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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…

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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

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

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

1273

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

Keywords

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

Keywords

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

Keywords

Abstract

Details

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

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…

87002

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.

Details

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

Keywords

Article
Publication date: 1 February 1983

JAMES A. LEGGETTE and BRENDA KILLINGSWORTH

Recently, theoretical economics has recognized something which the business person has known for a long time, that is “the world of single product firms with U‐shaped average cost…

Abstract

Recently, theoretical economics has recognized something which the business person has known for a long time, that is “the world of single product firms with U‐shaped average cost curves is simply not the world of reality.” Key to this newly emerging multiproduct framework is the concept of economies of scope.

Details

Studies in Economics and Finance, vol. 7 no. 2
Type: Research Article
ISSN: 1086-7376

Book part
Publication date: 26 July 2008

Jeroen Hinloopen

Uncertainty is introduced into a model of strategic R&D. The formation of an R&D cooperative increases the success rate of R&D. This increase in the R&D success rate can be…

Abstract

Uncertainty is introduced into a model of strategic R&D. The formation of an R&D cooperative increases the success rate of R&D. This increase in the R&D success rate can be reinterpreted as the realization of scope economies due to cooperation. It appears that within this setting the range of technological spillovers increases for which the formation of R&D cooperatives is beneficial to society. They are always beneficial if economies of scope are large. Absent the realization of economies of scope the traditional result apply in that the technological spillover should exceed some threshold value for R&D cooperatives to be desirable. If the economies of scope are intermediate this threshold value is lowered.

Details

The Economics of Innovation
Type: Book
ISBN: 978-0-444-53255-8

Article
Publication date: 29 November 2018

Varaporn Pangboonyanon and Kiattichai Kalasin

The purpose of this paper is to investigate how within-industry diversification affects the financial performance of small- and medium-sized enterprises (SMEs) in emerging markets…

Abstract

Purpose

The purpose of this paper is to investigate how within-industry diversification affects the financial performance of small- and medium-sized enterprises (SMEs) in emerging markets (EMs). The authors draw on both the resource-based view and the institutional perspective and argue that within-industry diversification can enhance the financial performance of SMEs in EMs. Due to institutional voids in emerging economies, SMEs can gain additional benefits from scope economies, as well as from market returns, by filling product market voids and gaps in business ecosystems, while also enjoying low input and labor costs that reduce the coordination costs of diversification. This, in turn, enhances benefits of within-industry diversification, thereby resulting in higher financial profitability.

Design/methodology/approach

This study employs panel data econometrics to estimate the model. The authors test hypotheses on 195 firms, originating from five countries in Southeast Asia, during the period of 2009–2014.

Findings

The empirical results support the arguments. Within-industry diversification has a positive impact on the performance of SMEs in EMs. These effects become weaker when the institutional contexts are more developed. Nevertheless, such effects become stronger when SMEs in EMs are more efficient.

Research limitations/implications

The relationship between within-industry diversification and performance is a positive linear pattern, which differs from the pattern in advanced economies. In addition to unrelated diversification, the related diversification is preferable for firms in EMs.

Practical implications

The paper provides implications for SMEs that aim to enhance their performance by engaging in single product lines and within-industry diversification.

Originality/value

This paper examines the different ways within-industry diversification can enhance SMEs performance in EM contexts.

Details

International Journal of Emerging Markets, vol. 13 no. 6
Type: Research Article
ISSN: 1746-8809

Keywords

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