Strategies for the Non-Market Environment

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Strategies for the Non-Market Environment

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Title: Strategies for the Non-Market Environment
Author: Hugill, Andrea Read
Citation: Hugill, Andrea Read. 2015. Strategies for the Non-Market Environment. Doctoral dissertation, Harvard Business School.
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Abstract: ABSTRACT 1: This paper examines whether mobile telecom operators with access to different
kinds of knowledge pursue different strategies in politically risky markets. Using
data from 2000-2010 I find that firms with country-specific knowledge, gained
via presence in the local market, and general knowledge, gained through a long
history of operations, were more likely to increase or maintain investment and
operations even as political risk rose to the highest levels while peer firms drop
both investment and operations. Firms with market-risk knowledge, gained
through previous experience confronting political risk, drop investment similar to
peer firms but increase operations to capitalize on their short-term competitive
advantage. Therefore, country-risk knowledge and general knowledge are
associated with strategies that are durable to political risk, while market-risk
knowledge is associated with the distinct strategy for political risk of increased
operations. These results contribute to the literature by documenting distinct
market-based strategies for firms with differing knowledge sets that remain in a
market as political risk rises.
ABSTRACT 2: Scholars of corporate governance have debated the relative importance of country and
firm characteristics in understanding corporate governance variation across emerging economies.
Using panel data and a number of model specifications, we shed new light on this debate. We
find that firm characteristics are as important as and often meaningfully more important than
country characteristics. In fact, 16.8% percent of firms in emerging economies have been able to
exceed the 75th percentile of ratings in developed economies. Our results suggest that over
recent years firms in emerging economies had more capability to rise above weak home-country
institutions than previously suggested.
ABSTRACT 3: Outsourcing firms seeking to avoid reputational spillovers that can arise from dangerous,
illegal, and unethical behavior at supply chain factories increasingly rely on private social
auditors to provide strategic information about the conduct of their suppliers. But little is
known about what influences auditors’ ability to identify and report poor supplier
conduct. We find that individual supply chain auditors’ monitoring practices are shaped
by social factors including their experience, gender, and professional training; their
ongoing relationships with suppliers; and the gender diversity of their audit teams.
Providing the first comprehensive and systematic findings on supply chain monitoring,
our study identifies previously overlooked transaction costs and suggests strategies to
develop governance structures to mitigate reputational spillover risks by reducing
information asymmetries between themselves and their suppliers.
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