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Shrader (2001) "Collaboration and performance in foreign markets: The case of young high-technology manufacturing firms

27 important questions on Shrader (2001) "Collaboration and performance in foreign markets: The case of young high-technology manufacturing firms

Which important choice should manufacturing firms make regarding the appropriate mode for organizing it foreign activities when going international?

Exporting
Licensing
Franchising
Joint ventures
Wholly owned foreign subsidiaries

What is a fundamental dimension of the entry mode decision that directly impacts the degree of control, resource commitment, risk, and 'rent sharing'?

The extent to which firms collaborate with local firms in the host markets they enter

What may multinational firms also choose?

Not to engage in ongoing collaboration with outside partners and have the internalization options of either producing and marketing products entirely within their own organization structures or producing their products inhouse and then relying on arm’s-length transactions to market them

How can collaboration with local partners benefit multinational firms?

By providing knowledge and access that might otherwise be unobtainable or extremely costly to obtain experientially via internalization or repeated arm's length market transactions

Where can local firms provide knowledge about?

Local economies
Politics
Cultures
Business customs
Demands and tastes
Information about or access to local labor forces
Distribution channels
Infrastructures
Raw materials
Other factors required to conduct business in their countries

Why may this particularly be beneficial to high-technology firms?

Because the geographic scope with which technology can be exploited is normally much wider than a firm's marketing expertise

Where does collaboration allows firms to?

To extent its competitive advantages into more locations, faster and with reduced cost and market uncertainty.

What can provide a more strategic flexibility under conditions of rapid technological change?

Leveraging the resources of local partners, rather than committing the firm's own resources for knowledge acquisition

Where do the benefits of collaboration stem from?

From the exchange of knowledge between partners

What can collaboration reduce?

The investment required by a multinational firm and the uncertainty of doing business in an unfamiliar environment, while simultaneously leveraging the firm's competitive advantage and allowing it to expand more rapidly and to more locations

What does the transaction cost theory provide?

An excellent lens through which to examine the relevant costs and benefits of collaboration and, more importantly, for understanding how those costs and benefits vary depending on the type of knowledge that is transferred between partners

What is the transaction cost argument?

Both collaboration and internalization involve specific and substantial transaction costs

What happens with the relationship between collaboration and performance?

It is moderated by the transaction costs of collaboration relative to the transaction costs of internalization

What do these transaction costs include?

Administration, additional payroll and overhead, added plant, property and equipment
Costs of administration
Potential inefficiencies that the opportunity costs associated with having assets committed to internal transactions

Where are the transaction costs associated with collaboration directly related to?

To the type of knowledge that is transferred as well as to the contextual factors, including

Bounded rationality
Opportunism

Where do the advantages of internalization stem from?

From avoiding the transaction costs of collaborating and include reducing the direct and indirect costs associated with writing, enacting, and enforcing contracts with partners

What can internalization also reduce?

The sometimes substantial costs associated with traning partners, technology assistence, management assistance, increased communication complexity, increased conflict, and the real or feigned incompetence of partners

Where do the most important advantages of internalization result form ?

Reducing the impacts of bounded rationality and opportunism on the transfer of knowledge between partners

What are the two basic assumptions upon which transaction cost theory is founded which directly relate to the transfer of knowledge to outside partners?

People are constrained by bounded rationality since they do not access all relevant information, nor they can fully comprehend all the information that is available to them
Furthermore, people are regarded as opportunistic: they pursue their own self-interest with guile

Where does dissemination risk refers to?

To the risk that firm-specific advantages in know-how will be expropriated by those with whom a firm collaborates and used for purposes other than those for which they were originally intended

Where are new ventures generally required to compete on?

On the basis of innovation-based or marketing-based differentiation because they are unlikely to be able to compete with established competitors on a cost basis

Why is R&D a major reason for collaboration?

Because technological advantages obsolesce over time, continuous investment in R&D is required to maintain competitive advantage. However, in some cases the knowledge may be so complex that even the innovator’s personnel do not fully understand it, and, therefore, cannot communicate it to outsider partners

In which way do international new ventures seek to transfer marketing-based advantages to foreign markets/

They frequently attempt to gain market power by beating competitors into foreign markets, establishing their products as industry standards, and aggressively creating brand loyalty before competitors arrive.

What does the ability to transfer marketing-based differentiation require?

A high level of knowledge about local customers' demand and tastes

What does the proliferation of international licensing agreements of international franchises indicate?

That brand name, image, and other marketing advantages can be efficiently transferred to foreign parterns

Why does this also involve transaction costs?

Because outside partners can benefit from the reputation of the multinational firm while substituting inferior products at low cost

How can disadvantages of free riding almost entirely mitigated?

By selecting appropriate partners: when trust is established

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