It is commonly argued that in recent years pharmaceutical companies have targeted their research and development (R&D) at small improvements of existing compounds instead of riskier drastic innovations. In this paper, we show that the bias in the pharmaceutical industry toward small innovations might be driven by the low sensitivity of the demand. In particular, small innovations get a proportionally larger reward because pharmaceutical firms target them at the inelastic segments of the demand. As a consequence, firms find it relatively more profitable to invest in small innovations. We also study the effect on R&D incentives of marketing strategies and regulatory instruments aimed at controlling pharmaceutical expenditure.

The organizational structure of multinational enterprises (MNEs) is mainly made up of subsidiaries located in emerging and advanced countries. Consequently, they usually compete against the same rivals simultaneously in both emerging and advanced contexts. Multimarket contact (MMC) theory analyzes the competitive dynamics that arise in these situations. However, researchers have paid more attention to the consequences of multimarket contact in developed countries than to its effect in emerging countries. To explore the impact of the macroenvironment on the relationship between MMC and performance, we examine how coinciding with multimarket rivals in emerging economies alters the effect of MMC on firm performance. Our research, which is developed with a sample from the mobile telecommunications industry, shows that the presence of MNEs in emerging countries hinders the development of mutual forbearance practices and, therefore, reduces the positive effect of MMC on firm performance.

Entrepreneurs are subjected to increased institutional pressures that encourage them to include environmental issues in their overall business objectives. Despite this, entrepreneurs do not always place the same importance on environmental issues in the overall objectives, but some are more environmentally oriented than others. We contend that these differences are explained by two factors: the stage of evolution of the venture and the intensity of coercive and normative environmental pressures on entrepreneurs. Using a sample of 9781 entrepreneurs from 27 countries, our research shows that entrepreneurs are more environmentally oriented (1) in early stages of evolution, (2) in countries with high coercive pressures, and (3) in countries with high normative pressures. Additionally, our results indicate that the differences in the environmental orientation in the early and late stages are reduced in countries with high normative pressures and that these differences are not influenced by the intensity of coercive pressures.

We thank the audience of the Health Economics Seminar at the Universidad Carlos III for useful comments. All redundancies are due to the second author. All missing explanations are due to the third one. Otherwise, the usual disclaimer applies. 2 BBVA.

PurposeDespite prior studies on cross-border acquisitions (CBAs) have analyzed the determinants of ownership strategies; there is still a quest for evidence on how the differences between home and host market characteristics affect the ownership percentage. Prior studies have acknowledged that entering host countries with greater uncertainty makes multinationals reluctant to acquire high levels of ownership. Nevertheless, emerging multinationals (EMNEs) are usually used to operating under greater levels of uncertainty than multinationals from advanced countries (AMNEs), which can imply different ownership strategies. The purpose of this study is to analyze the ownership percentage acquired by MNEs when designing a CBA in emerging or in advanced countries, and to analyze the extent to which the ownership strategy in emerging countries differs between EMNEs and AMNEs.Design/methodology/approachMobile telecommunications industry is used as research setting to provide empirical evidence of the interaction effect of the advanced versus emerging nature of the host and home countries on the ownership acquired in CBAs.FindingsResults confirm that both home and host countries' characteristics are relevant in explaining the ownership strategies of MNEs.Originality/valueThe authors contribute to the strategy and IB literatures by providing empirical evidence on the recent debate on whether the internationalization strategies followed by EMNEs are similar to the traditional patterns of AMNEs, and analyze how EMNEs differ from AMNEs in their ownership strategies in emerging countries. Focusing in the mobile telecommunications industry, the authors also contribute by extending the analysis to an international and cross-cultural setting that includes 48 mobile groups that come from 35 home and 81 host countries.