Showing papers in "Review of Managerial Science in 2014"
TL;DR: In this paper, a bibliometric citation analysis of 129 core papers and 5,228 cited references was performed to identify five topic clusters within the field of social entrepreneurship: 1) Definitions and conceptual approaches, 2) Impetus, 3) Personality, 4) Impact and performance, and 5) Future research agenda.
Abstract: Research on Social Entrepreneurship became a growing field of interest during the past decades. However, as the heterogeneity of investigated topics is rather large the purpose of this contribution is to provide an overview of the current state of research on Social Entrepreneurship. In doing so previous research is structured to identify major contributions and thereby key discussion lines within this field. Based on a bibliometric citation analysis of 129 core papers and 5,228 cited references, five topic clusters are identified within the field of Social Entrepreneurship: 1) Definitions and conceptual approaches, 2) Impetus, 3) Personality, 4) Impact and performance, and 5) Future research agenda. By reflecting the literature of each discussion line, a framework for the advancement of Social Entrepreneurship research is provided.
148 citations
TL;DR: In this article, the authors investigated the impact of family influence and various governance factors on internationalization of Austrian firms and found that family firms with medium family influence are the most internationally active companies.
Abstract: Despite family firm’s dominant role in economies worldwide, there is little empirical knowledge on their internationalization. Drawing on a sample of Austrian firms, this paper investigates the impact of family influence and various governance factors on internationalization. The findings reveal an inverted U-shaped relationship between family influence and internationalization. Family firms with medium family influence are the most internationally active companies. This indicates that concerning internationalization the advantages of being a family firm are highest when the family’s ownership share and involvement in management and governance boards is not too extensive. Additionally, neither the incumbent generation, nor the level of non-family executives in the management board, nor the existence of a supervisory board has a significant influence on going international. Since advisory boards seem to foster internationalization, they might be an adjuvant means of equipping family firms with the necessary capabilities, know-how and contacts to operate internationally.
120 citations
TL;DR: In this paper, a methodology for using fuzzy logic in the design of a comprehensive sustainability rating for firms is proposed, which addresses the complexity of the concept and enables the incorporation of expert knowledge into the system of assessment.
Abstract: Many organizations currently publish sustainability ratings that quantify the sustainability of firms by aggregating scores. These organizations analyze companies in economic, social, environmental and corporate governance terms. However, some of these scores are associated with problems of how positive and negative assessments are offset. This work proposes a methodology for using fuzzy logic in the design of a comprehensive sustainability rating for firms. This technique for measuring sustainability addresses the complexity of the concept and enables the incorporation of expert knowledge into the system of assessment. This approach is applied to organizational information taken from the 2008 Accountability Rating and corrects one of the weaknesses revealed by methodologies based on the aggregation of scores—the offset effect—enabling decision-maker to manage it. This is considered an important research topic because of the growth of social responsible financial markets, and the fact that investors are demanding more accurate information.
52 citations
TL;DR: In this paper, the authors analyzed family firms' specific requirements for CFOs along four dimensions, namely education, professional know-how, career path and social/interpersonal skills, and 11 propositions are then developed.
Abstract: Non-family chief financial officers (CFOs) are often the first non-family members recruited into a family firm’s top management team. Based on the extant literature and with reference to the resource-based view of the firm, family firm peculiarities can also be expected to affect the requirements family firms look for when hiring non-family CFOs. To analyze these requirements, this paper draws on interviews with family firm owners, chief executive officers and non-family CFOs. Family firms’ specific requirements for CFOs are analyzed along four dimensions, namely education, professional know-how, career path and social/interpersonal skills, and 11 propositions are then developed. The presented findings suggest that family firm owners seek to integrate non-family CFOs with professional non-family firm experience in order to enrich the family firm’s resource pool. In turn, non-family CFOs are required to adapt to the specific governance characteristics prevalent in family firms.
29 citations
TL;DR: The authors examined German literature using co-citation analysis methods to explore the relationship between environmental economics and clean technologies and found that researchers have provided a rather small and fragmented set of business knowledge for the cleantech industry.
Abstract: Over the past two decades, clean technologies (cleantech) have emerged as an important economic factor with remarkable progress. Fueled by growing concerns about climate change and diminishing fossil fuel resources, governments have put aggressive stimulus packages in place to support emerging technologies that drive cleantech businesses. The industry operates in highly regulated market conditions which in turn raises the question of whether economists have addressed private and public information requirements. To answer this question and to explore the relationship between environmental economics and clean technologies, this paper examines German literature using co-citation analysis methods. Based on the co-citation analysis of 588 documents, our results suggest that researchers have provided a rather small and fragmented set of business knowledge for the cleantech industry. Despite its economic and environmental importance, research on the private use and economic impact of cleantech remains scarce.
29 citations
TL;DR: In this paper, the authors investigate the effect of going public on the evolution of high-tech entrepreneurial firms, focussing in particular on the interaction between innovation variables and financing and investment strategies and find that firms with higher R&D investments typically view the IPO as a mechanism to raise external equity, used to pursue investments and to acquire participation in other companies.
Abstract: This paper empirically investigates the effect of going public on the evolution of high-tech entrepreneurial firms, focussing in particular on the interaction between innovation variables and financing and investment strategies. Specifically, I confront the effects of the IPO on firms with higher R&D investments versus firms with more patents. Firms with higher R&D investments typically view the IPO as a mechanism to raise external equity, used to pursue investments and to acquire participation in other companies, whereas those with more patents raise more debt capital and invest less after the IPO, as compared to high-tech entrepreneurial firms. I suggest that a large number of patents is an index of technological maturity for high-tech ventures, even more than age and size, that helps investors to individuate firms with a lower level of risk.
26 citations
TL;DR: In this paper, the authors analyzed to what extent ownership structure, capital structure, and dividend policy as corporate governance mechanisms drive the firm value, and found that there is an inverse U-shaped relationship between ownership concentration and firm value.
Abstract: The paper analyses to what extent ownership structure, capital structure, and dividend policy as corporate governance mechanisms drive the firm value. From a data panel of publicly quoted Chilean firms for the years 2002–2010, we find that there is an inverse U-shaped relationship between ownership concentration and firm value. The positive slope is supported by the supervision hypothesis; whilst the negative relation between ownership concentration and firm value is supported by the expropriation hypothesis. We also find that there is a positive impact of both leverage and the dividend pay-out on the firm value. In this case, these two mechanisms reduce the free cash flows which otherwise might be used opportunistically by managers in their own interests (free rider problem). Contrary to the previous empirical literature in Chile, it is found that the mere fact that a firm is affiliated to a business group/conglomerate impacts positively its value. This positive effect is basically driven by the development of intragroup capital markets, and the governance imposed by the rules of the conglomerate.
21 citations
TL;DR: In this article, the authors examined the historical performance of investments in various diamond quality grades and investigated their relation to stock market and currency risk, and concluded that the investment performance of diamonds is lower than the one of gold and silver.
Abstract: Currently, the role of diamonds in the global financial system is under intense discussion in the financial media because individual investors and portfolio managers have begun to consider them as potential investment assets. To address the growing interest in diamonds, this article examines the historical performance of investments in various diamond quality grades. Furthermore, it investigates their relation to stock market and currency risk. Specifically, we focus on two important practical investment questions: Can diamonds function as a hedge or a safe haven against stock market volatility or fluctuations of the US dollar? Can diamonds be regarded as effective diversifiers in a stock or a currency portfolio context? Key findings are as follows: (1) The investment performance of diamonds is lower than the one of gold and silver. (2) Diamonds have only acted as a weak hedge and a weak safe haven against stock market downturns and currency risk associated with the US dollar. (3) Within global stock and currency portfolios, 1.0 carat fine diamonds show valuable diversification potential in that they can increase portfolio performance to an economically significant extent. Interestingly, this final result is fairly robust to the choice of performance measure.
19 citations
TL;DR: In this paper, the authors investigated viewers' reactions to the design of car fronts (i.e., an automobile's face), which were designed to be threatening using basic principles of anthropomorphism, and found that automotive stimuli not only activate affective dimensions of customers, but also lead to specific automatic reactions that can be explained by evolutionary theory.
Abstract: Building on assumptions derived from evolutionary theory, we investigated viewers’ reactions to the design of car fronts (i.e., an automobile’s face), which were designed to be threatening using basic principles of anthropomorphism. Previous research suggests two opposite human reactions when presented with threatening stimuli: Initially, threatening objects attract human attention (e.g., when exploring a scene for the first time), but afterwards, people tend to avoid such threatening stimuli (as they are likely to induce discomfort in the viewer). This proposition is tested within a product design context using eye tracking methodology. Results showed that automotive stimuli not only activate affective dimensions of customers, but also lead to specific automatic reactions that can be explained by evolutionary theory. Practical implications for product design and marketing are discussed.
16 citations
TL;DR: In this article, the authors examined which technological alliance portfolio configuration is better for focal firm performance using a portfolio rather than a dyadic perspective, and found that spanning structural holes is simultaneously beneficial for firm profitability and unfavorable for firm growth.
Abstract: Firms pursuing technological alliances to gain competitive advantages have become a ubiquitous phenomenon in today’s business environment. This article examines which technological alliance portfolio configuration is better for focal firm performance using a portfolio rather than a dyadic perspective. To assess technological alliance portfolio effects on Korean pharmaceutical and biotechnology firms, we adopted three explanatory variables—number of alliances, number of partners, and spanning structural holes. The growth rate of revenue and the growth rate of profit are used as dependent variables. We identify two characteristics of technological alliance portfolios from the two-step generalized method of moments estimates. First, we find that between two firms with the same number of alliances, the firm with the larger number of partners would have a better performance. This result is unlike those in previous studies because it distinguishes between the number of alliances and number of partners based on the network theory. Second, we find that spanning structural holes affects firm performance rather like a double-edge sword—it positively affects the growth rate of profit but negatively affects the growth rate of revenue of firms. In short, spanning structural holes is simultaneously beneficial for firm profitability and unfavorable for firm growth. This result differs from those of earlier studies because it shows that a firm spanning structural holes among alliance partners produces either a positive or a negative effect, suggesting that a firm should vary its strategy depending on whether it prioritizes profitability or growth.
15 citations
TL;DR: In this article, a heuristic that maximizes conditional value-at-risk (CVaR) is presented to take risk-averse decision makers into account in revenue management.
Abstract: Many service industries use revenue management to balance demand and capacity. The assumption of risk-neutrality lies at the heart of the classical approaches, which aim at maximizing expected revenue. In this paper, we give a comprehensive overview of the existing approaches, most of which were only recently developed, and discuss the need to take risk-averse decision makers into account. We then present a heuristic that maximizes conditional value-at-risk (CVaR). Although CVaR has become increasingly popular in finance and actuarial science due to its beneficial properties, this risk measure has not yet been considered in the context of revenue management. We are able to efficiently solve the optimization problem inherent in CVaR by taking advantage of specific structural properties that allow us to reformulate this optimization problem as a continuous knapsack problem. In order to demonstrate the applicability and robustness of our approach, we conduct a simulation study that shows that the new approach can significantly improve the risk profile in various scenarios.
TL;DR: In this paper, the authors investigated the business case for diversity in customer contact jobs in 338 German business companies and found that companies that recognize the value in ethnic diversity and seek to respond to customer diversity are especially likely to assign migrants to customer contacts.
Abstract: Ethnic diversity of both their labor forces and customer bases presents a challenge for companies and fuels debate on the business case for diversity: the view that diversity positively impacts firm performance. This study enriches the business case debate by focusing on a particular organizational activity, customer contact. It combines theory from strategic human resource management (SHRM), research on diversity, and research on marketing to analyze what drives companies to assign migrants to customer contact jobs and which performance impacts ensue. We test our hypotheses in data from 338 German business companies. Companies that recognize the value in ethnic diversity and seek to respond to customer diversity are especially likely to assign migrants to customer contact jobs. The analyses reveal a positive impact of migrants in customer contact jobs on company profitability. This impact is enhanced by a broad range of equality and diversity practices and a supportive works council. These moderators have stronger effects than two other moderators related to business strategy: the market served by a company, and its competitive strategy. The paper contributes to SHRM research in general and diversity research in particular through its original examination associating the business case for ethnic diversity with the role of equality and diversity practices and institutions. The study findings can help managers to decide whether to leverage staff ethnic diversity and show that collaboration between HR management and marketing functions is useful to achieve a strategic fit among practices.
TL;DR: In this article, the authors used two waves of the German Socio-economic Panel data (2006, 2008) to analyze the occurrence of benefits and their effects on employees' satisfaction.
Abstract: Although a broad field of literature on incentive theory exists, economic research on employer-provided tangible goods (hereafter called benefits) is still in its infancy. The empirical study by Oyer (Res Labor Econ 28:429–467, 2008) is one of few exceptions focusing empirically on the dispersion of tangible incentives. In our study, we test some of his findings by drawing on a German data set. We use two waves of the German Socio-Economic Panel data (2006, 2008) to analyze the occurrence of benefits and their effects on employees’ satisfaction. Our results provide evidence for economic as well as psychological explanations. Looking at differences in firms’ and employees’ characteristics we find that cost efficiency concerns, the purpose to signal good working conditions and the aim to ease employees’ effort costs are evident reasons to provide benefits. Furthermore, analyzing the impact of tangible and monetary incentives on satisfaction and employees’ feeling of being acknowledged by employers, we find different motivational effects. Our results support the psychological explanation that benefits are evaluated separately from other monetary wage components and are more likely to express employers’ concern for their employees and recognition of their performance.
TL;DR: In this paper, the authors investigated whether free cash flow arguments or the internal capital market perspective better explain diversification decisions and found that financial benefits appeared to be the prevailing motivation for unrelated diversification decision.
Abstract: This paper investigates whether free cash flow arguments or the internal capital market perspective better explains diversification decisions. Based on a unique panel of hand-collected data from listed and unlisted Italian firms for the 1980–2010 time period, the results of this study generally reveal the predominant role of the internal capital market arguments. The benefits of unrelated diversification, which include the avoidance of costly external financing, outweigh its costs, which involve opportunistic problems. Although the literature suggests two distinct forces concurrently affect diversification decisions, in the Italian context, financial benefits appear to be the prevailing motivation for unrelated diversification decisions. Furthermore, the internal capital market argument has a strong effect on decisions to engage in unrelated diversification, particularly with respect to firms that are sensitive to financial constraints.
TL;DR: This paper empirically determines key factors of application fraud such as, for instance, the sales channel or the loan amount by employing a logistic regression and develops a fraud management framework taking the fraud rate, the average default cost due to fraud as well as the fraud screening costs into account.
Abstract: Based on a data set of nearly 43,000 personal loan applications from Germany, this paper empirically determines key factors of application fraud such as, for instance, the sales channel or the loan amount. This is done univariately as well as by employing a logistic regression, which is found to be a statistically significant approach for profiling loan application fraudsters. Besides in-sample and out-of-sample verifications, we also prove the economic significance of our results by developing a fraud management framework taking the fraud rate, the average default cost due to fraud as well as the fraud screening costs into account.
TL;DR: In this article, the authors analyze whether the use of CoCo bonds as a financing instrument improves credit supply and therefore reduces the likelihood of a credit crunch and propose a simple model to explain credit crunches in the sense that the loan decision does not only depend on loan characteristics but also on the bank's prospects.
Abstract: We analyze whether the use of CoCo bonds as a financing instrument improves credit supply and therefore reduces the likelihood of a credit crunch. In our simple model, banks decide about granting an additional loan. In case of the bank violating the regulatory constraint, it needs to issue equity associated with adjustment costs. The contribution of the paper is threefold: First, this simple model explains credit crunches in the sense that the loan decision does not only depend on loan characteristics but also on the bank’s prospects. Second, CoCo bonds can always be designed such that all loans with non-negative net present value are granted, which prevents the danger of a credit crunch. Third, banks might not want to issue CoCo bonds even though these instruments help to improve credit supply. This problem primarily concerns banks with favorable prospects, thereby challenging the notion that CoCo bonds should be issued in good times as a protection during bad times.
TL;DR: In this article, the degree of competition through individual actions and reactions of firms in the Spanish deposits market is analyzed. But, the analysis is limited to the case of a single bank.
Abstract: This study analyzes the degree of competition through individual actions and reactions. Empirical support for this analysis has derived mainly from structural econometric models describing the nature of competition. This analysis extends the existing literature by empirically considering a direct measurement of competition through the analysis of the competitive actions and responses, and describing how firms compete within and between strategic groups. We estimate the firms’ conduct in the Spanish deposits market with 146 firms and 18,888 observations. This is a specially compelling context for the banking industry, in which a deregulation process gives rise to the adoption of aggressive strategies seeking to increase the market shares of deposit accounts; thus, producing a turbulent situation of increasing rivalry. Our results offer a deeper understanding of the firms’ competitive behavior, since we identify different patterns of actions and reactions depending upon the strategic group the firm belongs to.
TL;DR: This article examined the intraday behavior of 5-min DAX futures return volatility, volume and transactions, employing data from between January 1999 and September 2011, thus covering major market up and down trends and found a uW-shape lending support for Daigler's (J Futures Markets 17:45−74, 1997) extended market closure theory.
Abstract: This paper examines the intraday behavior of 5-min DAX futures return volatility, volume and transactions, employing data from between January 1999 and September 2011, thus covering major market up and down trends. We focus on the interplay of the above variables finding a W-shape due to US macroeconomic news releases and the opening of US markets. By carefully modeling regular but infrequent events, we show that the last trading days of the FDAX and ODAX have significant impact on volatility and alter the intraday patterns. Additionally, we pay special attention to interactions between the futures and cash market caused by different trading hours at the Eurex. Thereby, we discover a uW-shape lending support for Daigler’s (J Futures Markets 17:45–74, 1997) extended market closure theory. Focusing on possible changes in the interplay of volume and volatility, we empirically analyze the implications of different volume–volatility theories. Finally, we model simultaneously the main volatility components—intraday calendar effects, macroeconomic announcement effects and interday volatility clustering—employing the framework of Andersen and Bollerslev (J Finance 53:219–265, 1998) to quantify and compare the impact of macroeconomic news announcements during contractions and expansions and focus on the economic impact of the crisis 2007/2008 on intraday volatility.
TL;DR: In this article, the authors reexamine the issue of diversification discounts from the standpoint of vertical versus lateral diversification, and horizontal growth through construction industry M&A, and build on previous evidence of positive acquirer abnormal returns for vertical M&As, and add new insight into stock return risk.
Abstract: The discussion of diversification discounts is one of the most controversial in corporate finance and strategic management. We are eager to reexamine this issue from the standpoint of vertical versus lateral diversification, and horizontal growth through construction industry M&A. We build on previous evidence of positive acquirer abnormal returns for vertical M&A, and we add new insight into stock return risk. Considering the high idiosyncratic risk levels of builders, we expect to find considerable informational content in systematic risk (beta) behavior, which has been neglected to date. In fact, we find that vertical M&A experience a negative asset beta shift, lateral M&A experience an increase in systematic risk, and only horizontal M&A exhibit no risk changes. Hence, our evidence on risk and previous evidence on return-induced wealth creation through vertical M&A shows that related industrial diversification is superior to unrelated—at least in the construction industry.
TL;DR: In this paper, an inter-organizational Stackelberg game model of trade credit is proposed, where the incentive-compatible decision on credit term is made endogenously and in coordination to ensure Pareto optimality for both the supplier and the retailer.
Abstract: This paper builds an inter-organizational Stackelberg game model of trade credit. The incentive-compatible decision on credit term is made endogenously and in coordination to ensure Pareto optimality for both the supplier and the retailer. Our model factors in financing, marketing, operations, default risk, and risk attitude coherently, treating trade credit as their intersectional nexus. We introduce the uncertainty due to the possible default of the retailer on the accounts payable into our model. The in-kind nature of trade credit is in line with the two-stage lottery method employed in this paper to capture the consequences of default on trade credit effectively. We find that financing capacity encourages the supplier to extend the credit term: a larger market demand rate prompts the supplier to extend a longer credit term, but a higher holding cost for the retailer shortens the length of the credit term received. More risk-averse suppliers tend to grant shorter term, but the impact of risk attitude is insignificant. Empirically, we find evidence supporting our main theoretical predictions by employing a panel sample of manufacturing companies covering 1998–2007 from the COMPUSTAT database.
TL;DR: In this article, the authors study the tradeoff between direct and indirect stock investments through equity mutual funds for a utility-maximizing investor and find that the fee levels that make private investors indifferent between direct investments and indirect investments vary heavily according to risk aversion, the amounts invested, correlations between assets, transaction costs, and the length of investment horizon.
Abstract: We study the tradeoff between direct and indirect stock investments through equity mutual funds for a utility-maximizing investor. Whereas direct investments impose higher transaction costs on the formation of a well-diversified portfolio, mutual funds charge fees for their services. Our results show that the fee levels that make private investors indifferent between direct and indirect stock investments vary heavily according to risk aversion, the amounts invested, correlations between assets, transaction costs, and the length of investment horizon. In particular, our results suggest that for a wide range of actively managed mutual funds, the fees charged are too high for these mutual funds to appeal to a wide range of informed investors. However, accounting for search costs, such as costs for financial advice, can facilitate an understanding of the levels of management fees charged by mutual funds existing in the market.
TL;DR: In this paper, the authors investigate the relationship between information content of new product preannouncements and trading behaviors of institutional investors and find that there is a significantly positive relationship between the information content and institutional investors.
Abstract: In this study, we investigate the relationship between information content of new product preannouncements (NPPAs) and trading behaviors of institutional investors. Using hand-collected data from 1995 to 2004, in empirical results, we find that there is a significantly positive relationship between information content and institutional investors. NPPAs can help institutional investors to evaluate the potential success of forthcoming new products through signaling enough information content. As a result, more information cues and earlier NPPAs can make institutional investors choose these preannouncing firms into their investment portfolios to increase their holdings and attract more different institutional investors to hold these shares of preannouncing firms. In addition, we also find the positive advertising and R&D investment effects. Our findings suggest that managers should use the information content of NPPA signals to reduce information asymmetry and help managers to implement their NPPA strategies so as to receive greater financial support from institutional investors.
TL;DR: In this paper, the authors analyze which stock option scheme best aligns the interests of a firm's manager and shareholders when both are risk-averse, and propose an optimal payoff scheme for the most common case in which the strike price equals the grant-date fair market value.
Abstract: This paper analyzes which stock option scheme best aligns the interests of a firm’s manager and shareholders when both are risk-averse. We consider granting to the manager a basic fixed salary and one of the following four options: European, Parisian, Asian and American options. Choosing the strike of the options optimally, the shareholders can mostly implement a first best solution with all payoff schemes. The American option scheme best aligns the interests of the manager and the shareholders in the most common case in which the strike price equals the grant-date fair market value.
TL;DR: In this paper, the authors discuss the impact of plant size, workers' outside options and bargaining power on the profitability of a shutdown contest among two plants in a two-plant model.
Abstract: When multi-plant firms face a declining demand, they typically have to close one or more locations In that case, the firm can organize a shutdown contest among the plants to generate extra incentives Within a two-plant model, I discuss the impact of plant size, workers’ outside options and bargaining power on the profitability of such contest Whereas the influence of plant size is ambiguous, the firm prefers a shutdown contest to an immediate closure of the less productive location if the more productive plant’s bargaining power is large relative to that of the less productive one In that case, the more productive workforce spends much effort and has a high probability to survive If the multi-plant firm is an international corporation, auctioning off the decision right which plant to close can be profitable for the firm, since each country is interested in protecting its domestic plant From the firm’s perspective, such bidding dominates a shutdown contest if national costs from plant closure are sufficiently large relative to extra profits generated by the contest