• A composite index of the creative economy with application to regional best practices

      Bowen, Harry; Moesen, Wim; Sleuwaegen, Leo (2006)
      This paper develops a “Composite Index of the Creative Economy” (CICE) for the purpose of benchmarking an entity's (e.g., country or region) creative capacity as reflected by it's achievement in three dimensions: Innovation, Entrepreneurship and Openness. To determine the weight each sub-dimension should contribute to the total value of the CICE, we introduce a novel method - endogenous weighting - that allows each entity to have its own unique set of “best” weights. This method addresses the issue of whether an entity's CICE score value reflects underlying capabilities (or lack thereof) or an “inappropriate” weighting of the underlying dimensions. Our endogenous weight method isolates achievement on the underlying dimensions as the source of a higher or lower CICE score value. In this paper we construct a value of the CICE for each of nine regions: Baden-Württemberg, Catalonia, Flanders, Lombardy, Maryland, Nord-Pas-De-Calais, Quebec, Rhône-Alpes, Scotland. A region's CICE value indicates its distance from “best practice” and can therefore be used to benchmark a region's creative capacity relative to other regions. In this respect, a focus of our analysis is the relative creative capacity of Flanders. We also examine the absolute and relative achievement of each region on each of the three underlying dimensions to identify specific areas of strength or weakness. The results indicate that Baden-Württemberg ranks highest in terms of creative capacity while Nord-Pas-De-Calais ranks lowest among the nine regions. Flanders ranks 3rd behind 2nd ranked Maryland. However, Flanders' rank masks that its CICE score value is 25% below that of Baden-Württemberg and 11% below that of Maryland, indicating a non-trivial gap in creative capacity between Flanders and “best practice.” On the three dimensions underlying creative capacity, Flanders ranks 2nd behind Baden-Württemberg on Innovation and Openness, but ranks 7th on Entrepreneurship (only ahead of Rhône-Alpes and Nord-Pas-De-Calais). Flanders' relatively poor ranking on Entrepreneurship reflects it's below average level of achievement on each of the three sub-dimensions of Entrepreneurship (ratio of newly established to existing firms, absence of a fear of failure, and venture capital as a share of GDP). This indicates that fostering and improving conditions for Entrepreneurship remains a challenge for Flanders compared to the other top ranked regions.
    • Changes in the industrial and geographical diversification of leading firms in European manufacturing

      Rondi, L.; Sleuwaegen, Leo; Vannoni, D. (Vlerick Business School, 2003)
      The authors present an original attempt to trace the changing industrial and geographical diversification strategy of firms along the integration process. The analysis is based on a unique database covering the product and geographical scope of the leading European firms in the manufacturing sectors for three years characterising different moments in the integration process, 1987 (start), 1993 (half-way) and 1997 (near completion). Before analysing the data, the authors offer some theoretical perspectives about the consequences of the European market integration program for the international strategies and structures of European firms.
    • Corporate international diversification: the impact of foreign competition, industry globalization and product diversification

      Wiersema, Margarethe; Bowen, Harry (2005)
      Significant reductions in barriers to international commerce since the mid-1970s have resulted in markets and industries becoming increasingly integrated across nations. A key consequence of industry globalization has been substantially increased levels of foreign competition in the markets of most nations, and in particular in the U.S. marketplace. The changes in competitive conditions facing firms as markets and industries become more globalized are significant economic phenomena that can be expected to impact corporate strategy in general, and corporate international diversification strategy in particular. Despite increasing global economic integration, the impact of industry globalization on corporate strategy is a question that has been largely overlooked in both the strategic management and international business literatures. This paper seeks to fill this important gap by examining the role of both environmental and firm specific factors in shaping a firm's international diversification strategy. Specifically, we develop a theoretical framework for understanding how industry globalization, foreign competition, and firm product diversification would be expected to influence a firm's strategic choice of its level of international diversification. We then empirically examine for the predicted impact and importance of these factors in a panel data set of U.S. firms from 1987 to 1993. Our study provides the first empirical examination and evidence that industry globalization and foreign-based competition are statistically significant factors explaining the increased international diversification of U.S. firms. Keywords: Corporate Strategy, Globalization, International Diversification
    • Corporate structure of leading firms in Europe: does country of origin still matter?

      De Voldere, Isabelle; Sleuwaegen, Leo; Van Pelt, An; Veugelers, Reinhilde (Vlerick Business School, 2004)
      This article traces the changing impact of national differences on the geographical and industry diversification strategy of leading firms in Europe in 1987-2000, a period of intensified European integration. The results indicate that, whereas country of origin had a significant effect at the beginning of the period, its impact has gradually diminished over time, with firms overall focusing resources on core activities but at the same time expanding production more internationally. However, some country differences do persist over time. Especially firms originating from Germany and Italy appear to be still significantly influenced by national differences.
    • Does foreign direct investment crowed out domestic entrepreneurship?

      De Backer, Koen; Sleuwaegen, Leo (Vlerick Business School, 2002)
      In analyzing firm entry and exit across Belgian manufacturing industries, this paper presents evidence that import competition and foreign direct investment discourage entry and stimulate exit of domestic entrepreneurs. These results are in line with theoretical occupational choice models, where it is shown that crowding out of domestic entrepreneurs through foreign direct investment works through selection in product and labor markets. However, the empirical results also suggest important long term structural positive effects of FDI on domestic entrpreneurship as a result of learning, demonstration, networking and linkage effects between foreign and domestic firms which tend to moderate or even reverse crowding out effects on domestic entrepreneurship.
    • Does IT matter where immigrants work? Traded goods, non-traded goods, and sector specific employment

      Bowen, Harry; Pedussel, Jennifer (Vlerick Business School, 2004)
      Immigrant employment often concentrates in non-traded goods sectors and many immigrants have low inter-sectoral mobility. We consider these observed characteristics of immigrant employment for the question of how immigration affects a nation's pattern of production and trade. We model an economy producing three goods, one is non-traded. Domestic labor and capital are domestically mobile but internationally immobile. Some immigrant labor is specific to the non-traded sector. Our model indicates that the output and trade effects of immigration depend importantly on the sector and nature of immigrant employment. Empirical investigation of the model's predictions indicates that trade and immigration are complements. JEL classification: C23, D5, F16, F22, J61, O15 Keywords: trade, immigration, non-traded goods, specific factors, panel.
    • Employee lay-off under different modes of restructuring

      Coucke, Kristien; Pennings, Enrico; Sleuwaegen, Leo (Vlerick Business School, 2005)
    • European integration: the third step

      Bowen, Harry; Sleuwaegen, Leo (Vlerick Business School, 2004)
      A perception of declining EU competitiveness has intensified calls for structural reforms within the EU. This paper examines recent evidence on changes in relative EU competitiveness and considers the observed changes in relation to the evolving competitive environment facing EU firms during the past two decades. Our analysis suggests that recent declines in EU competitiveness reflect an adjustment (or lack thereof) within the EU in response to an evolutionary “Third Step” in the process of EU integration: global market integration. We find that, starting from the mid-1990s, the EU began to face unprecedented increases in external sources of competition. The rising competition from external sources has created pressures for EU firms to alter their organizational and product market strategies to meet the challenge of a globally integrating market. While many leading EU firms are found to have responded to this challenge, EU firms remain hampered by anachronistic EU product and labor market regulations. The growing calls for structural reform therefore reflect the increased external competitive pressure on EU firms as they attempt to respond to growing global competition and to thereby strengthen their global competitiveness. JEL Classification: D21, F02, F23, L10, O40 Keywords: Competitiveness, European Integration, Foreign Competition, Globalization.
    • Evidence and implications of zipf's law for integrated economies

      Bowen, Harry; Munandar, Haris; Viaene, Jean-Marie (2006)
      This paper considers the distribution of output and productive factors among members of a fully integrated economy (FIE) in which there is free mobility of goods and factors among members and whose members share the same technology. We first demonstrate that, within an FIE, each member's share of total FIE output and its shares of total FIE stocks of productive factors will be equal. If economic policies are largely harmonized across FIE members then this “equal-share” property implies that the growth in any member's shares of FIE output and factor stocks can be taken to be a random outcome. Building on Gabaix's (1999) result for the distribution of city sizes we argue that, if output and factor shares among FIE members evolve as geometric Brownian motion with a lower bound, then the limiting distribution of these shares will exhibit Zipf's law. We empirically examine for Zipf's law for the distribution of output and factor shares across two (presumably) integrated economies: the 51 U.S. states and 14 European Union (E.U.) countries. Our empirical findings strongly support Zipf's law with respect to the distribution of output, physical capital and human capital among U.S. states and among E.U. countries. These findings imply that models used to characterize the growth of members within an FIE should embody a key assumption: that the underlying growth process of shares is random and homogeneous across FIE members. JEL Classification: E13, F15, F21, F22, O57 Keywords: growth, economic integration, Zipf's law.
    • Exit in globalising industries: the role of international (out)sourcing

      Coucke, Kristien; Sleuwaegen, Leo (2006)
      This paper studies the impact of globalisation on the exit behaviour of domestic and foreign firms in the manufacturing industries of Belgium, one of the most open economies in the world. The strongest effects are found to come from rising import growth and rising multinational firms penetration of the industry, which systematically increase the probability of exit of (inefficient) domestic firms. Product differentiation and international (out)sourcing moderate this impact and lower the risk of exit. Controlling for productivity differences across firms, exporting on itself does not lower the probability of exit. Subsidiaries of multinational firms are found to be subject to similar disciplinary forces from import competition as domestic firms but do not show exit to respond to the same passive learning process. Keywords: Exit, Sourcing, International Competition
    • Fairness in Strategy: A Fair Process Evaluation of Strategy Schools

      Tackx, Koen; Van der Heyden, Ludo; Verdin, Paul (2016)
    • Firm resources: a double-edged sword? Resources as enablers and inhibitors of competitive responsiveness

      Debruyne, Marion; Frambach, Ruud; Moenaert, Rudy (2006)
      We show that resources possess a dual, and opposing, role in influencing competitive responsiveness. On the hand, resources enhance decision-makers' belief that they are able to respond effectively to competitive attacks, but the presence of resources also makes them less motivated to respond. We demonstrate the key role competitor orientation plays in this process and formulate managerial implications from that. Keywords: new product introductions, competitive reaction, managerial assessment
    • Foreign ownership and productivity dynamics

      De Backer, Koen; Sleuwaegen, Leo (Vlerick Business School, 2002)
      In analyzing the distinctive contribution of foreign subsidiaries and domestic firms to productivity growth in aggregate Belgian manufacturing, this paper shows that foreign ownership is an important source of firm heterogeneity affecting productivity dynamics. Foreign firms have contributed disproportionately large to aggregate productivity growth, but more importantly reallocation processes differ significantly between the groups of foreign subsidiaries and domestic firms.
    • Global sourcing by mne's: impact on domestic firms

      Coucke, Kristien (2005)
      The unequal situation of large global firms with extensive networks and smaller domestic firms has created a dual structure in many industries. In this paper we examine the competitive position of domestic single-plant firms under growing rivalry of global companies that source abroad and flexibly coordinate production activities within a multinational network. Growing rivalry is modelled as a decrease in sourcing costs for multinational firms. We separate a direct and an indirect effect - i.e. competitive strategic effect- of a lower sourcing cost on the production decision of multinational and domestic firms. We show how cost characteristics of domestic firms determine the impact of these effects. We theoretically find that, ceteris paribus, output flexible firms will be most vulnerable and exit first from the market. Product differentiation is found to reduce the strategic effect of global sourcing by MNE's on the competitive position of domestic firms.
    • Globalisation and firm exit: Differences between small and large firms

      Colantone, Italo; Coucke, Kristien; Sleuwaegen, Leo (2008)
    • Globalisation and the definition of the relevant geographic market in antitrust practice

      Sleuwaegen, Leo; De Voldere, Isabelle (Vlerick Business School, 2001)
      This paper starts from the antitrust practices in the European Community and the US with respect to the delineation of the relevant geographic market in dealing with concentrations and shows that regulations and guidelines at this moment focus almost exclusively on demand substitution. However, the process of globalisation involves essentially global supply conditions and competition. A methodology is presented for delineating the relevant geographic market, that better takes this globalisation trend into account and brings both demand and supply substitution better in balance. The practical use of the methodology is illustrated for the Volvo-Scania merger case that was blocked by the European Commission in 1999.
    • Integrated performance management: adding a new dimension

      Verweire, Kurt; Van den Berghe, Lutgart (Vlerick Business School, 2003)
      In this paper, we argue that effective Integrated Performance Management (IPM) needs both strategic and maturity alignment. The management literature focuses on strategic alignment, in this paper we develop the concept of maturity alignment. Maturity alignment indicates that an organization must install the appropriate managerial and operational processes in accordance with the desired maturity level. We have identified four different maturity levels that indicate how well the organizational and managerial processes within an organization are defined and developed. We argue that insufficient maturity alignment is one of the major reasons why many performance management initiatives fail. Keywords Integrated performance management, strategic alignment, maturity alignment.
    • International and product diversification: their interrelationship and impact on firm performance

      Bowen, Harry; Wiersema, Margarethe (2007)
      Corporate strategic decisions regarding the international and product market scope of a firm's activities are the essence of corporate strategy, and how these choices in turn affect performance is the subject of a large body of research in the fields of international business and strategic management. When making these strategic decisions, managers are likely to take into account that these decisions are interrelated since they will require allocating a firm's fixed bundle of resources. Yet, the international business and strategy literatures have mostly treated these two scope decisions as independent strategies, and have also largely ignored the interrelated nature of these strategic scope decisions vis-à-vis their expected impact on performance. As a result, little is known about the nature of the relationship between these strategic choices - whether they are substitute or complementary strategies - or how they jointly impact firm performance. To address this important gap in our understanding of corporate strategy, this paper examines the joint and simultaneous nature of the relationships among these strategic scope decisions and firm performance in a unified framework. Our analysis serves to integrate prior international business and strategy research, and our model and empirical methods address a number of shortcomings of prior empirical studies. Our results indicate that the relationship between a firm's international and product market strategies and its performance is nonlinear, with performance first rising but then falling as the firm's international or product diversification rises, implying that the performance impact of these strategies is path dependent. Our results also provide the first evidence that, within the firm, international and product diversification are substitute strategies for performance. Keywords: Corporate Strategy, International Diversification, Product Diversification