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Book part
Publication date: 3 October 2006

Filippo C. Wezel and Arjen van Witteloostuijn

This paper extends organizational ecology by making an attempt to disentangle the consequences of scale and scope economies for organizational survival under different product…

Abstract

This paper extends organizational ecology by making an attempt to disentangle the consequences of scale and scope economies for organizational survival under different product market configurations. We test our hypotheses by analyzing the mortality rates of 643 UK motorcycle producers during the 1899–1993 period. The findings obtained offer two specific contributions. First, by separating the performance impact of scale from scope economies we clarify the complex mechanisms behind the survival consequences of different organizational strategies. Second, we show how the intensity of both scale and scope forces is relative to the aggregate market-level product configuration. The implications of these findings for organizational ecology and strategic management, and their cross-fertilization, are further discussed.

Details

Ecology and Strategy
Type: Book
ISBN: 978-1-84950-435-5

Book part
Publication date: 12 September 2017

Anna Bottasso and Maurizio Conti

This chapter examines the main methodological issues involved in the comprehension of the cost structure of the airport industry and suggests considerations for future airport…

Abstract

This chapter examines the main methodological issues involved in the comprehension of the cost structure of the airport industry and suggests considerations for future airport cost analyses. Such understanding has become a crucial concern for policy makers, regional planners, and managers in order to deal with optimal market design (e.g., regulation and market configuration) and airport strategies (e.g., pricing, investments, and alliances). An in-depth analysis of the economics of cost functions is presented, together with a description of the relevant multi-output cost economies measures (average incremental costs, scale and scope economies, and cost complementarities). We also discuss the assumptions underlying estimates of total versus variable cost functions and the importance of estimating a sufficiently flexible functional form. Moreover, we provide a critical survey of the international empirical literature on the cost structure of the airport industry, which highlights how econometric estimates strongly depend on the sample choice and the empirical model considered. Indeed, while econometric studies on international samples based on long-run cost function estimates show that long-run scale economies are never exhausted, single country studies mostly estimate variable cost functions and find lower values for scale economies at median sample points that tend to decrease with size. We discuss why we believe that studies based on the estimation of short-run variable cost functions offer more reliable results, given the reasonable assumption of airport overcapitalization in the short run. We conclude our work by noting that underlying policy issues related to planning and regulation, as well as to the optimal market structure of the airport sector, need to take into account the role played by vertical relationships between airports and airlines.

Details

The Economics of Airport Operations
Type: Book
ISBN: 978-1-78714-497-2

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Article
Publication date: 1 April 2003

Georgios I. Zekos

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some…

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Abstract

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

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Managerial Law, vol. 45 no. 1/2
Type: Research Article
ISSN: 0309-0558

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Article
Publication date: 1 October 1999

Roger Hallowell

The consolidation of numerous highly‐fragmented US service industries has attracted considerable capital inflows during the 1990s. Fundamental questions about this phenomenon…

2522

Abstract

The consolidation of numerous highly‐fragmented US service industries has attracted considerable capital inflows during the 1990s. Fundamental questions about this phenomenon include the sources of value in consolidations, and how these firms avoid the diseconomies of scale and scope noted in the service management literature. This paper introduces the consolidation phenomenon, discusses relevant theory, and begins to develop a framework useful in the understanding of scope economies for services.

Details

International Journal of Service Industry Management, vol. 10 no. 4
Type: Research Article
ISSN: 0956-4233

Keywords

Abstract

Details

Transport Economic Theory
Type: Book
ISBN: 978-0-08-045028-5

Article
Publication date: 26 January 2010

Anders Henten and Helge Godoe

The purpose of this paper is to discuss the concept of demand side economies of scope in relation to multiplay services. The basic question raised in the paper is the extent to

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Abstract

Purpose

The purpose of this paper is to discuss the concept of demand side economies of scope in relation to multiplay services. The basic question raised in the paper is the extent to which demand side economies of scope in the area of multiplay is based on an externality founded in a positive feedback mechanism as in the case of demand side economies of scale in interactive communication networks.

Design/methodology/approach

In order to elucidate this, the paper first presents and explores the concept of economies of scope, and more specifically demand side economies of scope. Second, an analysis of the bundling strategies of operators in the field is presented, including an examination of the forms of bundling with respect to how open or close the business models implemented are. After this analysis, the paper concludes with a discussion of the demand side economies of scope concept aiming to contribute to a qualification of the concept and its applicability.

Findings

The paper concludes that the value proposition of multiplay services is more related to the intrinsic value of the service than its extrinsic value. This constitutes a major difference between demand side economies of scale and demand side economies of scope.

Practical implications

The findings of the paper have practical implications for operators offering multiplay services with respect to the drivers of this market.

Originality/value

The value of the paper lies in its discussion of the concept of demand side economies of scope.

Details

info, vol. 12 no. 1
Type: Research Article
ISSN: 1463-6697

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Book part
Publication date: 11 August 2014

Lawton Robert Burns, Jeff C. Goldsmith and Aditi Sen

Researchers recommend a reorganization of the medical profession into larger groups with a multispecialty mix. We analyze whether there is evidence for the superiority of these…

Abstract

Purpose

Researchers recommend a reorganization of the medical profession into larger groups with a multispecialty mix. We analyze whether there is evidence for the superiority of these models and if this organizational transformation is underway.

Design/Methodology Approach

We summarize the evidence on scale and scope economies in physician group practice, and then review the trends in physician group size and specialty mix to conduct survivorship tests of the most efficient models.

Findings

The distribution of physician groups exhibits two interesting tails. In the lower tail, a large percentage of physicians continue to practice in small, physician-owned practices. In the upper tail, there is a small but rapidly growing percentage of large groups that have been organized primarily by non-physician owners.

Research Limitations

While our analysis includes no original data, it does collate all known surveys of physician practice characteristics and group practice formation to provide a consistent picture of physician organization.

Research Implications

Our review suggests that scale and scope economies in physician practice are limited. This may explain why most physicians have retained their small practices.

Practical Implications

Larger, multispecialty groups have been primarily organized by non-physician owners in vertically integrated arrangements. There is little evidence supporting the efficiencies of such models and some concern they may pose anticompetitive threats.

Originality/Value

This is the first comprehensive review of the scale and scope economies of physician practice in nearly two decades. The research results do not appear to have changed much; nor has much changed in physician practice organization.

Details

Annual Review of Health Care Management: Revisiting The Evolution of Health Systems Organization
Type: Book
ISBN: 978-1-78350-715-3

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Article
Publication date: 16 March 2010

John Banko, Scott Beyer and Richard Dowen

The purpose of this paper is to examine market concentration, economies of scale, economies of scope, and the relative size of a particular fund, within a fund family, as…

1803

Abstract

Purpose

The purpose of this paper is to examine market concentration, economies of scale, economies of scope, and the relative size of a particular fund, within a fund family, as determinants of mutual‐fund expense ratio. This examination is focused at the asset‐manager level and is based on the Morningstar equity and fixed‐income style classifications.

Design/methodology/approach

All data used in this study come from the July Morningstar Principia database for the years 1997 through 2006. One challenge of working with these data is that Morningstar treats each separate class of a fund as though it were an individual fund. As a result all Morningstar data items are reported for each fund class as though they are data items for a separate fund. The data are modified so that the items for separate classes of a fund are merged into data for a single fund. For example, assets in a fund become the total of the assets in each class of the fund.

Findings

This study contributes to the literature on mutual‐fund managers, and the literature on the structure of mutual funds, by showing that market concentration at the asset‐manager level varies substantially across Morningstar styles, particularly for the fixed‐income funds. The paper shows that increased market concentration is associated with greater expenses for the funds under management, within a given Morningstar‐style box, for both equity funds and for fixed‐income funds. We also show that increased costs are partially offset by economies of scope for the fixed‐income funds.

Originality/value

This paper extends the current literature in several ways. First, it confirms the existence of economies of scale at the fund level within Morningstar style classifications. Second, it documents the existence of varying levels of market concentration within different Morningstar style classifications. Third, the results demonstrate that there is a negative relation between the scope of funds handled across the Morningstar classifications by a particular fund manager and the expense ratio for particular funds. Finally, the results presented in this paper show that the largest funds within a family are associated with the highest expense ratios in the family.

Details

Managerial Finance, vol. 36 no. 4
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 1 September 2002

Barbara Casu and Claudia Girardone

Outlines previous research on the efficiency of the Italian banking system, describes the structure of Italian banking groups and uses parametric (stochastic cost frontier) and

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Abstract

Outlines previous research on the efficiency of the Italian banking system, describes the structure of Italian banking groups and uses parametric (stochastic cost frontier) and non‐parametric (data envelopment analysis) approaches to assess the efficiency of Italian bank conglomerates in 1995 compared with the parent companies and subsidiearies. Explains the methodology and presents the results, which suggest that parent companies and subsidiaries are more efficient than groups and that efficiency is not related to size. Analyses efficiencies of scale and scope to show that bank groups gain more economies of scope than parents or subsidiaries; but finds mixed results for economies of scale.

Details

Managerial Finance, vol. 28 no. 9
Type: Research Article
ISSN: 0307-4358

Keywords

Book part
Publication date: 3 October 2006

Tim R. Holcomb, R. Michael Holmes and Michael A. Hitt

Research on diversification has produced insights into possible linkages between organizational scale and scope and firm performance. However, the paucity of research on strategy…

Abstract

Research on diversification has produced insights into possible linkages between organizational scale and scope and firm performance. However, the paucity of research on strategy implementation has hindered our understanding of the broader performance implications of diversification. We extend the resource-based view and diversification research by examining how firms can exploit diversifying investments designed to achieve scale and scope economies. Successful firms more effectively structure their resource portfolio, bundle resources into capabilities, and leverage these capabilities when implementing a diversification strategy. We develop a model linking strategies by which firms expand product and geographic market scope to the actions they take to manage resources. We examine three actions – internal development, acquisitions, and strategic alliances – and discuss the implications of these actions using the resource management framework.

Details

Ecology and Strategy
Type: Book
ISBN: 978-1-84950-435-5

1 – 10 of over 45000