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The purpose of this paper is to theorize how the industry life cycle unfolds differently across places and how economic agglomeration varies over time.
Abstract
Purpose
The purpose of this paper is to theorize how the industry life cycle unfolds differently across places and how economic agglomeration varies over time.
Design/methodology/approach
The paper relies on literature review and conceptual analysis.
Findings
It generates a dynamic geographic concentration model (i.e. an industry’s degree of geographic concentration drops in the growth stage, rises in the mature stage, and drops again in the new growth stage) and a localized industry life-cycle model (i.e. temporal dynamics differ between the center and the periphery).
Originality/value
It makes contribution by theorizing that the extent to which an industry is geographically concentrated changes over time, and by demonstrating how an industry’s center and periphery may experience different temporal dynamics.
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Anita M. McGahan, Nicholas Argyres and Joel A.C. Baum
The central organizing principle for this volume – the industry life cycle model – is so widely accepted and its basic premises so taken for granted that it has become…
Abstract
The central organizing principle for this volume – the industry life cycle model – is so widely accepted and its basic premises so taken for granted that it has become conventional wisdom in business. Executives in a range of industries use the model to guide their thinking about when and how to invest in various industries. Diversification decisions, for example, are often made on the basis of life cycle logic, especially as large, established companies seek high-growth opportunities for investment.
Florian Waldner, Marion K. Poetz, Christoph Grimpe and Markus Eurich
What makes firms innovate their business models? Why do they engage in innovating how they create, deliver, and capture value? And how does such innovation translate into…
Abstract
What makes firms innovate their business models? Why do they engage in innovating how they create, deliver, and capture value? And how does such innovation translate into innovation performance? Despite the importance of business model innovation for achieving competitive advantage, existing evidence seems to be confined to firm-level antecedents and pays little attention to the impact of industry structure. This study investigates how different stages of an industry’s life cycle and levels of industry competition affect firms’ business model innovation, and how such innovation translates into innovation performance. Based on a cross-industry sample of 1,242 Austrian firms, we introduce a unique measure for the degree of innovation in a firm’s business model. The results indicate that the degree of business model innovation is highest toward the beginning of an industry life cycle, that is, in the emergent stage. Competitive industry pressures turn out to be negatively related to the degree of business model innovation. Moreover, we find that the degree of a firm’s business model innovation, conditional on it having introduced a new product or process recently, positively influences innovation performance. Our findings contribute to the ongoing dialog on the role of industry structure in business model innovation, and provide implications for the management of business model innovation.
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This paper aims to illustrate the value of the outsourcing life cycle, as described in several industry models, including ISO 37500.
Abstract
Purpose
This paper aims to illustrate the value of the outsourcing life cycle, as described in several industry models, including ISO 37500.
Design/methodology/approach
The authors present a comparison of outsourcing life cycles to provide an overview of current practices in the global outsourcing industry.
Findings
Several outsourcing life cycles have been defined by industry associations such as the International Association of Outsourcing Professionals (IAOP) and the National Outsourcing Association (NOA). Academic research has created several outsourcing life cycles, notably the model from the London School of Economics (Cullen and Willcocks, 2005). Finally, commercial models have been defined, for example the Vendor and Sourcing Management model from IDC (2014).
Research limitations/implications
Researchers will find the overview of different life cycles useful in assessing maturity of outsourcing organizations.
Practical implications
Practitioners will find the detailed description of ISO 37500 and the comparative life cycles to be illustrative of different approaches to managing outsourcing transactions. Both buyers and providers will be able to compare their own life cycle to industry standards.
Originality/value
Little or no research has been conducted on how outsourcing life cycles contribute to effective outsourcing. This paper provides a foundation for such research.
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Tanveer Ahsan, Man Wang and Muhammad Azeem Qureshi
The purpose of this study is to explain the adjustment rate made to target capital structures by listed non-financial firms in Pakistan during the courses of their life…
Abstract
Purpose
The purpose of this study is to explain the adjustment rate made to target capital structures by listed non-financial firms in Pakistan during the courses of their life cycles and to determine what factors influence their adjustment rates.
Design/methodology/approach
The study used multivariate analysis to classify 39 years (1972-2010) of unbalanced panel data from listed non-financial Pakistani firms in terms of their growth, maturity and decline stages. Further, it used a fixed-effects panel data model to determine the factors that influence capital structure and adjustment rates during the life-cycle stages of firms.
Findings
The study observed a low–high–low leverage pattern during the growth, maturity and decline stages of businesses in line with tradeoff theory. Furthermore, the study observed an adjustment rate for growing firms of between 49.3-37.9 per cent, for mature firms of between 35.5-17.5 per cent and for declining firms of between 22.2-15.1 per cent toward their respective leverage targets. Furthermore, it was found that growing firms have higher leverage adjustment rates because, by having more investment opportunities, these firms can alter their capital structures easily by changing the composition of their new issues.
Practical implications
Erratic economic conditions in Pakistan have created an uncertain business environment. Therefore, even mature Pakistani firms remain skeptical about the sustainability of positive trends among current economic indicators. Furthermore, to avoid uncertainty, Pakistani firms grab short-term opportunities by using quickly available short-term debt as a main financing source. Government should introduce long-term policies that will stabilize the business environment and strengthen the financial, as well as the judicial, institutions of the country so that these firms may benefit from long-term investment opportunities and access more options for raising external financing. The results of this study will also help policymakers for other Asian economies where the capital markets are underdeveloped and where firms have higher leverage ratios, such as Thailand, Indonesia and Malaysia.
Originality/value
This is the first study in Pakistan that has used a multivariate approach to classify firms into their different life-cycle stages and to discover the leverage adjustment rates of firms during those life-cycle stages.
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The purpose of this paper is to explain how the process of change is determined by the product lifecycle and the product lifecycle's relation to the organization structure.
Abstract
Purpose
The purpose of this paper is to explain how the process of change is determined by the product lifecycle and the product lifecycle's relation to the organization structure.
Design/methodology/approach
This paper is based on years of experience helping business organizations adapt to change by installing computer systems and consulting with senior management in this process.
Findings
Business organizations are highly variable in their structure, it is the environment that determines the organization structure. Where businesses are in a stable environment business organizations are capital intensive. Where the environment is highly volatile capital investment is limited and small flexible organizations prevail. In addition, there is a biological theory that totally parallels this theory.
Originality/value
Those who fail to understand the concepts are inclined to make massive mistakes in capital investment. This is often the reason why small startup companies are able to beat out larger established competitors in highly volatile environments.
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The dominance of multinational firms with developed global scanning capacities for sourcing and marketing in the early 1970s has led people to consider if the product life…
Abstract
The dominance of multinational firms with developed global scanning capacities for sourcing and marketing in the early 1970s has led people to consider if the product life cycle approach to international manufacturing and marketing is still valid. The usefulness of this approach is examined by fitting a logistic growth curve on the 1970–1979 trade data of the UK electronics industry. It is shown that although still valid, the international product life cycle model should combine with the theory of comparative costs to provide a more satisfactory explanation of the pattern of trade, as it is only applicable to manufactured goods.
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Despite existing life cycle costing (LCC) method descriptions and practicable suggestions for conducting LCC analyses, no systematic analyses on actual implementations of…
Abstract
Purpose
Despite existing life cycle costing (LCC) method descriptions and practicable suggestions for conducting LCC analyses, no systematic analyses on actual implementations of LCC methods exist. This paper aims to review reports on LCC applications to provide an overview of LCC uses and implementation feasibility.
Design/methodology/approach
A review of LCC cases reported in academic and practitioner literature. Case reports were compared against one another and against the defining articles in the field.
Findings
Most of the reported LCC applications were far from ideal. Compared to the methods suggested in the literature many of the case study applications: covered fewer parts of the whole life cycle, estimated the costs on a lower level of detail, used cost estimation methods based on expert opinion rather than statistical methods, and were content with deterministic estimates of life cycle costs instead of using sensitivity analyses.
Research limitations/implications
This review is limited to reported LCC applications only. Further research is encouraged in the form of a field‐based multiple‐case study to reveal context‐specific dimensions of LCC analysis and implementation challenges in more detail.
Practical implications
This review highlights the difficulty of conducting a reliable LCC analysis, and points out typical problems that should be carefully considered before drawing conclusions from the LCC analysis.
Originality/value
First systematic analysis of LCC applications that gives directions for further research on the LCC concept.
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Jesús M. Valdaliso, Aitziber Elola and Susana Franco
This paper aims to examine whether in old industrial regions, the trajectory of clusters follows that of their corresponding industry or deviates from it and which are the…
Abstract
Purpose
This paper aims to examine whether in old industrial regions, the trajectory of clusters follows that of their corresponding industry or deviates from it and which are the factors that account for cluster evolution. This paper deals with the issue of how established clusters either renew or transform themselves in such regions and how they adapt to changes in their corresponding international industries.
Design/methodology/approach
This research paper draws from in-depth case studies on six industrial clusters, takes a longitudinal perspective and uses a multi-level and qualitative analysis. Based on existing literature, the paper suggests and exploratory analytical framework with four alternative scenarios for cluster evolution and three broad factors: cluster knowledge base, social capital at cluster and region-level and public policies.
Findings
Clusters do not always follow the life cycle of its dominant industry. The paper clearly shows a diversity of cluster evolution across clusters and even within clusters (at subcluster level). This study suggests that cluster knowledge diversity and heterogeneity allow to broaden the scope of evolutionary trajectories available; the same goes for social capital at cluster and region levels.
Research limitations/implications
The main limitation of this paper lies in its qualitative approach that makes its conclusions more suggestive than conclusive. In any case, further research on other Basque clusters may corroborate or question its findings.
Originality/value
The paper offers an empirical and longitudinal study on cluster evolution, very much needed to the ongoing theoretical discussion on this issue. So far, there are very few empirical studies on cluster evolution with this perspective. At the same time, it presents a theoretical framework to analyse diversity of cluster evolution in old industrial regions that builds on Menzel and Fornah’s (2010) model.
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