Journal of Economics & Management Strategy最新文献

We demonstrate that the incentives of firms that partially own their suppliers or customers to foreclose rivals depend on how the partial owner can extract profit from the target. Compared to a fully vertically integrated firm, a partial owner may obtain only a share of the target's profit but may have significant influence over the target's strategy. We show that the incentives for customer and input foreclosure can be higher, equal, or even lower with partial ownership than with a vertical merger, depending on how the protection of minority shareholders and transfer price regulations affect the scope for profit extraction.

Jungbauer, T., and C. Schmid. 2024. “Branding Vertical Product Line Extensions.” Journal of Economics & Management Strategy 33: 909–936. https://doi.org/10.1111/jems.12565.

Article was categorized as “Invited Review” but should be “Original Article”.

We apologize for this error.

This paper sheds light on the role of the market for knowledge in shaping a firm's hierarchy—that is, the span of control and the number of layers. We predict that the larger the extent of the market for knowledge, the larger the span of control and the fewer the layers. We test our predictions using a rich database representing industrial firms in Italy over the period 2004–2017. Our identification strategy employs a difference-in-difference approach that exploits the cross-regional variability in the extent of the local market for knowledge-intensive business services and the cross-industry heterogeneity in the level of technological exposure of industrial firms to such a market. We find that a thicker regional market for knowledge is associated with relatively flatter firms in industries that use knowledge-intensive business services more intensively. The results are confirmed when we use instrumental variables for the extent of the market for knowledge, test the sensitivity of the estimates to omitted variable bias, and perform a series of robustness checks.

We analyze the effect of media mergers in a model that stresses, on the one hand, the fact that media are two-sided platforms willing to attract advertisers and viewers and, on the other hand, that strong competitors have emerged to challenge traditional media on both sides. We show that a merger has two conflicting effects on traditional media's incentives to invest in quality programs and to exploit their market power. When competition is primarily between traditional media, a Business-Stealing Effect dominates, and the merger is detrimental to advertisers and viewers. When the competition is mainly between the traditional media and their new competitors, an Ecosystem Effect dominates, and the merger benefits advertisers and viewers. We extend this setting to discuss the role of financial constraints that might limit investments in the quality of programs and show that the same effects are at play.

Empirical evidence supports the conventional wisdom that entrepreneurs are more optimistic and overconfident than others. However, the same holds true for (top) managers. In a large incentivized survey (), we directly compare entrepreneurs, managers, and employees on a comprehensive set of measures of optimism and overconfidence. We find that on average entrepreneurs and managers are more optimistic than employees in their dispositional optimism and their explanatory style of past events. However, they do not differ from each other in these respects. For two incentivized measures of overconfidence, we also find no differences between entrepreneurs and managers. Both are equally likely to overestimate their own abilities compared to employees. In terms of overestimating general economic prospects differences with employees are much less pronounced. Exploration of within-group heterogeneities shows that these observations hold true for various subgroups of entrepreneurs and managers. Together these findings tentatively suggest that optimism and overconfidence characterize strategic decision makers more generally, irrespective of whether they bear the full risk of their strategic decisions.

A monopoly platform may prevent a startup which sells a complementary product from developing a competing platform by copying it. Imitation reduces the potential rival's profits from the new platform and thus its incentives to invest. The anticipation of the incumbent's aggressive behavior may also create an “ex ante” effect, by inducing the rival not to challenge the incumbent with a new platform (i.e., not to enter the “kill zone”) and to develop another (noncompeting) product instead. This finding is robust to several extensions.

We analyze the effects of optimism and overconfidence when the manager has bargaining power and the compensation package includes severance pay. Optimism implies that the manager overestimates the probability of success, while overconfidence induces the manager to overestimate the increase in the probability of success due to her investment. If the manager can renegotiate the initial contract, the advantage of using severance pay to induce the manager to invest, commonly found in the literature, is reduced by the presence of the biases. Optimism increases severance pay and managerial entrenchement with a negative effect on expected profit. Overconfidence reduces incentive pay, as shown by the previous literature, but its effect on severance pay depends on the intensity of the bias. A moderate overconfidence reduces severance pay and increases expected profit. Conversely, extreme overconfidence increases severance pay and this may offset the beneficial effect on incentive pay. Thus, the attempt to exploit managerial overconfidence to reduce incentive pay may backfire if the manager is replaced. Our model suggests that the large severance payments documented by the empirical literature represent a form of efficient contracting when the optimistic and overconfident manager has bargaining power.