UBC Theses and Dissertations
Essays on international business strategy of non-traditional goods Ruckman, Karen Elizabeth
This thesis comprises three essays on international business strategy with regards to services and technology. The first essay investigates why the average expense ratio paid by Canadian mutual fund investors is 50% higher than that paid in U.S. This discrepancy is commonly thought to exist because Canadian funds do not take advantage of economies of scale and have less competition. A monopolistic competition framework is used to develop a model for the mutual fund industry. By allowing each fund to have different attributes, the model permits funds to charge different expense ratios in equilibrium and is found to strongly fit the North American mutual fund market. Empirical analysis indicates that these two common explanations and measurable fund attributes account for 15% of the discrepancy. The second essay analyses the U.S. mutual fund decision to enter the Canadian market through either foreign direct investment (FDI) or trade in advisement services. The total value of U.S.-controlled funds amounts to 18% of the Canadian equity fund market. This paper investigates how the fund-level and firm-level characteristics affect the channel used to enter the Canadian market. Empirical results indicate that the funds offered through FDI are not especially successful in the U.S. market but are associated with companies with large market shares, whereas the funds offered through trade in advisement services are highly successful in the U.S. market and are from companies with relatively few successful funds. The third essay compares the motivation for acquisition between foreign and domestic acquirers of U.S. drug companies, especially with regard to technology transfer. An estimation of the acquisition decision reveals that foreign acquirers choose targets with high research intensity more as their own intensity decreases while domestic acquirers choose targets with high research intensity more as their own intensity increases. Domestic acquirers' post-acquisition innovative productivity increases mostly due to efficiency of knowledge synthesis because the targets are usually have familiar product lines. Foreign acquirers' innovative productivity does not increase after acquisition because they tend to take over firms in unfamiliar research areas that are usually highly technical and require a long-term commitment of R&D.
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