Corporate Diversification and Risk: Portfolio Effects and Resource Redeployability

By analogy with portfolio diversification by stock market investors, managers and researchers have often expected that firms that spread operations across product or geographic markets reduce risk. However, numerous exploratory studies in corporate strategy and in international business have not been able to robustly confirm this expectation. This study develops a formal model to scrutinize implications of corporate diversification for corporate risk. The model incorporates the key distinction of corporate diversification, economies of scope, that qualifies the analogy between corporate and portfolio diversification. The presence of a particular type of economies of scope, resource redeployability, not only inherently increases risk but it can also raise risk over the level in undiversified firms. The model uses determinants of resource redeployability from previous research to derive conditions with which corporate diversification enhances risk. The developed elaborate operationalization of corporate risk should facilitate future research and help corporate managers.

Formal education and training for conservation agriculture in Africa.

This chapter examines the role of formal education, training and skills development in Conservation Agriculture (CA) in Sub-Saharan Africa (SSA) in the context of the region's agricultural transformation systems. It explores nascent literature on potential reforms that include development of CA educational programmes and linkages that are more strategically attuned to national agriculture development aspirations. The chapter highlights theoretical grounds and practical examples for the multi-level strategies with complementary relationships aimed at facilitating systemic CA-related education, training and skills development to accelerate and expand its uptake in Africa. The chapter has advocated educational institutions and the university in particular to orchestrate the CA innovation value chain through 'internal' alignment of actors at institutional level (i.e. intra-organizational mainstreaming). The success of an innovation also depends on its 'external' viability. This was illustrated by proposing inter-organizational mainstreaming and a triple helix model where government and industry, respectively, are the principal actors towards increase in sociotechnical viability of the CA innovation system. There are obvious hurdles related to the interactions and coordination between stakeholders, as well as the integration of value complementarities across the value chain. Probable corrective strategies have been exhaustively interrogated and they are, for instance, manifested through technical and organizational adaptations as they summarize and compare systematically their contributions, arguments, assumptions and limitations in the process of creating and harnessing economies of scope in innovation. There may not be any ideal model for demand-led, CA-related education, training and skills development. A number of strategic options present themselves and, in a dynamic world, all strategies are relatively short-lived but must yield outcomes that contribute to longer-term goals. The educational institutions should find appropriate themes and avenues worthy of support in their own right, and projects that invite collaboration on their own terms.

Economies of Scope between Research and Teaching in European Universities

The estimation of economies of scope between research and teaching has been the object of a large literature in economics of education and efficiency analysis, with parametric and non-parametric specifications. The paper contributes to the literature by building a pan-European dataset that integrates official statistics on higher education at country level with bibliometric indicators. The dataset allows a breakdown by scientific and educational field, accounting for the heterogeneity among disciplines. We applied a technique which has not been used for the efficiency estimation of economies of scope in higher education, namely seemingly unrelated regression (SUR) applied to separate input–output equations describing the production of education and research. We found confirmation for economies of scope in some fields and with some specifications, or no relation between the equations. In no case did we find diseconomies of scope between teaching and research.

Exploring the paradoxes of addressing sustainability in commercial research: A study of scientist views

<p>Research scientists increasingly engage in commercial research as well as face the need to address sustainability by taking into account the social, environmental and economic consequences of development activities. This role often entails addressing contradictory imperatives. Though paradox has pervasive effects on science work and managing for sustainability, it remains underexplored in these contexts. This research is positioned at the novel intersection of three bodies of work: sustainability in the context of science work, commercial research, and paradox in management and organisation. It engages a sensemaking perspective to examine the experiences of research scientists with managing sustainability in commercial research and explicates the tensions they perceive, as well as the ways in which they respond to them. The study is primarily based on a set of 44 semi-structured interviews conducted with research scientists across four Crown Research Institutes in New Zealand. It offers two sets of findings. First, it identifies three main paradoxes research scientists perceive and elucidates their dynamics. These include the paradoxes of service ethos, role identity, and professional integrity. Second, it explicates perceived responses to these paradoxes, both constraining and productive. The former comprise the practices of opposing, isolating, over-committing, and suppressing. The latter, productive responses, consist of a range of management tactics premised on differentiation or integration. Differentiation tactics include diversification in scope of services, variation in work organisation and responsibilities, and incrementalism. Integration tactics used with external parties comprise identifying financial synergies between public and commercial projects, (re)framing problems and solutions for clients, (re)positioning across roles and identities, as well as harnessing economies of scope by co-authoring with clients. This research contributes to the literature on research management by casting the emphasis on perceived paradoxes to be navigated when addressing sustainability in commercial research. It also offers a secondary contribution to the literature on paradox in management by contextualising organisational paradoxes and their management in science work. Specifically, it provides new insight into the ways by which scientists’ engagement with sustainability cuts across ethos and shapes their views on professional integrity. It also contributes to a nuanced understanding of role identity by focusing on the tensions research scientists at Crown Research Institutes experience in the dual role of advocates of change towards sustainability and allies of business. Altogether, this work extends existing organisational research by offering insights into scientists’ experience of paradox and its management when engaging with sustainability in commercial research.</p>

Exploring the paradoxes of addressing sustainability in commercial research: A study of scientist views

<p>Research scientists increasingly engage in commercial research as well as face the need to address sustainability by taking into account the social, environmental and economic consequences of development activities. This role often entails addressing contradictory imperatives. Though paradox has pervasive effects on science work and managing for sustainability, it remains underexplored in these contexts. This research is positioned at the novel intersection of three bodies of work: sustainability in the context of science work, commercial research, and paradox in management and organisation. It engages a sensemaking perspective to examine the experiences of research scientists with managing sustainability in commercial research and explicates the tensions they perceive, as well as the ways in which they respond to them. The study is primarily based on a set of 44 semi-structured interviews conducted with research scientists across four Crown Research Institutes in New Zealand. It offers two sets of findings. First, it identifies three main paradoxes research scientists perceive and elucidates their dynamics. These include the paradoxes of service ethos, role identity, and professional integrity. Second, it explicates perceived responses to these paradoxes, both constraining and productive. The former comprise the practices of opposing, isolating, over-committing, and suppressing. The latter, productive responses, consist of a range of management tactics premised on differentiation or integration. Differentiation tactics include diversification in scope of services, variation in work organisation and responsibilities, and incrementalism. Integration tactics used with external parties comprise identifying financial synergies between public and commercial projects, (re)framing problems and solutions for clients, (re)positioning across roles and identities, as well as harnessing economies of scope by co-authoring with clients. This research contributes to the literature on research management by casting the emphasis on perceived paradoxes to be navigated when addressing sustainability in commercial research. It also offers a secondary contribution to the literature on paradox in management by contextualising organisational paradoxes and their management in science work. Specifically, it provides new insight into the ways by which scientists’ engagement with sustainability cuts across ethos and shapes their views on professional integrity. It also contributes to a nuanced understanding of role identity by focusing on the tensions research scientists at Crown Research Institutes experience in the dual role of advocates of change towards sustainability and allies of business. Altogether, this work extends existing organisational research by offering insights into scientists’ experience of paradox and its management when engaging with sustainability in commercial research.</p>

Electricity Utility Companies Entering Private Sector Markets

On the one hand, energy utility companies (EUCs) fulfill public tasks assigned to them by the state. On the other hand, they are also often active as entrepreneurs in the free market. For example, they supply electricity products to major customers, install photovoltaic and e-mobility systems and provide services in the areas of building technology, metering and telecommunications. In such private sector activities, energy utility companies potentially enjoy unjustified advantages due to the fact that they are publicly controlled and perform public tasks: they receive particularly good financing conditions, are taxed on a privileged basis and benefit from economies of scope and information advantages when public and private sector tasks are carried out in parallel. Such privileges may distort competition or prevent companies from entering a market. This chapter examines the legal requirements for dealing with this issue and proposes specific measures with which legislators and authorities can avoid harmful effects of private sector activities by EUCs.

Performance Effects of Network Structure and Ownership: The Norwegian Electricity Distribution Sector

Transmission and distribution networks are capital intensive segments of the electricity sector and are generally considered natural monopolies. Due to their non-competitive nature, these are subject to independent regulation to prevent the abuse of monopolistic power and to induce competitive behaviour. Effective economic regulation of the electricity networks has become a key target in most developed economies after the 1980s. In Norway, incentive regulation and efficiency benchmarking were introduced in 1997. In Norway, the electricity grid is divided into three levels, namely, central, regional and distribution networks. In this paper, we study two overlooked aspects when analysing the performance of electricity networks: vertical integration and ownership structure. We use a stochastic frontier analysis approach to analyse the performance of Norwegian electricity distribution utilities for the period 2007–2014. We observe that vertical integration between distribution and regional transmission implies higher cost inefficiencies. This indicates that the efficiency gains due to separate management of the networks exceed the economies of coordination from vertical economies of scope. In addition, we find that council ownership entails higher efficiencies. This could be explained by the state having an interest in high-voltage electricity networks, rather than low-voltage ones, and the decentralised model from which the now centralised system was once developed.

The Extensive Margin of Exporting Products: A Firm-Level Analysis

To quantify trade frictions, we examine multiproduct exporters. We build a flexible general-equilibrium model and estimate market entry costs using Brazilian firm-product-destination data under rich demand and market access cost shocks. Our estimates show that additional products farther from a firm’s core competency come at higher production costs, but there are substantive economies of scope in market access costs. Market access costs differ across destinations, falling more rapidly in scope at nearby regions and at destinations with fewer nontariff barriers. We evaluate a counterfactual scenario that harmonizes market access costs across destinations and find global welfare gains similar to eliminating all current tariffs. (JEL D22, F12, F13, F14, O14, O19)

Platform mergers and antitrust

Should internet era merger policy differ from industrial era merger policy? Platform ecosystems rely on economies of scale, data-driven economies of scope, high-quality algorithmic systems, and strong network effects that frequently promote winner-take-most markets. Their market dominance has generated competition concerns that appear difficult to assess with traditional merger policy tools. This paper examines the acquisition strategies of the five major U.S. platforms—Google, Amazon, Facebook, Apple, and Microsoft—since their inception. We discuss the main merger and acquisition theories of harm and how these operate differently than in the past. To address merger and acquisition concerns of multi-sided platforms, we develop four proposals that incorporate (i) a new ex ante regulatory framework, (ii) an update of the conditions under which the notification of mergers should be compulsory and the burden of proof should be reversed, (iii) differential regulatory priorities in investigating horizontal versus vertical acquisitions, and (iv) an update of competition enforcement tools to increase visibility into market data and trends.