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Literature, spanning industrial organization and strategic management disciplines, uses variance decomposition to understand the relative importance of firm, industry and business group effects in shaping profitability variations. Some literature analyzes firm profitability under transition to liberalization. Previous research has taken a static before-and-after view on institutional change. This paper aims to focus on the dynamic process of liberalization in India, analyzing how different institutional regime changes alter firm behavior leading to changes in profitability patterns.

Based on a panel data set of several thousand Indian firms, spanning the 26-year period between 1980-1981 and 2005-2006, the authors determine the relative importance of firm, industry and business group effects in explaining manufacturing firms’ profitability variances across different institutional phases. The authors evaluate three propositions that help assess transition dynamics between phases. They determine the quantum of catch-up or falling behind by firms.

Different industries emerge as profitability leaders, as the economy progresses through different liberalization phases. Business groups that have been more effective in resource appropriation, rent-seeking, politician management and non-market activities in a controlled regime are replaced as profit leaders by those that, in a free-market economy, can be capable of intra-business resource allocation tasks and leveraging corporate capabilities.

The approach demonstrates how to analyze the underlying detailed structure of firm-level data, and performance outcomes, to derive nuanced interpretation of factors giving rise to the effects that explain profitability variances, and how to assess the way these effects behave over time. The dynamic evidence-based approach highlights what factors matter, where, when and why, in influencing profitability variances, which are a key dimension of industrial and economic performance.

This study aims to examine competitive entry in the presence of cross‐subsidization of firms in the telecommunications industry.

How variations in cross‐subsidies, received via the separations mechanism, influence firms to enter the territories of incumbents is assessed for the population of local exchange firms in the USA.

Firms able to obtain greater cross‐subsidies, on average, experience less entry within their territories. Competition has evolved considerably in the telecommunications industry in the last two decades.

These results point to the need for evaluating cross‐subsidies, where these may still exist, so as to encourage entry.

This article is the first to look at the consequences of an important regulatory phenomenon and its impact on competition. The results at the confluence of regulation and competition policies have potential applications across the world.

This paper aims to evaluate the impact of competitor entry on efficiency outcome in two‐sided network context.

The context is the population of incumbent firms making up the local exchange segment of the telecommunications industry in the US over a 14‐year period from 1988 to 2001.

The results show that encouraging the entry of competitors had led quite substantially to the enhancement of efficiencies for the incumbent firms.

A policy conclusion would be to enhance the incentives for new firms to enter two‐sided markets and also suppress anti‐competitive behavior by incumbents in such contexts with a firm hand so as to enhance efficiency levels.

This is a comprehensive analysis of policy changes in one of the world's largest telecommunications markets and the results have applicability across several other country contexts.

This chapter examines the impact of changes in foreign exchange legislation on the levels of R&D undertaken by pharmaceutical firms in India. Foreign exchange legislation in India was codified as the FERA, passed in 1973, and the legislation was based on the mens rea principle, assuming criminal intent on the part of transgressor. The provisions of FERA were replaced with those of new legislation, called FEMA, in 1999. The impacts of the changes have been examined.

The examination has been based on panel data of Indian pharmaceutical firms over a period of fifteen years, from 1991–1992 to 2005–2006.

The results of the analysis have shown that, controlling for a variety of other factors, a transition from FERA to FEMA has been associated with a significant rise in pharmaceutical firms’ average levels of R&D undertaken.

The research establishes that institutional changes have significantly impacted innovation performance in India. The sector examined, pharmaceuticals, is important for the Indian economy as well as for general welfare, since its products help enhance the quality of lives. How innovation can be enhanced in this sector is an important policy consideration.

The research is the first to examine the impact of changing the laws relating to foreign exchange transactions in India on capability building, via undertaking research activities, in an important sector of Indian industry.

The purpose of this paper is to evaluate the impact of the various mergers of the local exchange companies in the USA.

The authors evaluate all of the mergers that took place between 1988 and 2001 on several measures of performance for the firms that have undergone the mergers.

The analysis reveals that the impacts of mergers on the several measures of efficiency that have been evaluated have all been negative.

If the efficiency motive has been primary in influencing merger approvals, then the past mergers approved have led to inefficiencies, corresponding welfare losses for the American consumer, and the mergers of communication common carriers have not been in the public interest. On the other hand, given the inefficiency outcomes, views that the quiet life, hubris and a quest for possible market power have motivated the mergers cannot be discarded.

The results have considerable salience across industry segments and geographies where mergers are being considered and evaluated, since they call into question the strategic and public policy logic behind merger consummation.

Multinational enterprises (MNEs) play a dominant role in the international business (IB) literature. Traditionally, by far the majority of IB studies deal with issues at the micro level of the individual MNE, or at the meso level of a sample of individual MNEs in industries. This paper focuses on the impact of MNE behavior through foreign direct investment (FDI) on a country’s international trade, and vice versa. In so doing, this study responds to a recent plea for more macro‐level studies in IB into the effect of MNE behavior on the macroeconomic performance of countries as a whole, particularly developing and emerging economies. In the current study, we focus on the largest developing or emerging economy of all: China. Applying sophisticated econometric techniques, we unravel the causality and direction of FDI‐trade linkages for the Chinese economy in the 1980‐2003 period.

In the present knowledge economy, intellectual capital (IC) is regarded as one of the significant determinants of efficiency, profitability, and ultimately value of a firm. This chapter empirically investigates the ramifications of the IC on the level of efficiency of the firm. In addition, exploration of the changing dynamics in the relationship between IC and firm level efficiency in the face of global economic crisis is of special interest of this chapter. In attaining the objectives of the study, a comprehensive database of 299 manufacturing firms (chosen randomly from a stratification of six BSE manufacturing industry subsectors) were utilized during the period from 1999–2000 to 2013–2014. Firm level efficiency scores and implications of IC (as measured by employing Pulic's Value Added Intellectual Capital Model) on the level of efficiency of the firms were examined simultaneously using Stochastic Frontier Analysis. Empirical results revealed that IC significantly determines the efficiency of the manufacturing firms during the period of study. However, the impact of financial crisis was not robust in changing the synergy between efficiency and IC. Size, age, and leverage were also found to be significant determinants of efficiency during the period of study.