A review of research and practice for the industrial networks of the future

Academic researchers have followed closely the interest of companies in establishing industrial networks by studying aspects such as social interaction and contractual relationships. But what patterns underlie the emergence of industrial networks and what support should research provide for practitioners? First, it appears that manufacturing is becoming a commodity rather than a unique capability, which accounts especially for low-technology approaches in downstream parts of the network, for example, in assembly operations. Second, the increased tendency towards specialisation has forced other, upstream, parts of industrial networks to introduce advanced manufacturing technologies for niche markets. Third, the capital market for investments in capacity, and the trade in manufacturing as a commodity, dominates resource allocation to a larger extent than was previously the case. Fourth, there is becoming a continuous move towards more loosely connected entities that comprise manufacturing networks. Finally, in these networks, concepts for supply chain management should address collaboration and information technology that supports decentralised decision-making, in particular to address sustainable and green supply chains. More traditional concepts, such as the keiretsu and chaibol networks of some Asian economies, do not sufficiently support the demands now being placed on networks. Research should address these five fundamental challenges to prepare for the industrial networks of 2020 and beyond. © 2010 Springer-Verlag London.

Industrial networks of the future:a critical commentary on research and practice

Academia has followed the interest by companies in establishing industrial networks by studying aspects such as social interaction and contractual relationships. But what patterns underlie the emergence of industrial networks and what support should research provide for practitioners? Firstly, it seems that manufacturing is becoming a commodity rather than a unique capability, which accounts especially for low-technology approaches in downstream parts of the network, for example in assembly operations. Secondly, the increased tendency to specialize forces other parts of industrial networks to introduce advanced manufacturing technologies for niche markets. Thirdly, the capital market for investments in capacity and the trade in manufacturing as a commodity dominates resource allocation to a larger extent. Fourthly, there will be a continuous move toward more loosely connected entities forming manufacturing networks. More traditional concepts, like keiretsu and chaibol networks, do not sufficiently support this transition. Research should address these fundamental challenges to prepare for the industrial networks of 2020 and beyond.

Measuring accounting disclosure in a period of complex changes:the case of Egypt

Significant changes in accounting disclosure are observed in periods of economic change such as those relating to emerging capital markets and programs of privatization. Measurement of the level of accounting disclosure should ideally be designed to capture the complexity of change in order to give insight and explanation to match the causes and consequences of change. This paper shows the added interpretive value in subdividing the disclosure checklist to reflect the requirements of national accounting regulations, the location of disclosure items in the annual report, and limitations on the availability of regulations in official translation to the local language. Defining targeted disclosure categories leads to significance testing of specific aspects of changes in accounting disclosure in the Egyptian capital market in the 1990s. Strong correlation of disclosure with the presence of majority government ownership of the company and the relative activity of share trading supports the applicability of political costs and capital need theories, respectively. The relation between International Accounting Standards (IASs) disclosure and the type of audit firm points to additional theoretical explanations, including relative familiarity with the legislation and compliance features identifiable with the emerging capital market. The approach described in this paper has the potential for enhancing understanding of the complexity of accounting change in other emerging capital markets and developing economies.

Performance management in the United States and France:four case studies in the retail and airline industries

The profusion of performance measurement models suggested by Management Accounting literature in the 1990’s is one illustration of the substantial changes in Management Accounting teaching materials since the publication of “Relevance Lost” in 1987. At the same time, in the general context of increasing competition and globalisation it is widely thought that national cultural differences are tending to disappear, meaning that management techniques used in large companies, including performance measurement and management instruments (PMS), tend to be the same, irrespective of the company nationality or location. North American management practice is traditionally described as a contractually based model, mainly focused on financial performance information and measures (FPMs), more shareholder-focused than French companies. Within France, literature historically defined performance as being broadly multidimensional, driven by the idea that there are no universal rules of management and that efficient management takes into account local culture and traditions. As opposed to their North American brethren, French companies are pressured more by the financial institutions that fund them rather than by capital markets. Therefore, they pay greater attention to the long-term because they are not subject to quarterly capital market objectives. Hence, management in France should rely more on long-term qualitative information, less financial, and more multidimensional data to assess performance than their North American counterparts. The objective of this research is to investigate whether large French and US companies’ practices have changed in the way the textbooks have changed with regards to performance measurement and management, or whether cultural differences are still driving differences in performance measurement and management between them. The research findings support the idea that large US and French companies share the same PMS features, influenced by ‘universal’ PM models.

Organizational capital, product market competition and technical efficiency in Italian cooperatives

This paper tries to identify under which conditions increasing market competition may help cooperatives to improve technical efficiency to guarantee positive profits. This hypothesis is first formalized in a partial equilibrium framework and then is tested on a sample of Italian conventional and cooperative firms, using frontier analysis. Technical efficiency indexes are computed by using the one-stage approach as suggested by Battese and Coelli (1995), where proxies for competition are introduced as determinants of efficiency, along with other exogenous factors accounting for the firms’ heterogeneity. However, the overall impact of increasing competition on efficiency is negative.

Capital markets and the market structure of foreign investments

Contrary to the long-received theory of FDI, interest rates or rates of return can motivate foreign direct investment (FDI) in concert with the benefits of direct ownership. Thus, access to investor capital and capital markets is a vital component of the multinational’s competitive market structure. Moreover, multinationals can use their superior financial capacity as a competitive advantage in exploiting FDI opportunities in dynamic markets. They can also mitigate higher levels of foreign business risks under dynamic conditions by shifting more financial risk to creditors in the host economy. Furthermore, the investor’s expectation of foreign business risk necessarily commands a risk premium for exposing their equity to foreign market risk. Multinationals can modify the profit maximization strategy of their foreign subsidiaries to maximize growth or profits to generate this risk premium. In this context, we investigate how foreign subsidiaries manage their capital funding, business risk, and profit strategies with a diverse sample of 8,000 matched parents and foreign subsidiary accounts from multiple industries in 38 countries.We find that interest rates, asset prices, and expectations in capital markets have a significant effect on the capital movements of foreign subsidiaries. We also find that foreign subsidiaries mitigate their exposure to foreign business risk by modifying their capital structure and debt maturity. Further, we show how the operating strategy of foreign subsidiaries affects their preference for growth or profit maximization. We further show that superior shareholder value, which is a vital link for access to capital for funding foreign expansion in open market economies, is achieved through maintaining stability in the rate of growth and good asset utilization.

Evolution of capital structure in East Asia - corporate inertia of endeavours?

The paper examines the capital structure adjustment dynamics of listed non-financial corporations in seven east Asian countries before, during and after the crisis of 1997–1998. Our methodology allows for speeds of adjustment to vary, not only among firms, but also over time, distinguishing between cases of sudden and smooth adjustment.Whereas, compared with firms in the least affected countries, average leverages were much higher, generalized method-ofmoments analysis of the Worldscope panel data suggests that average speeds of adjustment were lower in the worst affected countries. This holds also for the severely financially distressed firms in some worst affected countries, though the trend reversed in the post-crisis period. These findings have important implications for the regulatory environment as well as access to market finance.

Inward investment and host country market structure:the case of the U.K.

Multinational enterprises are seen as vehicles for the international transfer of investment capital, protecting and increasing profits by transferring ownership advantages across national boundaries. As such, the argument often follows that foreign direct investment then exacerbates the monopoly problem in host countries, by increasing concentration and facilitating collusion. This paper however reveals the reverse, that inward investment into the U.K. acts to reduce concentration at the industry level, by increasing competitive pressures on domestic industry.

Sharpening the edge of market driven intangibles and innovations

A review of the extant literature concludes that market-driven intangibles and innovations are increasingly considered to be the most critical firm-specific resources, but also finds a lack of elaboration of which types of these resources are most important. In this paper, we incorporate these observations into a conceptual model and link it to highly developed institutional settings for the model evaluation. From the point of view of firm revenue management, we can anticipate that performance advantages created through deployment of intellectual and relational capital in marketing and innovation are more likely to be superior. In essence, they constitute the integration of organisational intangibles both in cognitive and behavioural level to create an idiosyncratic combination for each firm. Our research findings show feasible paths for sharpening the edge of market-driven intangibles and innovations. We discuss the key results for research and practice.

Empirical analysis of human capital development and economic growth in Europe

Recent discussion of the knowledge-based economy draws increasingly attention to the role that the creation and management of knowledge plays in economic development. Development of human capital, the principal mechanism for knowledge creation and management, becomes a central issue for policy-makers and practitioners at the regional, as well as national, level. Facing competition both within and across nations, regional policy-makers view human capital development as a key to strengthening the positions of their economies in the global market. Against this background, the aim of this study is to go some way towards answering the question of whether, and how, investment in education and vocational training at regional level provides these territorial units with comparative advantages. The study reviews literature in economics and economic geography on economic growth (Chapter 2). In growth model literature, human capital has gained increased recognition as a key production factor along with physical capital and labour. Although leaving technical progress as an exogenous factor, neoclassical Solow-Swan models have improved their estimates through the inclusion of human capital. In contrast, endogenous growth models place investment in research at centre stage in accounting for technical progress. As a result, they often focus upon research workers, who embody high-order human capital, as a key variable in their framework. An issue of discussion is how human capital facilitates economic growth: is it the level of its stock or its accumulation that influences the rate of growth? In addition, these economic models are criticised in economic geography literature for their failure to consider spatial aspects of economic development, and particularly for their lack of attention to tacit knowledge and urban environments that facilitate the exchange of such knowledge. Our empirical analysis of European regions (Chapter 3) shows that investment by individuals in human capital formation has distinct patterns. Those regions with a higher level of investment in tertiary education tend to have a larger concentration of information and communication technology (ICT) sectors (including provision of ICT services and manufacture of ICT devices and equipment) and research functions. Not surprisingly, regions with major metropolitan areas where higher education institutions are located show a high enrolment rate for tertiary education, suggesting a possible link to the demand from high-order corporate functions located there. Furthermore, the rate of human capital development (at the level of vocational type of upper secondary education) appears to have significant association with the level of entrepreneurship in emerging industries such as ICT-related services and ICT manufacturing, whereas such association is not found with traditional manufacturing industries. In general, a high level of investment by individuals in tertiary education is found in those regions that accommodate high-tech industries and high-order corporate functions such as research and development (R&D). These functions are supported through the urban infrastructure and public science base, facilitating exchange of tacit knowledge. They also enjoy a low unemployment rate. However, the existing stock of human and physical capital in those regions with a high level of urban infrastructure does not lead to a high rate of economic growth. Our empirical analysis demonstrates that the rate of economic growth is determined by the accumulation of human and physical capital, not by level of their existing stocks. We found no significant effects of scale that would favour those regions with a larger stock of human capital. The primary policy implication of our study is that, in order to facilitate economic growth, education and training need to supply human capital at a faster pace than simply replenishing it as it disappears from the labour market. Given the significant impact of high-order human capital (such as business R&D staff in our case study) as well as the increasingly fast pace of technological change that makes human capital obsolete, a concerted effort needs to be made to facilitate its continuous development.

The influence of social e-atmospherics in practice:a website content analysis perspectives from Turkey as an illustration of emerging market and France as a mature market

E-atmospherics have been often analyzed in terms of functional features, leaving its characteristics' link to social capital co-creation as a fertile research area. Prior research have demonstrated the capacity of e-atmospherics' at modifying shopping habits towards deeper engagement. Little is known on how processes and cues emerging from the social aspects of lifestyle influence purchasing behavior. The anatomy of social dimension and ICT is the focus of this research, where attention is devoted to unpack the meanings and type of online mundane social capital creation. Taking a cross-product/services approach to better investigate social construction impact, our approach also involves both an emerging and a mature market where exploratory content analysis of landing page are done on Turkish and French web sites, respectively. We contend that by comprehending social capital, daily micro practices, habits and routine, a better and deeper understanding on e-atmospherics incumbent and potential effects on its multi-national e-customer will be acquired.

Investement appraisal in a deregulated electricity market

This thesis analyses the impact of deregulation on the theory and practice of investment decision making in the electricity sector and appraises the likely effects on its long term future inefficiency. Part I describes the market and its shortcomings in promoting an optimal generation margin and plant mix and in reducing prices through competition. A full size operational model is developed to simulate hour by hour operation of the market and analyse its features. A relationship is established between the SMP and plant mix and between the LOLP and plant margin and it is shown bow a theoretical optimum can be derived when the combined LOLP payments and the capital costs of additional generation reach a minimum. A comparison of prices against an idealised bulk supply tariff is used to show how energy prices have risen some 12% in excess of what might have occurred under the CEGB regime. This part concludes with proposals to improve the marlmarket conditions and these are tested against the actual investment decisions since deregulation to demonstrate their appropriateness. It is shown that the current market mechanisms could lead to suboptimal investment. Part 3 discusses the essential role of transmission in enabling competition and reviews worldwide practices illustrating little consensus on charging for its use. Basic costing principles are described and a new model is developed to demonstrate bow a generator may strike supply agreements either side of an interconnector to influence prices so as to maximise his income. The optimal pricing strategy for the transmitter is also derived and consumer response is simulated .The concept of transmission uplift is developed and the operational model is extended to include transmission constraints and then used to establish monthly incremental transmission constraint cost functions. It is shown how these can be used to appraise investment options and optimally plan outages. Part 4 concludes by discussing the regulatory framework and its limitations in improving efficiency or encouraging the optimum levels of investment. The principal findings of the thesis are reviewed and potential market improvement are described. This part concludes with a discussion of alternative market structures and likely future developments.

Changing treaty and changing economic context:the dynamic relationship of the legislature and the judiciary in the pursuit of capital liberalisation

Introduction For a significant period of time (the late 1950s--1980s), a lack of capital freedom was a major obstacle to the progress of the internal market project. The free movements of goods, persons and services were achieved, and developed, primarily through the case law of the Court of Justice of the European Union (CJEU). On the other hand, the Court played a (self-imposed) limited role in the development of the free movement of capital. It was through a progressive series of legislation that the freedom was finally achieved. John Usher has noted that the consequence of this is that ‘free movement of capital thus became the only Treaty “freedom” to be achieved in the manner envisaged in the Treaty’. For this reason, the relationship of the Court and legislature in this area is of particular importance in the broader context of the internal market. The rest of this chapter is split into four sections and will attempt to describe (and account for) the differing relationships between the legislature and the judiciary during the different stages of capital liberalisation. Section 2 will deal with the situation under the original Treaty of Rome. Section 3 will examine a single legislative intervention: Directive 88/361. It was this intervention that contained the obligation for Member States to fully liberalise capital movements. It is therefore the most important contribution to the completion of the internal market in the capital sphere. An examination will be made of whether the interpretation of the Directive demonstrates a changed (or changing attitude) of the Court towards the EU legislature. Section 4 will examine the changes brought about by the Treaty on European Union in 1993. It was at Maastricht that the Member States finally introduced into the Treaty framework an absolute obligation to liberalise capital movements. Finally, Section 5 will consider the Treaty of Lisbon and the possibility of future interventions by the legislature. By looking at the patterns that run through the different parts, this chapter will attempt to engage with the question of whether the approaches were products of their historical context, or whether they can be applied to other areas within the capital movement sphere.