens to “substantially lessen competition.” After examining all 67 pharmaceutical mergers the FTC challenged between 1994 and 2020, AAI concluded that the largest companies “have grown through hundreds of mergers and acquisitions.” In this Essay, we first document the stability of leading firms in the pharmaceutical industry and contend that mergers, not innovation, have enabled these firms to maintain their industry dominance. We then identify three characteristics of prescription drug markets that lead to advantages related to overall firm size. First, insurance and reimbursement create size advantages in negotiations for formulary placement and pricing. Second, size conveys benefits in detailing, marketing, and sales to physicians. Third, size-related advantages in retained earnings provide a relatively low-cost source of financing for acquisitions. In all three contexts, any real efficiency savings are unlikely to be passed on to consumers through lower prices because insurance undermines competition on the final price. We conclude by outlining a framework for applying these considerations to the antitrust analysis of pharmaceutical mergers. When two large firms merge, the already significant advantages each firm has are compounded in a manner likely to harm competition across many drug markets in the firm’s portfolio (not just markets with overlapping products). This tends to entrench the enlarged firm’s dominance and effectively block smaller rivals from competing. As a result of these size-related advantages, we suggest a presumption that a merger between two large firms substantially lessens competition. Mergers involving mid-size firms are less likely to harm competition, with the extent of harm depending on the size of the merged entity and whether dominant products are involved. As a result, in addition to the standard concerns about overlapping products in particular markets, we recommend heightened scrutiny of mergers involving mid-size firms, especially where one of the merging firms has a dominant product. We recommend the continuation of the current approach for mergers involving small firms. Such a framework is more consistent with industry realities than the approach applied today and ensures that antitrust enforcement can play a vital role in the pharmaceutical industry.

Semiconductor chips and their production are foundational for future innovation, future developments of digitalization, and economic prosperity. However, the role of production when discussing who is creating and capturing value across different industrial supply chains has often been underestimated. In this report, we analyze the distribution of the value added in the semiconductor supply chain. Value added analysis is insufficient on its own to understand the importance of production; therefore, we also examine the share of operating profits that has been reinvested in the growth of tangible and intangible assets. Based on value added and reinvesting cycle analysis, we discuss production intensity, and we draw conclusion regarding how important production is for different supply chains and industries.

While it has been widely recognized that a supplier's direct sales activities can have a significant impact on its interactions with a reseller, little attention has been paid to the fact that many suppliers can sell directly only by accessing consumers through an agency platform that collects commissions and fees. Because these agencies are often controlled by independent third parties or even the resellers themselves, we investigate how the control of the agency impacts the interactions between the supplier and a reseller. We find that when the agency is controlled by either a third-party or by the reseller, the effects of supplier encroachment are dramatically different than when the supplier can sell directly on its own. When the supplier can sell directly only by paying a commission to an independently operated agency platform, there is no longer a possibility that the total supply chain profit can be reduced when the supplier sells a positive quantity directly. For an intermediate range of direct selling cost, the supplier, the reseller, and society as a whole are better off when the supplier must rely upon an independently operated agency platform than when the supplier can sell directly without paying a commission. We also find that if the agency platform is controlled by the reseller to whom the supplier sells her product, this can discourage the supplier from developing direct sales capability unless the reseller either decentralizes his agency and reselling operations or is able to commit to the transaction fee in the agency channel.

Opinions by experts on whether the breakup of Big Tech is a valuable and viable solution range from one end of the spectrum to another. Despite strong advocacy by some to break up Big Tech companies as the best solution to the competition issues present in the technology sector, these proposals are often stated in basic terms with little specificity. Likewise, opposition to breaking up Big Tech often cites administrability by the courts as a key obstacle but does not provide specificity as to why this undertaking is out of the court’s abilities. This paper explores whether a breakup of the “Big Tech” companies is feasible given the unique nature of the technology business. Since characteristics like zero-price business models and advantageous network effects are central to today’s technology companies but were not major considerations during the last breakup in United States antitrust history—the divestment of the Bell Operating Companies from AT&T in 1984—these are novel factors that must be taken into account when evaluating any proposal to break up Big Tech. This paper also uses specific examples from the business models of each of the four Big Tech companies to determine how a division of resources in a breakup could hypothetically affect those operations. Based off of those scenarios, the paper draws inferences on whether or not a structural remedy like a breakup or spinoff is advisable and whether or not the resulting companies would be able to function properly in the market after the divestiture. Since there has been so much recent endorsement for utilizing structural remedies in the current Big Tech federal antitrust lawsuits, advocates should appropriately analyze the mechanics of breakups and spinoffs and the potential effects they could have on companies and consumers alike.

This study investigates whether a private firm’s decision to go public affects the IPO decisions of its competitors. Using detailed data from the drug development industry, we identify a private firm’s direct competitors at a precise level through a novel approach using similarity in drug development projects based on disease targets. The analysis shows that a private firm is significantly more likely to go public after observing the recent IPO of a direct competitor, and this effect is distinct from “hot” market effects or other common shocks. Furthermore, our effects are centered on firms that operate in more competitive areas. We additionally explore peer effects in private firm funding propensities more broadly, such as through venture capital or being acquired, and find results consistent with a competitive channel.