Showing papers by "London Business School published in 1994"
01 Oct 1994
TL;DR: In this article, the authors explore the properties of self-enforcing international environmental agreements (IEAs) using two models: (i) the number of signatories, the terms of the agreement, and the actions of nonsignatories are determined jointly; (ii) the IEA is modeled as an infinitely repeated game, but one which is renegotiation-proof.
Abstract: Effective management of international environmental resources requires cooperation, and in practice cooperation is usually codified in international environmental agreements (IEAs). The essential feature of IEAs is that they cannot be enforced by a third party. This paper explores the properties of self-enforcing IEAs using two models. In one, the number of signatories, the terms of the agreement, and the actions of nonsignatories are determined jointly. In the other, the IEA is modeled as an infinitely repeated game, but one which is renegotiation-proof. Both models indicate that IEAs can do little to improve on the noncooperative outcome when the number of countries that share the resource is large. Copyright 1994 by Royal Economic Society.
1,535 citations
TL;DR: In this article, the various types of corporate entrepreneurship (individual managers, business renewal and Schumpeterian or industry, leadership) share five "bundles" of attributes, and external and internal triggers for change are examined for a sample of 10 firms in 4 European industries.
Abstract: This paper demonstrates how the various types of corporate entrepreneurship–individual managers, business renewal and Schumpeterian, or industry, leadership–share five ‘bundles’ of attributes. Each type can exist in one firm, though at different times as the common attributes change their role and relative importance. External and internal triggers for change are examined for a sample of 10 firms in 4 European industries. The data suggest a provocative conclusion: troubled firms in hostile environments can shed past behaviors, adopt policies fostering entrepreneurship and accumulate innovative resource bundles that provide a platform on which industry leadership can be built.
823 citations
TL;DR: In this paper, the authors demonstrate that governments may have incentives to impose weak environmental standards on industries that compete for business in imperfectly competitive international markets, where "weak" means that the marginal cost of abatement is less than the marginal damage from pollution.
634 citations
TL;DR: In this paper, the authors investigate the financial recontracting of firms completing distressed exchanges and those reorganizing under Chapter 11 and find that recovery rates for creditors, on average, are higher in distressed exchanges than in Chapter 11 reorganizations, as are equity deviations from absolute priority.
479 citations
TL;DR: In this article, the authors explore if, when, and how intentionally corporate officers conceal negative organizational outcomes from shareholders, using computer assisted content analysis of over 1,000 presidents' letters contained in annual reports to shareholders.
Abstract: To explore if, when, and how intentionally corporate officers conceal negative organizational outcomes from shareholders, we used computer-assisted content analysis of over 1,000 president's letters contained in annual reports to shareholders. Results suggest that outside directors, large institutional investors, and accountants limit such concealment, but small institutional investors and outside directors who are shareholders prompt it. Low disclosure is associated with subsequent selling of stock by top officers and outside directors. This result supports the claim that concealment by officers and its toleration by outside directors may be intentional.
378 citations
TL;DR: In this article, the authors examined the valuation consequences of 276 U.S. international acquisitions made in the period 1975-1988, and provided direct evidence on the effect of international acquisitions on the market value of U. S. bidding firms.
Abstract: Do international acquisitions—in contrast to their domestic counterparts—create value for the acquiring firms' shareholders? This study examines the valuation consequences of 276 U.S. international acquisitions made in the period 1975–1988, and provides direct evidence on the effect of international acquisitions on the market value of U.S. bidding firms. It is shown that, on average, international acquisitions create value for the acquiring firms. The study also finds that the value created is a function of the nature of the acquisition (e.g., related or unrelated); the nature of the bidding firm's industry (e.g., its concentration level and advertising intensity); the nature of the acquiring firm (e.g., its prior international experience and its current profitability); and the nature of the macroeconomic environment (e.g., tax regulations and the relative strength of the U.S. dollar).
354 citations
TL;DR: In this paper, the authors aim to update a previous study into the marketing practices of successful UK exporters and find that the majority of success factors identified over a decade ago are still valid today.
Abstract: Aims to update a previous study into the marketing practices of successful UK exporters. Finds that the majority of success factors identified over a decade ago are still valid today. In addition, finds some support for the emerging relational approach to export marketing. Concludes that exporters should place greater emphasis on relationship factors to improve their performance. Revises an earlier model of export performance as the basis for future research.
305 citations
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296 citations
TL;DR: This article seeks to decompose BPR into its principal elements, suggesting what is novel and what is not so new.
Abstract: Business process redesign (BPR) has become one of the most seductive management ideas of the 1990s. It has been associated with information technology and accordingly information systems (IS) academics are expected to have a view on it, and IS practitioners are expected to be knowledgeable about it. This article seeks to decompose BPR into its principal elements, suggesting what is novel and what is not so new. Questions for research are suggested, frameworks for analysis proposed and implications for IS raised. Evidence is drawn from recent research studies and the experiences of some large US and UK companies.
264 citations
TL;DR: In this paper, conceptual issues associated with strategic human resource management (SHRM) are addressed, highlighting the key variables and interrelationships that need to be included in a model of SHRM, and a more detailed critical analysis of the contribution of the literature in each of these areas follows.
Abstract: In this paper conceptual issues associated with strategic human resource management are addressed. The rapidly expanding intemationai interest in strategic human resource management is first highlighted. The article then explores some of the broader issues around the debate on SHRM that can inform thinking at a macro level. Firstly, the progress made towards understanding the meaning of SHRM is analysed, then a brief overview of the major models of SHRM to date is presented. This overview is used to highlight the key variables and interrelationships that need to be included in a model of SHRM, and a more detailed critical analysis of the contribution of the literature in each of these areas follows. A summary of the most important research questions arising out of the literature is followed by a model of the SHRM process, which attempts to remedy the major weaknesses in existing models of SHRM. The ways in which this model may be used as a basis for empirical research are then noted.
260 citations
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TL;DR: In this paper, the authors consider a model of the stock market with delegated portfolio management and show that some portfolio managers trade even though they have no reason to prefer one asset to another (noise trade).
Abstract: We consider a model of the stock market with delegated portfolio management. All agents are rational: some trade for hedging reasons, some investors optimally contract with portfolio managers who may have stock-picking abilities, and portfolio managers trade optimally given the incentives provided by this contract. Managers try, but sometimes fail, to discover profitable trading opportunities. Although it is best not to trade in this case, their clients cannot distinguish 'actively doing nothing,' in this sense, from 'simply doing nothing.' Because of this problem: (i) some portfolio managers trade even though they have no reason to prefer one asset to another (noise trade). We also show that, (ii), the amount of such noise trade can be large compared to the amount of hedging volume. Perhaps surprisingly, (iii), noise trade may be Pareto-improving. Noise trade may be viewed as a public good. Results (i) and (ii) are compatible with observed high levels of turnover in securities markets. Result (iii) illustrates some of the possible subtleties of the welfare economics of financial markets.
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TL;DR: In this article, the authors provide intuition as to when and why introductory pricing might occur in the presence of network externalities, and they show that incomplete information about demand or asymmetric information about costs are necessary for introductory pricing to occur in equilibrium.
Abstract: How should a monopolist price a durable good or a new technology that is subject to network externalities? In particular, should the monopolist set a low "introductory price" to attract a "critical mass" of adopters? In this paper, we provide intuition as to when and why introductory pricing might occur in the presence of network externalities. Incomplete information about demand or asymmetric information about costs are necessary for introductory pricing to occur in equilibrium.
TL;DR: In this paper, the Cox, Ingersoll, and Ross (1985) model was used to estimate real term structures from cross-sections of British government index-linked (realrd) bond prices.
TL;DR: The authors argue that the P[star] relationship does not have a causal link with prices but rather the causality runs from prices to money, and that monetary conditions do seem to have some predictive power for future levels of activity.
Abstract: Recent articles have attempted to restore the use of a simple measure of the money supply as an indicator of future price levels, P[star], and to reestablish a causal link from money to prices. In this paper we argue that the P[star] approach is flawed. It is certainly more complex than traditional monetarist approaches but the fundamental questions of causality are in no way either affected or resolved. We argue that the P[star] relationship does not have a causal link with prices but rather the causality runs from prices to money. We also find that there is some causality running from money to real income, so that monetary conditions do seem to have some predictive power for future levels of activity. Copyright 1994 by Royal Economic Society.
TL;DR: The authors argued that the three basic marketing paradigms are the same but their order of precedence in the minds of Chinese business people is the reverse of those in the West, and argued that distances of culture, language and geography do not facilitate understanding of marketing practices and ways of thinking.
Abstract: Greater China, with nearly one quarter of the world's population and one of the fastest rates of economic growth, is attracting the attention of practitioners and academics alike. The distances of culture, language and geography do not facilitate understanding of marketing practices and ways of thinking. This article argues that the three basic marketing paradigms are the same but their order of precedence in the minds of Chinese business people is the reverse of those in the West.
TL;DR: In this article, the expectation model of the term structure for US data on three and six-month treasury bills for the period 1962(1) to 1987(3) is explored.
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TL;DR: In this paper, the effects of portfolio insurance on market and asset price dynamics in a general equilibrium continuous-time model were examined. And the authors found that the market volatility and risk premiums are decreased, and the asset and market price levels increased, by the presence of portfolio insurers.
Abstract: This paper examines the effects of portfolio insurance on market and asset price dynamics in a general equilibrium continuous-time model. Portfolio insurers are modeled as expected utility maximizing agents in two alternative ways. Martingale methods are employed in solving the individual agents' dynamic consumption-portfolio problems. Comparisons are made between the optimal consumption processes, optimally invested wealth and portfolio strategies of the portfolio insurers and "normal agents". At a general equilibrium level, comparisons across economies reveal that the market volatility and risk premiums are decreased, and the asset and market price levels increased, by the presence of portfolio insurance.
TL;DR: Earl and Khan as mentioned in this paper examined BPR from four different perspectives: as a phenomenon in Western business, as an emergent management technology, as a potential laboratory, and as a new idea or an old one dressed up.
TL;DR: This paper found that although most managers profess to value growth and follow expansionary strategies, the main limits on the growth of SMEs are the intensity of competition stemming from the recession, and the inability or unwillingness of management to deal with the increased administrative burden arising from expansion.
Abstract: Recent evidence suggests that many small to medium sized enterprises (SMEs) in the UK experience difficulty growing from the start-up phase into larger well established firms. This research uses survey data from UK instruments, printing and software SMEs to explore the attitudes of SME managers towards growth, to identify the strategies they pursue to achieve growth, and to establish the main factors they perceive to be limiting their growth. We find that although most managers profess to value growth and follow expansionary strategies, the main limits on the growth of SMEs are the intensity of competition stemming from the recession, and the inability or unwillingness of management to deal with the increased administrative burden arising from expansion.
TL;DR: Ginsberg and Hay as discussed by the authors argue that corporate entrepreneurship is both a "top-down" and a "bottom-up" process that relies on the initiatives emanating from below as much as on the creation of a receptive climate from above.
TL;DR: In this article, the frequency of use and fairness of four cost-based and four market-based pricing rules were studied in the buying and selling of bulk electricity, and no potentially collusive consensus emerged about the price setting process in this market.
TL;DR: Voss examines the growing recognition of the interdependence of a variety of business processes: product innovation, product development, process innovation, technology acquisition, industrial design, total quality management, and quality function deployment as discussed by the authors.
TL;DR: In this paper, the ability of developed countries to sustain a cooperative agreement to compensate developing countries for the "incremental costs" of biodiversity conservation is considered, and it is shown that, depending on certain parameter values and the model specification, such an agreement could only codify the non-cooperative outcome or achieve the full cooperative outcome where global net benefits are maximized.
Abstract: This paper considers the ability of developed countries to sustain a cooperative agreement to compensate developing countries for the “incremental costs” of biodiversity conservation. It is shown that, depending on certain parameter values and the model specification, such an agreement could only codify the non-cooperative outcome or achieve the full cooperative outcome where global net benefits are maximized. However, where the agreement can sustain the full cooperative outcome, net benefits will be only slightly larger than in the noncooperative outcome.
TL;DR: In this article, the effect of interest rate uncertainty on the shape of the forward rate curve is analyzed, and it is shown that, despite the well known shortcomings of single factor models, attempts to fit such models to cross-sections of nominal bond prices nonetheless produce reasonable estimates of interest rates volatility.
Abstract: This paper analyses the effect of interest rate uncertainty on the shape of the forward rate curve. We consider a broad class of term structure models characterized by an affine relation between the drift and diffusion coefficients of the stochastic process describing the evolution of the state variables and the level of the state variables. For these models, a simple relation exists between the shape of the forward rate curve, the sensitivity of the zero-coupon yield curve to the state variables and the variance-covariance matrix of the state variables. In single factor models this relation implies that minus the convexity of the forward rate curve with respect to a measure of ‘duration’ is equal to the variance of the short rate. The paper explores why it is that, despite the well known shortcomings of single factor models, attempts to fit such models to cross-sections of nominal bond prices nonetheless produce reasonable estimates of interest rate volatility.
TL;DR: Can an academic‐based approach contribute to benchmarking and self assessment and, second, can tools be developed for use in manufacturing, in particular those to do with technology management?
Abstract: Sets out to examine two questions: first, can an academic‐based approach contribute to benchmarking and self assessment and, second, can tools be developed for use in manufacturing, in particular those to do with technology management. Proposes and tests a procedure for developing and evaluating benchmarking tools and frameworks. Illustrates this with the development of an overall technology management framework and detailed frameworks and tools for process technology and innovation management.
TL;DR: In this article, two standard measures of brand-loyalty are found to be closely predictable from the Dirichlet model of buyer behaviour in most cases. But, the authors also consider that market share is generally the dominant factor, but there are also certain submarkets and isolated deviations.
TL;DR: The idea that successful companies should pursue only one strategy and avoid being "stuck in the middle" between several strategies, originally articulated by Michael Porter, has become an important tenet of corporate strategic thinking.
Abstract: SUMMARY
The idea that successful companies should pursue only one strategy and avoid being ‘stuck in the middle’ between several strategies – originally articulated by Michael Porter – has become an important tenet of corporate strategic thinking. This paper attempts to distinguish and appraise several different interpretations of the advice.
It is sometimes interpreted as advice about market positioning in a narrow sense; it is sometimes presented as prescribing broad strategic clarity; and it is sometimes viewed more descriptively as a scheme for classifying firms by strategic outcomes.
When interpreted narrowly as referring to the appeal of a product to its target buyers, the proposition that firms should not be ‘stuck in the middle’ should not be taken to imply that companies must be down-market or up-market, but nothing in-between. Such a view is belied by the evident success of companies such as Sainsbury's, which earn substantial economic rents in a mid-market position.
Porter can be interpreted more broadly as suggesting that firms need strategic clarity and that they will do better to pursue one or other of cost or quality objectives than to seek a mix of the two. PIMS data and other evidence shows, however, that intermediate positions are indeed profitable and are successfully exploited by many firms.
We conclude that ‘don't be stuck in the middle’ is best employed as a classification scheme of strategic outcomes – it says that firms which fail in both cost and quality dimensions perform poorly.
TL;DR: In this article, a taxonomy of "ethical domains" is proposed to describe the foci of organizations' and their agents' ethical concerns and conduct, and a framework of concepts is suggested to help set an agenda for empirical research.
Abstract: In a climate of increasing interest and activity within the field of business ethics, as yet there exists no coherent conceptual framework for organizational theory and research. From a review of current thinking and previous writings a framework of concepts is suggested to help set an agenda for empirical research. The elements of this are, first, a taxonomy of “ethical domains”: the foci of organizations' and their agents' ethical concerns and conduct. Second, it is considered how “ethical functioning” might be analysed in terms of causal relationships between expressive forms, voluntary action and instituted forms. Third is discussed “ethical process”, the means by which ethical awareness is aroused. Fourth and last, the paper examines how normative evaluations might apply to the “ethical condition” of organizations and their agents, meaning change or stability in reputation and integrity. At each stage of the argument possible objectives for research are developed.
TL;DR: In this article, a range of indirect non-structural and structural tests for rational, exploding deterministic and stochastic bubbles are carried out for the Polish hyperinflation at the end of the eighties was too excessive to be attributed to market fundamentals only.
TL;DR: The state-of-the-art in financial modelling using neural networks is reviewed, and typical applications in key areas of forecasting, classification and pattern recognition are described.
Abstract: Modelling of financial systems has traditionally been done in partial equilibrium. Such models have been very useful in expanding our understanding of the capital markets; nevertheless, many empirical financial anomalies have remained unexplainable. It is possible that this may be due to the partial equilibrium nature of these models. Attempting to model financial markets in a general equilibrium framework still remains analytically intractable. Because of their inductive nature, dynamical systems such as neural networks can bypass the step of theory formulation, and they can infer complex non-linear relationships between input and output variables. Neural networks have now been applied to a number of live systems, and have demonstrated far better performance than conventional approaches. This paper reviews the state-of-the-art in financial modelling using neural networks, and describes typical applications in key areas of forecasting, classification and pattern recognition. The applications cover areas such as asset allocation, foreign exchange, stock ranking and bond trading.