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Firms pursue competitive advantage through both individual and collective strategic actions. Because of the difficulties of coordinating collective action, industries are characterized by extended periods of individual activity, punctuated by waves of collective activity. Rational and self-interested firms engage in individual activities unless disrupted by a force ample to overcome the collective action problem. At key points in the life of an industry, legitimacy challenges arise, presenting incentive to collectivize. In a legitimacy challenge, mobilized groups of constituents attempt to gain control of and change the institutional rules of the game. In order to regain control, firms gradually collectivize in a pattern akin to the resource mobilization perspective of social movement theory. I build a model and offer several testable propositions that trace the dynamic working balance between individual and collective activities within an industry during the emergence, maturity, and decline stages. Over the life of an industry, these ebbs and flows in collective activity take the form of waves of collectivizing.
Geroski's discussion of organizational ecology from the point of view of an industrial economist is useful and illuminating. However, I believe that there are a few areas in which someone not familiar with the ecological literature might be misled. I therefore provide a slightly more detailed discussion of work done by ecologists in three key areas: the relationship between density, legitimacy, competition and the rates at which organizations enter and exit a population; the ways in which ecologists conceptualize and model legitimacy; and the theory of structural inertia.
Focuses on the concept of global branding. How the creation of a distinct retail entity is influenced by global branding; Popularity of Internet-based transactions in business communications; Discussion on brand imaging and market positioning.
The underlying research discussed in this paper is derived from a research programme along three tiers of an automotive steel supply network. The main objective of the initial research was to pinpoint wasteful activities in the supply chain, and in later stages, to develop solutions. The preliminary work involved mapping the dynamics of the supply chain focusing on how the demand information is passed from the final customer back to the material suppliers. Production scheduling approaches were found to be a main cause of distortion in the dynamics of supply chain, and the initial studies led to proposals for scheduling improvements both within and between companies. These proposals include changing the scheduling frequency in accordance to the specific demand patterns – coupled with the use of kanban, changeover reduction, and total preventive maintenance. Specifically, the scheduling of batch operations in first and second tier suppliers of the supply chain was identified as a key problem area in further supply chain dynamics analysis. Therefore, a new and holistic scheduling algorithm was developed, which will be presented and discussed in theory and application.
Traditionally, the quality of a forecasting model is judged by how it compares, in terms of accuracy, to alternative models. However, by providing a relative measure, no indication is given as to how much scope there might be for improvements beyond the benchmark model. When judgemental methods are used alongside simple forecasting models, the scope for such improvements is considerable and difficult to benchmark. Derivation of targets for forecasting quality is thus not straightforward. The approach taken in this paper is to consider forecast error as consisting of irreducible error due to intrinsic unpredictable uncertainty, and error due to less than perfect modelling, estimation and forecasting. As the intrinsic uncertainty presents a bound on forecast accuracy, our derivation of an accuracy target is based on the measurement of this irreducible uncertainty. The motivation and data for this case-study was taken from the short-term sales forecasting process of a major, international high-technology manufacturer.
Although the importance of operations in reaching world-class competitiveness has been highlighted in the operations management literature, small and medium-sized companies (SMEs) have been found to have a poor uptake of world-class practices. Reports on a study of 285 SMEs located in Italy, the UK, and other northern European countries. The data are taken from the MICROSCOPE facilitated self-assessment benchmarking database, which studied operations practices and performance in small firms. The level of world-class practices and performance was compared across companies by company size and by country of origin. Significant differences were found between “micro” companies (fewer than 20 employees) and larger companies (between 20 and 200 employees). Other significant differences were found by country, which may be attributed to differences in regional policies and infrastructures regarding small firms.
The p-principal points of a random variable X with finite second moment are those p points in minimizing the expected squared distance from X to the closest point. Although the determination of principal points involves in general the resolution of a multiextremal optimization problem, existing procedures in the literature provide just a local optimum. In this paper we show that standard Global Optimization techniques can be applied.
A number of methods for multiple-objective optimization problems (MOP) give as solution to MOP the set of optimal solutions for some single-objective optimization problems associated with it. Well-known examples of these single-objective optimization problems are the minsum and the minmax. In this note, we propose a new parametric single-objective optimization problem associated with MOP by means of Goal Programming ideas. We show that the minsum and minmax are particular instances, so we are somehow combining minsum and minmax by means of a parameter. Moreover, such parameter has a clear meaning in the value space. Applications of this parametric problem to classical models in Locational Analysis are discussed.
A major U.K.-based multinational is reevaluating its leverage policy as it restructures its business. The treasury team models the tradeoffs between the benefits and costs of debt financing, using Monte Carlo simulation to estimate the savings from the interest tax shields and expected financial distress costs under several sets of leverage policies. The group treasurer (CFO) must decide whether and how the simulation results should be incorporated into a recommendation to the board of directors and, more generally, what recommendation to make regarding the firm's leverage policy.
Cephalon Inc., a biotech firm, bought call options on its own stock to meet its conditional cash flow needs. We analyze this decision by using the cash flow hedging concepts of Froot et al., (1993. Journal of Finance 5, 1629-1658). We identify the managerial analyses necessary to apply this theory and discuss managerial considerations absent from the theory. We find that managers consider deadweight costs of risk management, which theory tends to ignore. Theory provides little guidance in how to measure these and other deadweight costs. Finally, uncertainty about the availability of external financing and accounting considerations are critical considerations by managers.
Nearly one in ten professionals now works part-time. But all too often, part-time work creates as many problems as it solves. At best, many part-timers work more hours than they intended. At worst, they see their importance to their organizations dwindle. Two generations have wrestled with such arrangements, and today some part-time professionals have found ways to overcome the challenges, with shining results. Drawing on two years of research investigating part-time engineers, financial analysts, IT specialists, and consultants, the authors present five strategies used by successful part-timers to make their unique position work for themselves and their companies. To begin with, successful part-time professionals take pains to make their work-life priorities, their schedules, and their plans for the future transparent to the organization. Second, they broadcast the business case for their arrangement, being careful to demonstrate that the arrangement has not disrupted the business and may even have a positive impact. Third, they establish routines to protect their time at work and rituals to protect their time at home. Fourth, they cultivate champions in senior management who protect them from skeptics and advocate for their arrangements up and down the ranks. And last, they gently but firmly remind their colleagues that, despite their part-time status, they're still major players in the organization who cannot be ignored. Taken together, these strategies not only help the part-timer deal with the organization but also make the organization itself more receptive to the possibilities of part-time work.
Individuals and social systems are often portrayed as risk averse and resistant to change. Such propensities are characteristically attributed to individual, organizational, and cultural traits such as risk aversion, uncertainty-avoidance, discounting, and an unwillingness to change. This paper explores an alternative interpretation of such phenomena. We show how the reproduction of successful actions inherent in adaptive processes, such as learning and competitive selection and reproduction, results in a bias against alternatives that initially may appear to be worse than they actually are. In particular, learning and selection are biased against both risky and novel alternatives. Because the biases are products of the tendency to reproduce success that is inherent in the sequential sampling of adaptation, they are reduced whenever the reproduction of success is attenuated. In particular, when adaptation is slowed, made imprecise, or recalled less reliably, the propensity to engage in risky and new activities is increased. These protections against the error of rejecting potentially good alternatives on inadequate experiential evidence are costly, however. They increase the likelihood of persisting with alternatives that are poor in the long run as well as in the short run.
This paper is an exploration of the ability of game theory to explain real-world corporate maneuvering. We explore this issue by investigating bond tender offers accompanied by a threat to call nontendered bonds, so called "Simultaneous Tender and Call" (STAC) offers. We argue that STACs engender a transparent game played by bondholders and shareholders. We model this game and use this model to predict the outcome of STACs. Finally, we investigate the issue of whether this theoretical model explains the outcomes of four actual STAC issues made by James River, May Department Stores, and Houston Lighting & Power Company. Our clinical analysis provides support for the explanatory power of our model. Calibrating the predictions of the model with data from these STACs, we demonstrate a correspondence between theory and actual corporate behavior. As predicted by our model, subgame perfection, or threat credibility, and preplay coordination are central to explaining the outcomes of the STACs.
This paper investigates, from both a theoretical and clinical perspective, bond tender offers accompanied by a threat to call nontendered bonds, or so-called STACs. The theoretical analysis explains the use of STACs and derives conditions under which the call threats embedded in STACs are credible. These conditions relate to the degree of bondholder coordination, and the relative costs of adverse selection and suboptimal call policies. Next, three cases of actual STACs-James River, May Department Stores, and Houston Power and Light-are investigated. A rough correspondence between the evolution of these STACs and the different strategic equilibria of the model is established.
Focuses on a study which examined how the contracting of French beans has engendered conflict over rights, obligations and resources in Meru District, Kenya. Effect of cultural factors and gender relations on intrahousehold resource allocations; Details on horticultural exports and contract farming; Information on the Meru District of Kenya; Division of labor in horticultural contracting.
This working paper sets out the fieldwork manual that was utilised to conduct research in LADDER villages in Uganda, Tanzania, Malawi and Kenya during 2001. The manual was applied in 38 villages and to roughly 1,200 households across the four countries. The manual seeks to combine qualitative and quantitative research methods to investigate rural livelihoods, and to establish the social and institutional context within which livelihood strategies unfold. This is not the entire methodology for the LADDER research project, which also comprises work on micro-macro links and engagement with key policy processes in each country.
It is perhaps unusual to make plain the field methods of a project in this way. More often the results of household or village level investigations are presented, but the process by which these results were obtained remains undocumented. It is hoped that this manual may prove useful to others undertaking similar work, since a lot of reinventing of the wheel tends to happen in devising fieldwork of this sort. Section A of the manual deals with the organisation of the research, including selection of villages and households. Section B is concerned with secondary data, key informants and group methods of enquiry, and especially with eliciting the contextual character of rural livelihoods. Section C provides the basic set of sample survey forms that were
administered to households. This set excludes a few components that were investigated at household level in just a few of the case-study villages.
Codes of conduct covering employment conditions of Southern producers exporting to European markets mushroomed throughout the 1990s. A recent article (Blowfield 2000) cited over 200 codes related to worker welfare specifically, and over twenty codes applied to agriculture in developing countries. Codes have become very prevalent in the UK food retail sector, and most of the large supermarkets are now implementing codes along their supply chains to cover their own brand name products and fresh produce. But codes of conduct are also evolving at multiple levels both internally and externally to supply chains as various actors such as importers, exporters and local trade associations have adopted their own codes. Externally, independent standards have been established through organisations such as Social
Accountability 8000 in the US and the Ethical Trading Initiative in the UK. As a result, suppliers of horticultural products are faced with a plethora of codes, some of which are similar, but amongst which there can be considerable variability.
Production of fresh vegetables for export has grown rapidly in a number of countries in sub-Saharan Africa over the last decade. This trade brings producers and exporters based in Africa together with importers and retailers in Europe. Large retailers in Europe play a decisive role in structuring the production and processing of fresh vegetables exported from Africa. The requirements they specify for cost, quality, delivery, product variety, innovation, food safety and quality systems help top determine what types of producers and processors are able to gain access to the fresh vegetables chain and the activities they must carry out. The control over the fresh vegetables trade exercised by UK supermarkets has clear consequences for inclusion and exclusion of producers and exporters of differing types, and for the long-term prospects for the fresh vegetables industry in the two major exporting countries studied, Kenya and Zimbabwe.
Over the past twenty years the marketing of African fresh vegetables in the United Kingdom has become dominated by large retailers that have adopted competitive strategies based on quality, year-round supply, and product differentiation. This has led to a dramatic change in marketing channels, from wholesale markets to tightly knit supply chains. Global value chain analysis is used to explain why the various stages of production and marketing have become much more closely integrated and to consider the likely outcome of a further round of restructuring occurring at the present time. Although the current trends may lead to a changing role for importers, the tendency towards the concentration of production and processing in Africa in the hands of a few large firms is likely to continue.
In recent academic debates, upgrading has emerged as a key way for developing countries to meet the competitive challenges of globalisation and trade liberalisation. This article draws on global commodity chains literature to comparatively explore the conditions within which upgrading occurs in two sectors: export horticulture in Kenya and textile/apparel in Tamil Nadu, India. In both sectors upgrading into new products, functions or markets has generated increased employment and sustained incomes. However, firms in horticulture and textile/apparel are governed by a small number of global buyers with demanding requirements. Firms without the linkages to these buyers or the capabilities to meet their requirements can be locked out of international markets. The article concludes that insertion into global value chains creates varying outcomes for developing country firms, both providing and circumscribing opportunities for broad-based development.
The central focus of the article is managing change in the National Health Service (NHS). In particular, it uses the implementation of general management (see the Griffiths Report, 1983) to explore the value of the process-sociological approach for understanding a number of unintended outcomes associated with this change. Elias is not a sociologist associated with the study of the NHS, or indeed the management of change, yet it is argued his approach has much to offer in exploring change in complex organizations such as the NHS. The article is organized as three sections. First, the central elements of a figurational approach are discussed and used to explore existing studies of change in the NHS. Second, the article applies a figurational approach to the study of the implementation of general management. Here the value of Elias's game models is explored in some detail. Finally, Elias's contribution to the study of complex social change is critically assessed.
Objectives: To evaluate the Promoting Action on Clinical Effectiveness (PACE) programme, which sought to implement clinically effective practice in 16 local sites.
Methods: 182 semi-structured interviews, usually by telephone, with project team members, clinicians, and senior managers and representatives from the Department of Health and the King's Fund.
Results: The most influential factors were strong evidence, supportive opinion leaders and integration within a committed organization; without these factors, projects had little chance of success. Other factors (context analysis, professional involvement and good project management) emerged as important, supporting processes; their presence might be an additional help, but on their own they would not be enough to initiate change. A serious problem with any of them could have a strong adverse impact.
Conclusions: Although there is no simple formula for the factors that ensure successful implementation of research-based improvements to clinical practice, certain principles do seem to help. Time and resource need to be devoted to a period of local negotiation and adaptation of good research evidence based on a careful understanding of the local context, in which opinion leader influence is an important component of a well managed and preferably well integrated process of change.
The goal of this study was to examine cultural differences in the value of family involvement in German and Chinese small businesses due to their differences in collectivism/individualism. Our analyses, based on a sample of 562 Chinese and German owners, showed that family involvement — measured as the number of family members that work in the business — is higher in China than in Germany. Compared to German business owners, Chinese owners received most of their start-up capital from family members. Moreover, we were interested in whether family involvement is related to the business owner's ability to make use of start-up capital to turn it into business outcomes. Building on existing literature and based on the match hypothesis we hypothesized that the effects of family involvement on business outcomes depend on the cultural values underlying a business. Our analyses revealed that family involvement negatively affected relationships of start-up capital with business outcomes both in China and in Germany. Our study contributes by showing that a negative effect of family involvement on the ability to make use of start-up capital is not only evident in individualistic cultures such as Germany but does also apply to collectivistic Chinese businesses. Practically, owners in both cultures are suggested to develop strategies in order to prevent and overcome negative effects of family involvement on business outcomes. Our results suggest fruitful avenues for future research.
Making Social Science Matter presents an exciting new approach to social science, including theoretical argument, methodological guidelines, and examples of practical application. Why has social science failed in attempts to emulate natural science and produce normal theory? Bent Flyvbjerg argues that the strength of social science is in its rich, reflexive analysis of values and power, essential to the social and economic development of any society. Richly informed, powerfully argued, and clearly written, this book provides essential reading for all those in the social and behavioral sciences.
Though there is a wide acceptance of the strategic importance of integrating operations with suppliers and customers in supply chains, many questions remain unanswered about how best to characterize supply chain strategies. Is it more important to link with suppliers, customers, or both? Similarly, we know little about the connections between supplier and customer integration and improved operations performance. This paper investigated supplier and customer integration strategies in a global sample of 322 manufacturers. Scales were developed for measuring supply chain integration and five different strategies were identified in the sample. Each of these strategies is characterized by a different arc of integration, representing the direction (towards suppliers and/or customers) and degree of integration activity. There was consistent evidence that the widest degree of arc of integration with both suppliers and customers had the strongest association with performance improvement. The implications for our findings on future research and practice in the new millennium are considered.
The article reviews the book "The War for Talent: Getting the Best From the Best," by Michael Williams.
This paper provides a framework for explicitly modeling the information gathering activities of potential entrants and analyzes how entry behavior is affected by these activities. We assume that information is acquired secretly and that firms face uncertainty about more than one variable. When costs of information gathering are small, entry decisions are as if firms had perfect information so that lack of information cannot cause too much nor too little entry. This as if behavior is even exhibited in specialization equilibria in which different firms obtain information about few but distinct variables. Such equilibria are both socially desirable and robust.
This article uses clinical evidence to show how the German system of corporate control and governance is both more active and more hostile than has previously been suggested. It provides a complete breakdown of ownership and takeover defence patterns in German listed companies and finds highly fragmented (but not dispersed) ownership in non-majority controlled firms. We document how the accumulation of hostile stakes can be used to gain control of target companies given these ownership patterns. The article also suggests an important role for banks in helping predators accumulate, and avoid the disclosure of, large stakes.
In the summer of 1999, Adecco SA, one of the world's leading staffing companies, was in the midst of attempting to acquire the staffing operations of Olsten Corp., a U.S. firm. This case analyzes the economics of the staffing industry, basic valuation, cross-border issues including tax arbitrage, valuation of minority interest, and the importance of financial health in merger negotiations.
This article examines notions of renewal in a professional union by exploring the developing role of the steward in the Royal College of Nursing. Drawing on survey and other data, it assesses different dimensions of the union renewal process linked to workplace activities, issues and relations. The findings suggest that the process of renewal has been based primarily upon member rather than management-facing activities, although there is strong evidence to suggest variation in the activities carried out by the RCN’s ordinary and senior stewards.
In this article we reexamine the relationship between time and processes of institutionalization. We argue that pace and stability, two temporal dimensions of institutionalization, depend on the mechanism used by agents to support the institutionalization process. Drawing from the power literature, we develop four types of mechanisms—influence, force, discipline, and domination—and argue that (1) each type will produce a distinctive pattern of pace and stability, and (2) more complex patterns of pace and stability will result from the combined use of multiple mechanisms.
A study of four HAs in three regions found that they had little influence on encouraging trusts to implement the recommendations of the Changing Childbirth report over the period 1993-98. Where changes had been introduced this was often through the influence of an opinion leader in the trust, such as directors of midwifery. The results suggest healthcare professionals providing services have substantial influence over the fate of strategic change initiatives.
We present findings from evaluations of two government-funded initiatives exploring the transfer of research evidence into clinical practice — the PACE Programme (Promoting Action on Clinical Effectiveness), and the Welsh Clinical Effectiveness Initiative National Demonstration Projects. We situate the findings within the context of available research evidence from healthcare and other settings on the role of opinion leaders or product champions in innovation and change — evidence which leaves a number of problems and unanswered questions. A major concern is the difficulty of achieving a single replicable description of what opinion leaders are and what they do — subjective understandings of their role differ from one setting to another, and we identify a range of very different types of opinion leadership. What makes someone a credible and influential authority is derived not just from their own personality and skills and the dynamic of their relationship with other individuals, but also from other context-specific factors. We examine the question of expert versus peer opinion leaders, and the potential for these different categories to be more or less influential at different stages in the innovation process. An often neglected area is the impact of opinion leaders who are ambivalent or hostile to an innovation. Finally, we note that the interaction between individual opinion leaders and the collective process of negotiating a change and reorienting professional norms remains poorly understood. This raises a number of methodological concerns which need to be considered in further research in this area.
In a study of the ownership of German corporations, we find a strong relation between board turnover and corporate performance, little association of concentrations of ownership with managerial disciplining, and only limited evidence that pyramid structures can be used for control purposes. The static relationship of ownership to control in Germany is therefore similar to the United Kingdom and the United States. However, there are marked differences in dynamic relations involving transfers of ownership. There is an active market in share blocks giving rise to changes in control, but the gains are limited and accrue solely to the holders of large blocks, not to minority investors. We provide evidence of low overall benefits to control changes and the exploitation of private benefits of control.
Economic theory points to five parties disciplining management of poorly performing firms: holders of large share blocks, acquirers of new blocks, bidders in takeovers, nonexecutive directors, and investors during periods of financial distress. This paper reports the first comparative evaluation of the role of these different parties in disciplining management. We find that, in the United Kingdom, most parties, including holders of substantial share blocks, exert little disciplining and that some, for example, inside holders of share blocks and boards dominated by nonexecutive directors, actually impede it. Bidders replace a high proportion of management of companies acquired in takeovers but do not target poorly performing management. In contrast, during periods of financial constraints prompting distressed rights issues and capital restructuring, investors focus control on poorly performing companies. These results stand in contrast to the United States, where there is little evidence of a role for new equity issues but nonexecutive directors and acquirers of share blocks perform a disciplinary function. The different governance outcomes are attributed to differences in minority investor protection in two countries with supposedly similar common law systems.
This article reviews the development of corporate finance from domestic analyses to international comparisons of financial systems, to comparative corporate governance, to law and finance, and most recently to politics and finance. It describes how both theoretical developments and empirical evidence have guided this research agenda. It considers the lessons that can be learnt from the newly emerging literatures and considers the policy implications that can be derived. It argues that while strong policy prescriptions are frequently proposed, there are many unresolved theoretical and empirical issues which suggest that caution should be exercised in drawing policy conclusions.
Despite the frequent assertion that knowledge management is an important strategic activity, there have been relatively few empirical studies of the processes involved in this, particularly in knowledge intensive firms. The paradox inherent to codification projects is that they are dependent on professional staff willingly transferring the knowledge that often underpins their status. My purpose in this article is to examine whether and how this paradox is resolved by presenting a case study of a knowledge codification project under- taken by a professional service firm (PSF). I argue that the successful assertion of property rights relates, ironically, to its limitation. Codification takes place in a way that does not nullify the consultants’ expert role in front of the client. That there appear to be limits to how far such a reductive exercise can capture the activities of the consultants has implications for grammatical models that aim to describe and theorize about organizational processes or sequences of actions. I discuss these in the latter part of the article.
This paper investigates the reasons for and implications of the recent merger between three of the largest unions in the retail finance sector, creating UNIFI. Recent union mergers have been explained by environmental changes adversely affecting membership and finances. These prompt leaders to consider merger as an appropriate organizational solution. Mergers are successfully concluded when leaders are able to overcome internal resistance and develop acceptable outcomes. We examine whether these factors are sufficient to explain how the merger between the national banking union and two large company-based staff unions was concluded, given longstanding institutional rivalry.
Geographically-dispersed, global service organisations must find cost-effective ways of delivering consistent service quality while recognising local differences in service culture. For such organisations, the management of operations cannot be separated from issues of training, corporate culture, and organisational identity. This paper presents an analysis of the experience of Avis Europe, a leading car rental firm, in developing a multimedia system for training frontline staff. The case illustrates how multimedia technologies enable a new sort of organisational text that has implications for the way in which operations may be documented and enacted. In particular, multimedia allows texts that are complex enough to address issues of what Hochschild describes as “emotional labour” in service operations. These developments have great significance for both practice and research in operations management.
We examine voting by a board designed to mitigate conflicts of interest between privately informed insiders and owners. Our model demonstrates that, as argued by researchers and the business press, boards with a majority of trustworthy but uninformed "watchdog" agents can implement institutionally preferred policies. Our laboratory experiments strongly support this conclusion. Our model also highlights the necessity of penalties on insiders when there is dissension among board members. However, penalties for dissent appeared to have little impact on the experimental outcomes.
This paper investigates investor activism when there are a number of strategic investors that are capable of intervening in corporate governance. These strategic investors can monitor and/or trade in anonymous financial markets. In equilibrium, a core group of monitoring investors emerges endogenously to curtail managerial opportunism. These core activists both intervene and trade aggressively. Although the smallest investors are passive, there is no monotonic relationship between the size of preexisting shareholdings and activism. In fact, among those investors who choose activism, those with the smallest holdings are the most aggressive.
We consider default by firms that are part of a single clearing mechanism. The obligations of all firms within the system are determined simultaneously in a fashion consistent with the priority of debt claims and the limited liability of equity. We first show, via a fixed-point argument, that there always exists a "clearing payment vector" that clears the obligations of the members of the clearing system; under mild regularity conditions, this clearing vector is unique. Next, we develop an algorithm that both clears the financial system in a computationally efficient fashion and provides information on the systemic risk faced by the individual system firms. Finally, we produce qualitative comparative statics for financial systems. These comparative statics imply that, in contrast to single-firm results, even unsystematic, nondissipative shocks to the system will lower the total value of the system and may lower the value of the equity of some of the individual system firms.
We derive conditions under which permitting manager “insiders” to trade on personal account increases the equilibrium level of output and the welfare of shareholders. These increases are produced by two effects of insider trading. First, insider trading impounds information about hidden managerial actions into asset prices. This impounding of information allows shareholders to make better personal portfolio-allocation decisions. Second, allowing insider trading can induce managers to increase, on average, the correlation between their personal wealth and firm value beyond the level dictated by the employment relationship alone. This increased correlation increases managerial incentives. When these two effects are only weakly present, permitting insider trading harms shareholders, because insider trading reduces shareholder control over the performance–compensation relationship. In addition, when managerial effort incentives are high and corporate governance costs are low, managers may prefer insider-trading restrictions because such restrictions force shareholders to offer them a larger fraction of output through the employment relationship.
If the duty of the intellectual in society is to make a difference, the management research community has a long way to go to realize its potential. The Starkey and Madan (2001) report is a useful entry point into the debate about what kind of management research, but it defines the issues too narrowly and seeks solutions too particularly. The big strategic issues about management research are about capacity, capability and delivery. In an era of knowledge production after modernism there is a more receptive context to meet the double hurdles of management research. Research without scholarly quality will satisfy no one and will certainly disable our capacity to meet the double hurdle of scholarly quality and relevance. A more contextualist and dynamic view of knowing needs to be supported by a re-engagement of management researchers with social scientists and users, a re-engagement between European management researchers and their colleagues in the USA and a period of experimentation and learning with all the potential partners out there waiting to engage with us.
Argues that management needs to be 'joined up', i.e. that it needs to acknowledge the interdependence of all parts of the organization and understand that strategy, structure and systems need to complement each other. Summarizes research into what is termed complementary change. Draws on work with BP and Unilever to discuss four aspects of complementary change - complementarities traps, complementarities gaps, the virtuous circles of complementary change and the J-curve (in which there is a short drop in performance followed by a steep rise).
This article presents several studies that examine organizational change. The authors note that certain issues should be addressed when examining the studies including an examination of the multiple contexts and levels of analysis in studying organizational change, the inclusion of time, history, process and action, the link between change processes and organizational performance, the investigation of international and cross-cultural comparisons, the study of receptivity, customization, sequenicng, pace and episodic versus continusous change and the partnership between scholars and practicioners in studying change. The author discuss how these issues are related to the concepts in the studies and note they research has not addressed these issues at this point in time.
Strategic management theories invoke the concept of competitive advantage to explain firm performance, and empirical research investigates competitive advantage and describes how it operates. But as a performance hypothesis, competitive advantage has received surprisingly little formal justification, particularly in light of its centrality in strategy research and practice. As it happens, the core hypothesis - that competitive advantage produces sustained superior performance - finds little support in formal deductive or inductive inference, and the leading theories of competitive advantage incorporate refutation barriers that preclude meaningful empirical tests. The logical and philosophical foundations of the competitive advantage hypothesis are explored, locating its philosophical foundations in the epistemologies of Bayesian induction, abductive inference and an instrumentalist, pragmatic philosophy of science.
Epistemology is the study of knowledge - of what is known and how we know it. Organizational epistemology is dominated by the dualist opposition of objectivist and subjectivist philosophies of science. Objectivists accept knowledge claims as potentially true and warranted on objective evidence, whereas subjectivists ground knowledge in perception, phenomenology and social construction. Though these two perspectives differ in their ontologies (the reality of constructs and relations) and methodologies (how these relations can be observed), both views accept that reliable organizational knowledge is possible. This paper introduces a third epistemological perspective fallibilism - and shows how neglect of this third epistemology has constrained advance in the objectivist-subjectivist debate. Fallibilism, which challenges the foundations and reliability of knowledge claims, occupies a significant place in every major philosophical tradition, but contradicts the prevailing rhetoric of knowledge-claiming in organizational research, and has been systematically excluded from the debate. In this article we present the foundations and precepts of fallibilism, show how its absence has invited divisive and sectarian dogmatism, and explore its potential contributions to organizational research.
The Generalized Assignment Problem (GAP) is the problem of finding the minimal cost assignment of jobs to machines such that each job is assigned to exactly one machine, subject to capacity restrictions on the machines. We propose a new stochastic model for the GAP. A tight condition on this stochastic model under which the GAP is feasible with probability one when the number of jobs goes to infinity is derived. This new stochastic model enables us to analyze the adequacy of most of the random generators given for the GAP in the literature. We demonstrate that the random generators commonly used to test solution procedures for the GAP tend to create easier problem instances when the number of machines m increases. We describe a greedy heuristic for the GAP, and use it to illustrate the results from the paper.
The multi-period single-sourcing problem (MPSSP) is the problem of finding an assignment, over time, of customers to warehouses such that each customer is assigned to exactly one warehouse in each period, subject to capacity constraints, such that the total transportation and inventory costs are minimized. We propose a general stochastic model for the MPSSP, and derive a tight condition on this stochastic model under which the MPSSP is feasible with probability 1 when the number of customers goes to infinity. This result can be used to generate suitable experimental data. Moreover, we show that the normalized optimal value of the problem converges almost surely to a constant, for which we provide an explicit expression; this property can be useful in constructing asymptotically optimal heuristics for the problem. The rate of convergence to the limiting value is illustrated empirically.
The authors motivate social capital arguments at the world-system level through the analysis of world-trade flows and nation status, 1965 to 1980, with specific attention to contextual changes in global trade and stratified effects on participation in trade within it. They generate measures of structural autonomy based on world-trade data from the United Nations Commodity Trade Statistics Index and incorporate these measures into robust regression models of the determinants of nation status. The authors find support for the overall positive effects of structural autonomy on nation status in 1965 and 1970 but find that these effects dissipate by 1980. They then use quantile regressions to find that only high-status countries experience significant returns on structural autonomy in any of the 3 observation years. The authors combine network and institutional perspectives on trade to argue that changes in the context of world trade between 1965 and 1980 affect the benefits that social capital can reap and for whom.
Presents data interpreted from a survey of 429 people working in 6 companies in the IT, software, electronics and pharmaceutical sectors. The finding covered the following areas; what knowledge workers value most; the role of individual characteristics, the state of the psychological contract, factors shaping the contract, and its impact. The final section discusses the implications of the findings for managers.
The purpose of the Harvard Business School-Journal of Financial Economics conference was to reexamine the role of clinical work in our profession. Clinical research–empirical work that examines a relatively small number of events intensively–accounts for a very small fraction of published work in the field. The pieces in this conference volume are case studies of different “clinical” research techniques that are used to develop, test, apply and communicate theory.
United Grain Growers Ltd. (UGG), a Canadian grain distributor, audited its exposure to a number of key risks, especially the impact of weather on grain volumes and operating income. Understanding these risks was crucial because the company was in the midst of a major modernization and diversification program. But although UGG already managed traditional risks through a variety of control processes, it was still faced with the problem of how to deal with the biggest risk; the weather.
Looks at a fictional company, HBS Inc., which is trying to determine the appropriate amount of debt in its capital structure. Allows students to analyze the tradeoff between tax shields and expected costs of financial distress. May be used with: (9-201-033) Diageo plc.
Automated agents are increasingly being used to interact on behalf of individuals and organizations in electronic markets. Agents are used, for example, to explore the set of possible contracts and to trade in communication bandwidth. Users choose agents which are then matched on various locations (hosts). Hosts will normally check the agents (i.e., the code) to verify that it is compatible with the communication protocol. In this paper we explore the equilibrium outcomes of such interactions. We show that users will choose agents who reveal parts of their code in order to coordinate on welfare improving outcomes which otherwise would not have been supported in equilibrium.
The economics of mergers are doubtful — we know that more broadly, and the case indicates the same in the pharmaceutical industry specifically. Yet still big businesses strive to get bigger. We should look more widely than to economics for our explanations.