Copyright (c) 2008 All rights reserved. http://works.bepress.com/michael_ryall Recent documents in Michael D Ryall en-us Sun, 24 Aug 2008 19:43:50 PDT 3600 http://works.bepress.com/michael_ryall/15 http://works.bepress.com/michael_ryall/15 Sat, 16 Aug 2008 23:17:16 PDT We analyze value appropriation under competition using cooperative game theory and demonstrate that competition embodies two competing rivalries: to appropriate value on the one hand and to create it on the other. The management of this tension is central to strategy. We present a new notion of competitive intensity, show where the traditional view of competition leads one astray and introduce a new quantitative method by which practitioners may assess their strategic options. Michael D. Ryall http://works.bepress.com/michael_ryall/14 http://works.bepress.com/michael_ryall/14 Thu, 25 Oct 2007 18:41:04 PDT Michael D. Ryall http://works.bepress.com/michael_ryall/13 http://works.bepress.com/michael_ryall/13 Thu, 25 Oct 2007 18:39:55 PDT Michael D. Ryall http://works.bepress.com/michael_ryall/12 http://works.bepress.com/michael_ryall/12 Thu, 25 Oct 2007 18:37:07 PDT Michael D. Ryall http://works.bepress.com/michael_ryall/11 http://works.bepress.com/michael_ryall/11 Thu, 25 Oct 2007 18:33:38 PDT Formal contracting addresses the moral hazard problems inherent in inter-firm deals via explicit terms designed to achieve incentive alignment. Alternatively, when firms expect to interact repeatedly, relational mechanisms may achieve similar results without the associated costs. However, as we now know from a growing body of theoretical and empirical work, the resulting intuition - that relational mechanisms will be substituted for formal ones whenever possible - does not generally hold. The extent to which firms substitute relational mechanisms for formal ones in the presence of repeated interaction is an empirical question that forms the basis of this paper. We study a sample of 52 joint technology development contracts in the telecommunications and microelectronics industries and devise a coding scheme to allow empirical comparison of contract terms. Counter to the above intuition (but consistent with recent research), we find that a firm's contracts are more detailed and more likely to include penalties when it engages in frequent deals (whether with the same or different partners). Our results suggest complementarity between formal and relational contracts and have implications for optimal contracting, particularly in high technology sectors. Michael D. Ryall http://works.bepress.com/michael_ryall/10 http://works.bepress.com/michael_ryall/10 Thu, 25 Oct 2007 18:29:34 PDT This paper presents the first formal examination of role of causal ambiguity as a barrier to imitation. Here, the aspiring imitator faces a knowledge (i.e., icapabilities-based) barrier to imitation that is both causal and ambiguous in a precise sense of both words. Imitation conforms to a well-explicated process of learning-by-observing. I provide a precise distinction between the intrinsic causal ambiguity associated with a particular strategy and the subjective ambiguity perceived by a challenger. I find that intrinsic ambiguity is a necessary but insufficient condition for a sustained capability-based advantage. I also demonstrate that combinatorial complexity, a phenomenon that has attracted the recent attention of strategy theorists, and causal ambiguity are distinct barriers to imitation. The former acts as a barrier to explorative/active learning and the latter as one to absorptive/passive learning. One implication of this is that learning-by-doing and learning-by-observing are complementary strategic activities, not substitutes --̃ in most cases, we should expect firm strategies to seek performance enhancement using efforts of both types. Michael D. Ryall http://works.bepress.com/michael_ryall/8 http://works.bepress.com/michael_ryall/8 Thu, 25 Oct 2007 18:17:41 PDT A new player, e.g., an entrant, joining an existing game generally allows more value to be created, but also creates new alternatives for existing players. Greater value expands the range of equilibrium appropriation levels for an existing player, in particular, lowering the minimum equilibrium appropriation. The emergence of new alternatives has the opposite effect.We say a player has "competitive advantage" if the player's minimum equilibrium appropriation is strictly greater than the player's outside alternative. That is, the forces of competition alone, as embodied in the conditions defining equilibrium, suffice to guarantee a player appropriates more than the best alternative to being in the game, i.e., a sustainable performance advantage.When a player has competitive advantage pre-entry, but not post-entry, we say entry "destroys" competitive advantage; likewise for "creating" and "sustaining" competitive advantage. Our results provide complete characterizations (i.e., if and only if statements) of the features of a game that cause the addition of a new player to destroy, create or sustain competitive advantage in a general coalitional game.These results are of importance for strategy issues since -- as argued by proponents of value-based business strategy, e.g., Brandenburger and Stuart (1996) -- many of the economic interactions of interest in strategy are well-described as coalitional games. Michael D. Ryall http://works.bepress.com/michael_ryall/7 http://works.bepress.com/michael_ryall/7 Thu, 25 Oct 2007 18:11:46 PDT We analyze what can be inferred about a game's information structure solely from the probability distributions on action profiles generated during play; i.e., without reference to special behavioral assumptions or equilibrium concepts. Our analysis focuses on deriving payoff-independent conditions that must be met for one game form to be empirically distinguished from another. We define empirical equivalence and independence equivalence. The first describes when two game forms can never be distinguished based solely on the empirical distribution of player actions. As this turns out to be difficult to characterize, we introduce the latter, which describes two game forms that imply the same minimal sets of conditional independencies in every one of their empirical distributions. Our main contribution is to identify, for an arbitrary game form, the minimal set of conditional independencies that must arise in every one of its empirical distributions. We also introduce a new graphical device, the influence opportunity diagram of a game form which facilitates verifying independence equivalence, and hence provides a simple necessary condition for empirical equivalence. Michael D. Ryall http://works.bepress.com/michael_ryall/6 http://works.bepress.com/michael_ryall/6 Thu, 25 Oct 2007 18:04:57 PDT The broker profits by intermediating between two (or more) parties. Using a biform game, we examine whether such a position can confer a competitive advantage, as well as whether any such advantage could persist if actors formed relations strategically. Our analysis reveals that, if one considers exogenous the relations between actors, brokers can enjoy an advantage but only if (1) they do not face substitutes either for the connections they offer or the value they can create, (2) they intermediate more than two parties, and (3) interdependence does not lock them into a particular pattern of exchange. If, on the other hand, one allows actors to form relations on the basis of their expectations of the future value of those relations, then profitable positions of intermediation only arise under strict assumptions of unilateral action. We discuss the implications of our analysis for firm strategy and empirical research. Michael D. Ryall http://works.bepress.com/michael_ryall/5 http://works.bepress.com/michael_ryall/5 Thu, 25 Oct 2007 17:57:18 PDT Michael D. Ryall