Abstract While the currently prevailing conceptual framework of first mover advantages (FMAs) specifies various market mechanisms through which first movers can gain pioneering benefits, it is incomplete by failing to consider the role of political resources in creating FMAs. In this context, this article aims to add the political mechanism to the current classification of FMA mechanisms. The article further serves as a window to an understanding of the long-term process of acquiring, sustaining, and exploiting firm-specific political resources in international business, which has been neglected in prior studies on business--government relations. Detailed analysis of three case studies suggests that the causal relationship between political resources and FMAs is a complex one; while non-market strategies can be used successfully by first movers, they can also be used by late movers to neutralize FMAs. The article proposes a model for understanding the link between FMAs and political resources. Show
Journal Information Strategic Management Journal publishes original refereed material concerned with all aspects of strategic management. It is devoted to the improvement and further development of the theory and practice of strategic management and it is designed to appeal to both practising managers and academics. Strategic Management Journal also publishes communications in the form of research notes or comments from readers on published papers or current issues. Editorial comments and invited papers on practices and developments in strategic management appear from time to time as warranted by new developments. Overall, SMJ provides a communication forum for advancing strategic management theory and practice. Such major topics as strategic resource allocation; organization structure; leadership; entrepreneurship and organizational purpose; methods and techniques for evaluating and understanding competitive, technological, social, and political environments; planning processes; and strategic decision processes are included in the journal. Strategic Management Journal is currently published 13 times a year. Publisher Information Wiley is a global provider of content and content-enabled workflow solutions in areas of scientific, technical, medical, and scholarly research; professional development; and education. Our core businesses produce scientific, technical, medical, and scholarly journals, reference works, books, database services, and advertising; professional books, subscription products, certification and training services and online applications; and education content and services including integrated online teaching and learning resources for undergraduate and graduate students and lifelong learners. Founded in 1807, John Wiley & Sons, Inc. has been a valued source of information and understanding for more than 200 years, helping people around the world meet their needs and fulfill their aspirations. Wiley has published the works of more than 450 Nobel laureates in all categories: Literature, Economics, Physiology or Medicine, Physics, Chemistry, and Peace. Wiley has partnerships with many of the world’s leading societies and publishes over 1,500 peer-reviewed journals and 1,500+ new books annually in print and online, as well as databases, major reference works and laboratory protocols in STMS subjects. With a growing open access offering, Wiley is committed to the widest possible dissemination of and access to the content we publish and supports all sustainable models of access. Our online platform, Wiley Online Library (wileyonlinelibrary.com) is one of the world’s most extensive multidisciplinary collections of online resources, covering life, health, social and physical sciences, and humanities. Rights & Usage This item is part of a JSTOR Collection. International Trade Theory Which of the following refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country? Which of the following is
a major benefit of engaging in free trade? It gives countries access to products that they cannot purchase. David Ricardo's theory of comparative advantage explains global trade in terms of the __________________________. International differences in labor productivity. Which of the following theories emphasizes the interplay between the proportions in which the factors of production are available in different countries and the proportions in which they are needed for producing particular goods? Which of the following observations is consistent with Michael Porter's theory of national competitive advantage? Factors such as domestic demand and domestic rivalry determine nations' dominance on production. Which of the following is a theory that can be used to justify limited government intervention to support the development of certain export-oriented industries? Which of the following is a major
flaw associated with mercantilism? Mercantilists view trade as a "zero-sum" game. A country has an absolute advantage in the production of a product when it _______________. Is more efficient than any other country in producing it. According to Adam Smith, A country should specialize in the production of a good when it has _______________________________. An absolute advantage in the production of the good. According to Ricardo's theory of comparative advantage, a country should produce goods
____________. That it produces most efficiently. Diminishing returns to specialization occurs when ________. More units of resources are required to produce each additional unit. What
will happen, according to Paul Samuelson's critique, if a rich country enters into a free trade agreement with a poor country? The poor country will rapidly improve its productivity. Which of the following terms refers to the extent to which a country is gifted with such resources as land, labor, and capital? Which
of the following terms refers to the unit cost reductions associated with large sized outputs? Wal-Mart makes bulk purchases from its vendors and hence it is able to get better deals than its competitors. This allows Wal-Mart to to offer greater discount to its customers. In this case, Wal-Mart benefits from ______________________. Which of the following theories
suggests that first mover advantage is significant in the export of a good? Which of the following is an example of a basic factor that a nation will possess as proposed by Porter? Which of the following factors, according to Porter's national Diamond, is most likely to give a country competitive advantage over another country? Porter argues that a nation's firms gain competitive advantage if _____________________________. Their domestic consumers are demanding. The Political Economy of International Trade Tariffs do not benefit _______. Import tariffs _____________. Reduce the overall efficiency of the world economy. By lowering production costs, _________ help domestic producers compete against foreign imports. Which of the following observations about subsidies is
true? Government subsidies must be paid for, typically by taxing individuals and corporations. Which of the following is a consequence of subsidies? Subsidies protect inefficient domestic producers. According to
the _______________ policy, subsidies can help a firm achieve a first-mover advantage in an emerging industry. ___________ is a direct restriction on the quantity of some good that may be imported into a country. ______________ is a quota on trade imposed by the exporting country, typically at the request of the importing country's government. Voluntary Export Restraint Foreign producers typically agree to voluntary export restrictions because: They fear far more damaging punitive tariffs or import quotas might follow if they do not. According to _________________, some specific fraction of a good must be produces domestically. Local Content Requirements According to the Buy America Act, if a company wishes to win a contract from a US Government agency to provide some equipment, it must ensure that at least 51% of the product by value is manufactured
in the US. This is an example of ______________________________________________. Local Content Requirements. Local content regulations ___________. Protect domestic producers by limiting foreign competition. Administrative trade policies are _________. Bureaucratic rules designed to make it difficult for imports to enter a country. _________________ is variously defined as selling goods in a foreign market at below their costs of production -or- as selling goods in a foreign market at below their "fair" market value. The US government has used the threat of punitive trade sanctions to try to get the Chinese government to enforce its intellectual property laws. This is an example of government intervention based on _____________________. According to the _____________ argument, governments should temporarily support new industries until they have grown strong enough to meet international
competition. Regional Economic Integration From least integrated to most integrated, the levels of economic integration are:
Country X and Country Y reach an agreement to boost bilateral trade. They agree to remove all barriers to the trade of goods and services. They, however, are free to determine their own policies in regard to non-members. Which level of economic integration is this an example of? Which feature of a customs union differentiates it from a free trade area? A common external trading policy toward non-members. A _________________ has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members. Which feature of a common market differentiates it from a customs
union? Ability of factors of production to move freely between members. A(n) ______________ involves the free flow of products and factors of production between member countries, the adoption of a common external trade policy, a common currency, harmonization of member's tax rates, and a common monetary and fiscal policy. Which of the following is a reason why the European Union is considered an imperfect economic union? Not all members of the union have adopted the Euro. The move toward economic union raises the issue of how to make a coordinating bureaucracy accountable to the citizens of member nations. Which of the following offers a
solution to this problem? A political benefit of economic integration is _________________. It reduces the potential for violent conflict. Which of the following explains why economic integration has never been easy to achieve or sustain, despite
the strong economic and political arguments in support of it? While a nation as a whole may benefit significantly, certain groups may lose. __________________________ occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area. Which of the following occurs when lower-cost
external suppliers are replaced by higher-cost suppliers within the free trade area? To ensure that a free trade agreement does not result in trade diversion, which of the following has to come within the scope of the WTO? The __________ is responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws by member states. Why is the European Council said to be the ultimate controlling authority within the EU? Since draft legislation can become EU law only if the council agrees. Which of the following is directly elected by the populations of the member states and is primarily a consultative rather than a legislative
body? Which of the following observations pertaining to the EU's Court of Justice is INCORRECT? Its judges are required to act as representatives of national interests. Which of the following is seen as a benefit of the Euro? Lower foreign exchange and hedging costs. Which of the following is seen as a disadvantage of the Euro? National authorities losing control over monetary policy. How does NAFTA seem to increase the
international competitiveness of US and Canadian firms? It allows them to take advantage of lower labor costs in Mexico. What was the main objection raised by those in the US and Canada who opposed the ratification of NAFTA? Which of the following is the most frequently aired
objection to free trade in Africa? They need to be "protected" by tariff barriers from unfair foreign competition. The International Monetary System The international monetary system refers to the institutional arrangements that govern ________. When the
foreign exchange market determines the relative value of a currency, we say that the country is adhering to a _________ regime. A pegged exchange rate means that the value of a currency is __________________. Fixed relative to a reference currency.
A dirty float refers to a situation in which __________________. A country tries to hold its currency against as important reference currency without a formal pegged rate. After WWII, world's major industrial nations arranged their currencies against each other at a mutually agreed upon exchange rate. This is an example of a ___________________ system. Which of the following statements is true of the Gold standard? Currencies were pegged to gold under the Gold standard. Gold par value refers to the ___________. Amount of currency needed to
purchase one ounce of gold. A country is said to be in balance-of-trade equilibrium when _________________. The income its residents earn from exports is equal to the money its residents pay for imports. A country's trade balance is in
surplus when ______________. Its exports are greater than its imports. Which of the following is an advantage of using the Gold standard? It contains a powerful mechanism for achieving balance-of-trade equilibrium by all countries. The agreement reached at Bretton Woods established _________________. International Monetary Fund Which of the following observations is true of the Bretton Woods agreement? All countries agreed to fix
the value of their currency in terms of gold. The World Bank was established at the Bretton Woods conference to _____________________________. Promote general economic development. Identify the currency that was convertible to gold under the Bretton Woods system. What will happen if a country increases its money supply rapidly under a fixed exchange rate regime? Trade deficit would widen in that country. Which of the following is a disadvantage of using a rigid policy of fixed exchange rates? It is likely to create high unemployment in some cases. Which of the following is a function of the World Bank? Lending money to governments for development. Which of the following is a factor that
initiated the collapse of the fixed exchange rate system? Worsening of US foreign trade position. __________________ exchange rates were declared as acceptable in the Jamaica agreement of the IMF. US had large and growing trade deficit between 1980 and 1985. Despite this, the
value of the US Dollar rose during this period. Which of the following is a factor that caused this occurrence? US attracted heavy inflows of capital from foreign investors during this period. Which of the following is the reason why the current foreign-exchange system is sometimes thought of as a managed-float system? Governments intervene frequently in the foreign exchange market. Which of the following arguments is in favor of floating exchange rates? Governments can restore monetary control by removing the obligation to maintain exchange rate parity. The monetary autonomy argument holds that _________. Each country should be allowed to choose its own inflation rate. Which of the following is the exchange rate policy where the government intervenes in the exchange rate system only in a limited way? Which of the following theories suggests that government policies should be used to support certain exportBoth the new trade theory and Porter's theory of national competitive advantage can be interpreted as justifying some limited government intervention to support the development of certain export-oriented industries.
Which theory predicts that countries will export the goods?[4] The so-called Heckscher-Ohlin theory basically holds that a country will export those commodities that are produced by the factor that it has in relative abundance and that it will import products whose production requires factors of production where it has relatively less abundance.
Which observation is consistent with Michael Porter's theory of national competitive advantage?Which of the following observations is consistent with Michael Porter's theory of national competitive advantage? Factors such as domestic demand and domestic rivalry determine nations' dominance on production.
What is the main principle of mercantilism quizlet?The main tenet of mercantilism is that it is in a country's best interests to: maintain a trade surplus. New trade theory suggests that nations: may benefit from trade even when they do not differ in resource endowments or technology.
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Which of the following theories suggests that the first mover advantage is significant in the export of a good?
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