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The purpose of this paper is to present a new perspective on the marketing-R & D interface by modelling firms that develop new products in a duopolistic market.

By using a game-theoretic modelling approach, this study examines strategic delegation, through which the marketing and R & D managers of each firm are given authority over pricing and new products’ quality levels.

Interestingly, the study finds that the case where two managers with conflicting incentives negotiate (the horizontal coordination case) might produce a better financial outcome than when the managers’ decisions are perfectly coordinated by a profit-maximizing CEO (the vertical control case). In addition, the study identifies several conditions that guarantee horizontal coordination’s generation of higher profit, such as high (or low) sensitivity to the quality (or price) of a new product. The paper further shows that two competing firms may select horizontal coordination as a Nash equilibrium.

These findings provide new insights into the role of marketing-R & D interaction under strategic delegation, which may allow rival firms to “spend smart” on R & D, avoid excessive (and unnecessary) quality competition, and thus enhance the profitability of new products. Such insights would be useful for any firms under budget constraints.

To the authors’ knowledge, this paper represents the first attempt to analyze how delegation interacts with the conflicting incentives of marketing and R & D managers, which in turn affects the quality investment decisions, competitive intensity, and, ultimately, the financial outcomes of new products developed competing firms.

Despite its strategic importance, researchers have given little attention to when CEOs are willing to delegate decisions to top management team members. Prior studies and conventional wisdom suggest that CEOs will be more willing to delegate in times of good performance. Drawing from prospect theory, we suggest an alternative view: that CEOs will be risk‐averse and, therefore, less willing to delegate when their firms have performed well. Our findings provide support for both perspectives.

This chapter contains a model of strategic delegation from owners to managers in a Cournot duopoly where firms compete under incomplete information on the rival marginal costs and the relations between owners and managers are characterised by moral hazard It is shown that despite incomplete information the owners are able to use strategically the delegation of the output decision by making the managers' incentive schemes observable. Strategic delegation enhances the equilibrium level of the managers' effort, decreasing all firms' marginal costs and so increasing expected output. When moral hazard results in under-provision of effort, strategic delegation has a counter-balancing effect on the loss of productivity due to agency costs. On the other hand, collusive agreements are shown to weaken the disciplinary role on managers of product market competition. In the linear demand case is also shown that the equilibrium industry output in each state of nature is lower with strategic delegation than otherwise, so that the equilibrium price is distorted toward the monopoly price. Therefore, the expected output increase is all due to the better states of nature becoming more likely. However, at difference from what happens with strategic delegation under complete information in the output setting game, in this model consumers may not benefit from strategic delegation, since consumer's surplus is convex in output.

The purpose of the chapter is to develop and substantiate the necessity for delegating authorities in the process of decision making in modern business systems, as well as conditions, principles, and criteria of successful delegation in view of the applied approach. The methodology of the chapter is based on the method of analysis of causal connections, which is used for determining the necessity and essence of delegation, evaluating and comparison of the possible concepts and means of its implementation in the process of decision making, and studying the managers' opinions for determining the problems of delegation. This allows determining the conditions and criteria of successful delegation and developing an optimal set of principles that allow for effective implementation of the process of delegating authorities. As a result, the authors determine conditions and limitations that determine the possibility of delegating authorities in the process of decision making and offer criteria of successfulness of the process: preliminary task setting, interest and readiness of employees, briefing, written form of delegating authorities for complex and responsible tasks, accessibility of any necessary information, support from manager, and controllability of the process and result. The concepts of delegation are studied, and priority of its new model is established. Based on this, 11 principles of successful delegation were formulated: determination of goal, certainty, parity of rights and responsibility, adequate support, motivation of effective solutions, participation, “finite character,” structural limitations, complex nature of tasks, succession, and vision of perspective.

Complexities of the process of delegation in the process of decision making in business systems are described – their knowledge helps developing own styles of delegation and improving it.

This paper considers a strategic delegation setting with R&D spillovers in a Cournot market. The game we analyze has four stages. First, owners have the option to hire a manager. If they decide to delegate, then in the contracting stage they have to determine the optimal incentives for the managers. In the R&D stage, the levels of investments in research and development are chosen which reduce production costs. Finally, in the production stage quantities offered on the market are selected. We characterize the sub-game perfect outcomes of this game depending on the level of R&D spillovers and derive the following main insights. First, in a case where no spillovers exist, both owners have the incentive to delegate R&D and production decisions to managers. This leads to higher outputs, higher R&D activities, but lower profits for the firms in comparison with an entrepreneurial (owner-managed) firm. These results still hold if the basic production unit costs are high, independent of the existence of spillovers. In these cases delegation leads to an increase in social welfare. Second, we demonstrate that when spillovers exist and basic unit production costs are low, then there are situations where owners delegate but discourage managers from being aggressive. This “soft” commitment leads to lower outputs, lower R&D, but higher profits for the firms in comparison with an entrepreneurial firm. Here, however, delegation results in lower welfare.

The purpose of this paper is to examine if corporate entrepreneurship in terms of innovation and proactivity that has been developed in the international joint ventures (IJVs) in the Chinese cultures.

A structured questionnaire with a systematic sampling approach was adopted and sent to 800 firms (400 from the manufacturing industry and 400 from the servicing industry) in Beijing. Descriptive statistics, correlation analyses and stepwise multiple regression were used.

Corporate entrepreneurship exists in the IJVs, yet the Western‐Chinese JVs are more innovative and proactive. It is found that organisational variables such as flexibility, operational delegation, control system and the implementation of differentiation or growth strategy are significantly related to both innovation and proactivity. However, organisational variables on strategic delegation and risk‐taking culture are significantly related to proactivity only. On the other hand, the implementation of cost leadership is found to be unrelated to either innovation or proactivity.

Since the sample was drawn from IJVs in Beijing, comparative studies could be done on IJVs across different cities in China.

The significant results provide insights for studying the cultural context of China's IJVs.

Asian‐Chinese JVs have to improve corporate entrepreneurship posture in their management. This will attract professionals with international experience from different parts of the world to work in China's IJVs.

The entrepreneurial posture of an IJV can be measured in terms of its ability on innovation and proactivity. It provides benefits to both foreign and local partners in terms of local knowledge, access to market, and cost consideration as well as technological and skills transfers.

The purpose of this paper is to analyse a key research hypothesis: Do firms ruled by managers have a greater rationale to implement a mergers and acquisitions (M&A) than (family) firms managed by their owners?

This paper uses an organizational-delegation-quantity oligopoly game to examine the profitability of M&As for firms that strategically delegate production decisions to managers versus family firms with no strategic delegation. This paper delimits the condition for delegation as aimed at increasing merger profitability: non-family CEOs will implement mergers more frequently than family CEOs and more so for inefficient firms because these require fewer synergies. The paper tests the main propositions with data on all M&As by small and medium firms in Spain in 2017 and 2018.

The greater the average operating margin of a firm, the more likely a merger, which is also more likely between non-family firms. The evidence of higher ex post synergies by firms is not statistically significant due to large variability, suggesting that some family firms did not obtain the expected ex ante synergies. The lesson is that family firms competing in an environment of high marginal costs (e.g. industries in the early stage of the life cycle) seeking to grow through inorganic means such as M&As have an incentive to professionalize management.

This paper models competition in a Cournot fashion, representative of industries where firms compete in terms of sales growth and increased market share. Other results might hold in industries where firms are oriented to price competition or to service differentiation. The empirical research uses proxies for key variables such as the form of firm governance and unit costs, while hypotheses on ex ante synergies driving merger decisions had to be tested through ex post synergies.

M&As by small firms and family firms remain largely unexplored in the literature. This paper contributes with both a theoretical model and empirical research that highlight the implications of strategic delegation contracts for M&A deals.

In this chapter, the author outlines the link between organization design and competitive strategy, focusing on rivalry. A firm’s organization design choices can affect its competitive advantage as well as the strategic decisions of its rivals. Therefore, organization design can influence the nature and intensity of competitive interactions between firms. To illustrate this effect, the author focuses on the literature on divisionalization and offers a set of propositions as examples. Taken together, the author makes three main observations: (1) a firm’s competitive position and objectives are reflected in its organizational choices; (2) heterogeneity in competitive position and objectives lead to heterogeneity in organization design choices across firms; and (3) organization design and competitive strategy are interdependent processes. The author concludes by discussing the implications for strategy and management research and pointing out some opportunities for future research.