Advanced Search
MyIDEAS: Login

Strategic choice during economic crisis: Domestic market position, organizational capabilities and export flexibility

Contents:

Author Info

  • Lee, Seung-Hyun
  • Beamish, Paul W.
  • Lee, Ho-Uk
  • Park, Jong-Hun
Registered author(s):

    Abstract

    This study examines how sudden shrinkage of domestic demand affects firm-level export performance. Using the Asian economic crisis as a natural experiment, we show that while the industrial organization (IO) economics and resource-based view (RBV) apply well in the pre-crisis period, the real options perspective does a better job in explaining firms' efforts to increase exports in the post-crisis period. Specifically, using a real options perspective, we show how sudden change in domestic demand provides benefits to those firms that have invested in flexible capabilities while those firms that are locked in with inflexible resources fail to change. We find that the positive relationship between a firm's domestic market position and export intensity becomes stronger in the post-crisis than the pre-crisis period. Further, we find a positive relationship between non-location-bound flexible capabilities such as R&D and export intensity and a negative relationship between location-bound inflexible capabilities such as advertising and export intensity. These relationships become more pronounced in the post-crisis period.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sciencedirect.com/science/article/pii/S1090951608000187
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal Journal of World Business.

    Volume (Year): 44 (2009)
    Issue (Month): 1 (January)
    Pages: 1-15

    as in new window
    Handle: RePEc:eee:worbus:v:44:y:2009:i:1:p:1-15

    Contact details of provider:
    Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/620401/description#description

    Order Information:
    Postal: http://www.elsevier.com/wps/find/journaldescription.cws_home/620401/bibliographic
    Web: http://www.elsevier.com/wps/find/journaldescription.cws_home/620401/bibliographic

    Related research

    Keywords: Export intensity Domestic market position Real options Economic crisis Emerging economy;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Lee, Seung-Hyun & Makhija, Mona & Paik, Yongsun, 2008. "The value of real options investments under abnormal uncertainty: The case of the Korean economic crisis," Journal of World Business, Elsevier, vol. 43(1), pages 16-34, January.
    2. Lee, Keonbeom & Peng, Mike W. & Lee, Keun, 2008. "From diversification premium to diversification discount during institutional transitions," Journal of World Business, Elsevier, vol. 43(1), pages 47-65, January.
    3. Mariko Sakakibara & Michael E. Porter, 2001. "Competing At Home To Win Abroad: Evidence From Japanese Industry," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 310-322, May.
    4. Oster, Sharon M, 1982. "Intraindustry Structure and the Ease of Strategic Change," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 376-83, August.
    5. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
    6. Hennart, J.-F. & Park, Y.R., 1994. "Location, governance and strategic determinants of Japanese manufacturing investment in the United States," Open Access publications from Tilburg University urn:nbn:nl:ui:12-174010, Tilburg University.
    7. Chris Changwha Chung, 2005. "The Impact of Institutional Reforms on Characteristics and Survival of Foreign Subsidiaries in Emerging Economies," Journal of Management Studies, Wiley Blackwell, vol. 42(1), pages 35-62, 01.
    8. Jaideep Anand & Andrew Delios, 1997. "Location Specificity and the Transferability of Downstream Assets to Foreign Subsidiaries," Journal of International Business Studies, Palgrave Macmillan, vol. 28(3), pages 579-603, September.
    9. Briance Mascarenhas, 1986. "International Strategies of Non-Dominant Firms," Journal of International Business Studies, Palgrave Macmillan, vol. 17(1), pages 1-25, March.
    10. Bruce Kogut, 1991. "Joint Ventures and the Option to Expand and Acquire," Management Science, INFORMS, vol. 37(1), pages 19-33, January.
    11. Pakes, Ariel S, 1986. "Patents as Options: Some Estimates of the Value of Holding European Patent Stocks," Econometrica, Econometric Society, vol. 54(4), pages 755-84, July.
    12. Peltzman, Sam, 1977. "The Gains and Losses from Industrial Concentration," Journal of Law and Economics, University of Chicago Press, vol. 20(2), pages 229-63, October.
    13. Kim, Oknam & Hahn, Minhi, 2004. "An advertising model for hierarchically structured markets: application to the automobile industry," Journal of Business Research, Elsevier, vol. 57(8), pages 829-833, August.
    14. Henderson, Rebecca. & Cockburn, Iain., 1994. "Measuring competence? : exploring firm effects in pharmaceutical research," Working papers 3712-94., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    15. Israel Shaked, 1986. "Are Multinational Corporations Safer?," Journal of International Business Studies, Palgrave Macmillan, vol. 17(1), pages 83-106, March.
    16. Jay B. Barney, 1986. "Strategic Factor Markets: Expectations, Luck, and Business Strategy," Management Science, INFORMS, vol. 32(10), pages 1231-1241, October.
    17. Titus Awokuse, 2005. "Exports, economic growth and causality in Korea," Applied Economics Letters, Taylor & Francis Journals, vol. 12(11), pages 693-696.
    18. Miller, Danny, 1992. "The icarus paradox: How exceptional companies bring about their own downfall," Business Horizons, Elsevier, vol. 35(1), pages 24-35.
    19. Ang, James S. & Ma, Yulong, 2001. "The behavior of financial analysts during the Asian financial crisis in Indonesia, Korea, Malaysia, and Thailand," Pacific-Basin Finance Journal, Elsevier, vol. 9(3), pages 233-263, June.
    20. Caves, Richard E, 1981. "Intra-Industry Trade and Market Structure in the Industrial Countries," Oxford Economic Papers, Oxford University Press, vol. 33(2), pages 203-23, July.
    21. Constance E. Helfat & Marvin B. Lieberman, 2002. "The birth of capabilities: market entry and the importance of pre-history," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 725-760, August.
    22. Chang,Sea-Jin, 2003. "Financial Crisis and Transformation of Korean Business Groups," Cambridge Books, Cambridge University Press, number 9780521814355, October.
    23. Braunerhjelm, Pontus, 1996. "The relation between firm-specific intangibles and exports," Economics Letters, Elsevier, vol. 53(2), pages 213-219, November.
    24. Kiyohiko Ito, 1997. "Domestic Competitive Position and Export Strategy of Japanese Manufacturing Firms: 1971--1985," Management Science, INFORMS, vol. 43(5), pages 610-622, May.
    25. Martha Amram, & Nalin Kulatilaka,, 1998. "Real Options:: Managing Strategic Investment in an Uncertain World," OUP Catalogue, Oxford University Press, number 9780875848457.
    26. Noel Capon & John U. Farley & Donald R. Lehmann & James M. Hulbert, 1992. "Profiles of Product Innovators Among Large U.S. Manufacturers," Management Science, INFORMS, vol. 38(2), pages 157-169, February.
    27. Abernathy, William J. & Clark, Kim B., 1985. "Innovation: Mapping the winds of creative destruction," Research Policy, Elsevier, vol. 14(1), pages 3-22, February.
    28. Kravis, Irving B & Lipsey, Robert E, 1992. "Sources of Competitiveness of the United States and of Its Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 193-201, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Muñoz Sepúlveda, Jesús A., 2014. "Residual exports and domestic demand: an empirical analysis," MPRA Paper 54799, University Library of Munich, Germany.
    2. Anna Bykova & Evgeniia Kuminova, 2013. "Did relational capital matter during the financial crisis?," HSE Working papers WP BRP 23/FE/2013, National Research University Higher School of Economics.
    3. Martín-Tapia, Inmaculada & Aragón-Correa, J. Alberto & Rueda-Manzanares, Antonio, 2010. "Environmental strategy and exports in medium, small and micro-enterprises," Journal of World Business, Elsevier, vol. 45(3), pages 266-275, July.
    4. García-Villaverde, Pedro M. & Ruiz-Ortega, María J. & Parra-Requena, Gloria, 2012. "Towards a comprehensive model of entry timing in the ICT industry: Direct and indirect effects," Journal of World Business, Elsevier, vol. 47(2), pages 297-310.
    5. Hicheon Kim & Johngseok Bae & Garry Bruton, 2012. "Business groups and institutional upheaval in emerging economies: Corporate venturing in Korea," Asia Pacific Journal of Management, Springer, vol. 29(3), pages 729-752, September.
    6. Matevž Rašković & Maja Makovec Brenčič & Barbara Moerec, 2011. "Trust and management-to-employee communication in Slovenian companies: Some evidence from the current economic crisis," Tržište/Market, Faculty of Economics and Business, University of Zagreb, vol. 23(2), pages 165-187.
    7. Dietmar Sternad, 2012. "Adaptive Strategies in Response to the Economic Crisis: A Cross-Cultural Study in Austria and Slovenia," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 10(3 (Fall)), pages 257-282.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eee:worbus:v:44:y:2009:i:1:p:1-15. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.