Roderick Macdonald

Strategic alliances: managing complementarity to capitalize on emerging technologies

Abstract There are many different ways for firms to enter emerging industries and many possible patterns of rivalry within such industries. Although the literature gives prominence to the pioneering role of small start-ups, the fact is that large firms have often tried to pioneer new industries, by leveraging on the achievements of their central research facilities. Some firms have sought an organizational complement to progressiveness in the R&D lab. This complement is the internal venture. However, internal ventures pose the difficulty of internal diversity. Strategic alliances, on the other hand, permit the firm to exploit new technologies in new industries with a minimum of internal diversity. They have the benefit of speedy access to technology or to market expertise, minimizing risk and financial exposure, and providing a greater focus when bringing resources to bear on innovation. Strategic alliances provide alternatives for collaboration between firms with minimal contamination of the pioneering and entrepreneurial spirit of new technology-based firms.

Strategic alternatives in emerging industries

Managers of firms in emerging industries face major challenges in coping with the day-to-day crises that arise from constantly changing operating conditions. But they also face more subtle strategic challenges that have to be addressed successfully if the firm is ultimately to survive. Rod Macdonald says there are three basic strategic options for these firms, and in this article he provides the analysis to help managers think their way through the difficult choices.

Time, timeliness of innovation, and the emergence of industries

Abstract Timeliness is an important issue in industrial innovation, particularly for the emergence of industries. To refine the concept of time in new industries, three streams of research are examined: new product innovation management, order of entry into new markets, and the life cycle literature. The same three dimensions of industrial gestation reappear in each stream of literature: the evolution in demand, the evolution of technology, and the evolution of the set of rival firms. The evolution along each of these axes takes the form of reduction of uncertainty regarding future events. The rate of reduction of uncertainty may not be the same for all three axes. As a result, both strategic planning and empirical studies of emergence must take into account the relative rate of development along each axis of technology uncertainty, demand uncertainty and rivalry uncertainty. Different strategic scenarios may result from different relative rates of development.

The Roots of the Crisis

The average house costs the equivalent of two to five years of the average person’s revenue, and few people ever save that much cash. Those who do have already been working for more than five to ten years, since they have to spend money to eat, get to and from work, and pay for their shelter during that time. If a couple in their twenties wants to marry and start a family, it may be difficult for them to own their own home, since their expenses will be rising as the family grows, and as parents they will probably not both work outside the home continuously. Yet these are precisely the people who would most benefit from owning a home.

How Italy Experienced the Euro Crisis

This chapter is about the financial crisis in Italy. After purveying the symptoms that reveal the crisis and contrasting the crisis in Italy with those in other euro zone countries, the chapter offers a brief history of Italy from its reunification to the post-Second World War years. The second section describes the economy of Italy in the Golden Age from 1953 to 1971, with particular attention paid to the impact of SOE. Next comes an overview of the economy in the 1970s and 1980s. The electoral revolts from 1992 to 1994 are then covered, with a description of the evolution of the economy in the 1990s. Then comes the experience of Italy participating in the euro, including the onset of the crisis. The final section proposes a schema of the dynamics of the crisis in Italy.

A Financial and Economic Crisis in Greece

This chapter is about the financial and economic crisis in Greece. After listing symptoms that indicate the reality of a crisis, the following sections describe the prelude to the crisis. The first deals with the incubation of modern Greece—and of some behaviour of recent Greek governments—within the Ottoman Empire, continuing with economic and political developments in the decades immediately subsequent to the Second World War. The next section examines developments in the 1980s and early 1990s, with particular attention to fiscal policy, monetary policy and the macroeconomic environment. A third section discusses the slowing productivity growth that characterizes the last quarter of the twentieth century. This is followed with a caveat regarding the statistics provided by the Greek government in the past. Access to the European monetary union is the topic of the next section. Then comes a discussion of the apparent boom brought by accession to the euro. The chapter ends with a simplified model of the dynamic of the crisis in Greece.

Spain, the Euro and a Crisis

This chapter is about Spain and the crisis that occurred there in 2010. After a consideration of the symptoms revealing the crisis, an economic (and political) historical background follows. Next comes a description of the financial situation of Spain in 2007. After this come two sections on the real estate bubble in Spain. The first section deals with spurious explanations of the bubble. The second of these sections dwells on underlying factors such as the law governing zoning and the corruption of local officials. It then considers the role of money laundering and other factors contributing to the rising demand for housing. After this examination of the underlying factors, the next section examines the cajas de ahorro and the role they played in the bubble, particularly by financing developers. The last section proposes a simplified dynamic of the financial crisis in Spain.

Ireland: From Prosperity to Crisis

This chapter describes the crisis in Ireland. After noting the admiration in which other countries held the economy of Ireland previous to the crisis, it lists symptoms indicating that there is indeed a crisis. The following sections provide a prehistory of this crisis. The first offers a condensed history of Ireland’s economy up to the Second World War. The following section continues with a post-war history of the Irish economy, covering ideas and actors before describing political and economic action and policy changes. The next section pursues with a history of the Irish economy in the 1970s and 1980s. After this, the Celtic Tiger (1993–2007) is described, both in terms of the genetic factors or blueprint and in terms of the resulting economic performance. The onset of the crisis is then related. The final section proposes a dynamic of the crisis in Ireland.

Conclusion: The Crisis and Lessons for the Administration of the Euro

Six sections constitute this short concluding chapter. The first section situates the book with respect to other approaches to the euro crisis. It reasserts the mission of the book: basing the explanation of the euro crisis upon an understanding of the crises in individual countries. The second section provides an overview of the book, summarizing each chapter. The third section examines similarities and differences in the crisis experience of the various countries. Lessons are then drawn from the different crisis experiences, such as the impact of money laundering and the importance of sanctioning risk management guidelines. Next comes a lesson to be drawn from the overall euro crisis: the administration of the euro project can be improved, notably in the procedures inherited from the Stability and Growth Pact and its amendments. The chapter ends by questioning whether Europe and Greece are capable of the changes in mentality required of each in order to effectively resolve the crisis in Greece.

Introduction: Europe, the Euro and a Crisis

After providing geographic and historical introductions that motivate the creation of the euro, this chapter lists and describes the treaties and agreements that prepared the introduction of the euro on January 1, 1999. It then describes fiscal and monetary policy of governments within the euro regime. Next, it explains the two meanings of “euro crisis,” describes the crisis according to each meaning and notes different explanations of the crisis. After this, the symptoms of crisis are listed for various countries participating in the euro, showing that something went wrong in the economy of Europe and that the problems were more acute in some countries than others. Finally, this introduction describes the content of the subsequent chapters of this book.