What determines vertical scope? Transactions cost economics (TCE) has been the dominant paradigm for understanding "make" vs. "buy" choices. However, the traditional focus on empirically validating or refuting TCE has taken attention away from other possible drivers of scope, and it has rarely...

This paper suggests that an unrecognized determinant of global expansion is the structure of the value chain, which is both country- and sector-specific. Value chain structure evolves in a path-dependent, country-specific way. Differences in vertical structures between countries predict the...

This article considers how ideas from evolutionary theory in general, and Sidney Winter in particular, can be fruitfully combined with ideas from Herbert Simon and the Carnegie tradition on decomposability and cognitive limits. Rather than focusing on any one individual issue, this article...

In this paper, we consider how a better understanding of entrepreneurial activities can help explain how firm and industry boundaries change over time and how a more comprehensive understanding of boundary setting can explain where entrepreneurial activities are directed. We start from the...

This paper shows how idiosyncratic resources can be the basis of sustained profitability and persistent heterogeneity under competitive conditions: Generic inputs purchased in the market become idiosyncratic resources by investments in customization. Analytically, we show how heterogeneous firms...

In this study, we investigate whether managerial specialization leads to significant outperformance of investment trusts. In the existing literature on the performance of mutual funds one of the unsolved puzzles is the persistence of outperformance. We argue that specialization is one of the...

Traditional finance theory based on the assumptions of symmetric information and perfect and competitive markets has provided many important insights. These include the Modigliani and Miller Theorems, the CAPM, the Efficient Markets Hypothesis and continuous time finance. However, many empirical...

The Barings, Daiwa Bank and Sumitomo Corp. financial debacles in the mid-1990s suggest that management failures rather than misfortune, errors, or complexity are a major source of the risk of financial debacles. These errors are systematic and are a concommittant of the structure of trading and...

Positive and negative asset price bubbles and their relationship to monetary policy are considered. Positive bubbles occur when there is an agency problem between banks and the people they lend money to because the banks cannot observe how the funds are invested. This causes a risk shifting...