The study is organized in five chapters. The first chapter covers research background, research motivation, research purpose and questions, and research limitations.
The second chapter briefly reviews the literature on the
structure-conduct-performance paradigm, laying the groundwork for subsequent analysis in this paper. Its first section provides a review of the status quo of the MICE industry as well as that of one of its partner industries, the T&I industry. The
following sections focus on the resource-based view (RBV) and social exchange theory, and the links among resource-based view, social exchange theory, and competitive advantages.
The third chapter describes the research methodology that will be followed throughout the research and different stages of implementation. Also included are the research framework, research participants of choice, data collection, and data analysis procedures.
The fourth chapter reports the results of the study including a company profile for both Firm A and Firm B, case analyses of both firms, and cross-case analysis in terms of the determinants of sustained competitive advantages and hence superior performance. The fifth chapter summarises the major findings, implications, and research contributions and recommendations for future studies. The overall approach to the organisation of this study is illustrated in Figure 1.1.
Figure 1.1 Research Process Flowchart
Conclusions and Implications in terms of RBV, Social Exchange
and Competitive Advantages
Chapter Two Literature Review
This chapter aims to review literature on the current situation of global and Taiwan’s MICE industries and the factors exerting influence over firm performance.
To explain firm performance, Morgan et al. (2004) stressed that the
Structure-Conduct-Performance paradigm (SCP) and resource-based view (RBV) are the two major theories that researchers normally draw on.
In the light of the study carried out by Morgan et al. (2004), who integrated both RBV and SCP theoretical perspectives, which had been considered as competing theories, this research will follow suit by using the SCP paradigm to examine the current development of the MICE industry and the T&I industry and focus more on firm-level performance, which is when RBV and social exchange theory (SET) come into play. The resource-based view will be used to examine what firms ought to have while social exchange theory serves as a theoretical tool to explore what firms have done with what they have had in order to generate sustained competitive advantages.
This chapter will then be divided into five sections. The first section provides insight into SCP theory while the second section looks at the market structure of the MICE industry as well as encompasses the current situation of the T&I industry in Taiwan, followed by the third and fourth sections explaining inter-firm performance variations with RBV and SET, respectively. The last section briefly discusses the relations among RBV, social exchange theory, and competitive advantage.
2.1 Structure-Conduct-Performance Paradigm
Before analysing the MICE industry in detail, it is sensible to give a brief account of the SCP paradigm, which has been widely used in industrial organisation economics. It was originally the work of Mason in 1939 and further developed by many scholars such as Bain and Stigler (Chen et al., 2004). Structure is concerned with market structure defined primarily by the concentration of market shares;
conduct refers to either the competitive or collusive behaviours of firms; performance is about the social efficiency defined by the level of market power (Chen et al., 2004).
The paradigm describes the environmental conditions that determine levels of firm performance. The theory is based on two hypotheses: the structural characteristics of the locus in which a firm operates and effective and efficient execution of planned competitive strategies (Porter, 1985). In other words, a firm’s performance is determined by the structure of a firm’s market that defines the level of competitive intensity and by a firm’s ability to obtain competitive advantages with the
implementation of competitive strategies.
Market structure is mainly determined by the number of sellers and buyers, concentration of market shares, economy of scale, barrier to entry and exit, absolute cost advantage, capital advantage, product differentiation, governmental policies, and distribution channels, whereas other basic market conditions such as demand and supply sides also have a minor influence on market structure. The behaviours of firms include pricing strategies, product development strategies, advertising, R&D, plant investment, legal strategies, etc. Performance consists of production and allocation efficiency, full employment, equity, quality and service, and so on (Mason, 1939;
Scherer, 1979; Chen et al., 2004). The SCP paradigm is depicted in Figure 2.1.
Figure 2.1 The Structure-Conduct-Performance Paradigm Number of sellers and buyers
Product differentiation Barrier to entry and exit Absolute cost advantage
Nevertheless, the secondary data on firm behaviours and performance in the MICE industry and the peripheral T&I industry have been fairly scarce. A survey on Taiwan’s MICE industry was carried out in 2008 by the Department of Investment Services of Ministry of Economic Affairs. The survey has limited information about the market structure, and is short on details about the conduct of firms and industry performance. As for the peripheral T&I industry, the Survey of Translation and Interpretation Industry in Taiwan was released by the Government Information Office in 2004, detailing the market structure in terms of number of sellers and buyers, barrier to entry and exit, and absolute cost advantages as well as government policies.
No updated surveys concerning the two industries have been available since then.
In the absence of sufficient secondary data on the MICE industry, especially with regard to firm conduct and market performance, the researcher was unable to examine firm conduct and market performance through SCP paradigm. Instead a qualitative research method using the case study approach is adopted to delve into the factors contributing to the superior performance of two firms, one in the MICE industry and the other in its peripheral T&I industry. It is based on the two theoretical perspectives:
resource-based view of the firm and social exchange theory. For the same reason, market performance will be replaced by the performance of the two chosen firms in this research.
One of the ultimate goals of firms is to generate superior performance. Firms use different methods and criteria to measure performance. The term ‘performance’ itself is comparative because it is measured against a set of standards or that of a competitor.
When performance is to be measured, two questions have to be addressed, why and what to measure (Crowther, 1996). There are financial and non-financial measures, or
a combination of the two to evaluate performance. For instance, Morgan et al (2004) measured the performance of export ventures against economic (market shares, profitability, etc.) and strategic (establishment and maintenance of relationships with key members of the value chain) dimensions. Another example is Clulow et al. (2003) using the average rate of return of funds in their study with a financial services firm.
They pointed out that the alternative criteria utilised to evaluate performance could be market share or rankings in the market. As access to the financial data is unattainable for the cases studied, this research will use both quantitative and qualitative
performance measures to substantiate that the performance of the firms studied here is superior to their rivals.