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Prof. Sumit Majumdar (University of Texas)

Program

  • Date: 07.07.2009
    Time:
    14:15 - 15:45
    Location:
    Room 307,Schackstr.4, 3rd floor

Underinvestment as a Deterrence Strategy:  General Purpose Technology Adoption in a Two-Sided Market with Competitor Entry

Investment in the face of entry has long been a strategy used by incumbents firms. Nevertheless, the concept applies to traditional sectors of industry and not for contemporary network contexts. This article reports a study that has examined the strategic behavior of the incumbent local exchange carriers in the United States telecommunications with respect to broadband technology investments in the face of competitive entry over a fourteen year period, 1988 to 2001. In the face of competitive entry, the incumbents adopted a strategy of underinvestment in broadband, a general purpose technology, an approach consistent with a desire to constrain entry by denial of quality interconnections and thereby retain their existing market positions. Such underinvestment, in a general purpose technology, in the face of competitive entry, was construed as a strategy of entry deterrence adopted by the telecommunications firms in the United States.

 

  • Date: 08.07.2009
    Time:
    17:15 - 18:45
    Location:
    Room 024, Ludwigstr. 28/R

Retentions, Relationships and Innovations: The Financing of R&D in India
Abstract

Based on a panel of several thousand Indian firms, data for which are evaluated for a period of fifteen years, between 1991-92 and 2005-06, this article has examined the impact of financial retentions and debt types on the levels of R&D undertaken by firms. Retentions by firms clearly influence firms' R&D spending levels. The results show that the important relational debt types, such as bank borrowing, corporate borrowings and deferred payments, have a positive and significant impact in influencing levels of R&D undertaken by firms in India. The economic impact of such debt in impacting R&D spending levels is also not insubstantial. For Indian firms, where relational borrowings, especially from banks, have been very substantial, such borrowings have influenced their capability-building activities. Conversely, debt that is of the transactional variety has no material impact on firms' R&D spending levels. These results hold consistently across specifications and data stratification.