Reply to “Modeling Managerial Altruism,CSR, and Donations: A Comment”

We point out that the main concern of this comment is on the assumptions about “managerial compensation” and “who should make the donation decision for the firm”.     

Organizations and overlapping generations games: Memory,communication, and altruism

This paper studies the role of memory and communication in overlapping generations (OLG) games between ongoing organizations. In each organization, each individual, upon entry into the game, replaces his predecessor who has the same preferences and faces the same strategic possibilities. An individual has no prior memory - that is, he does not directly witness the events that occur before his tenure. Instead, each individual relies on information about the past from his predecessor via cheap talk. This paper highlights the role of communication as a surrogate for memory.It has been shown elsewhere that Folk Theorems hold in OLG games with long enough lived individuals who can perfectly observe the past. However, the Folk Theorem fails for many games when individuals have no prior memory. We show that for OLG games without prior memory but with costly communication, a Folk Theorem holds only when there is some altruistic link between cohorts in an organization. Our main result asserts that if communication costs are sufficiently small, or if altruistic weights on successors are sufficiently large, then a strongly stationary Folk Theorem (i.e., equilibrium payoffs are time invariant) obtains if a managers message is public information. The equilibria in this Folk Theorem require a special form of intergenerational sanctions. In these sanctions, punishment is sometimes carried out long after both victim and perpetrator have left the game. Without this special structure, altruism may in fact destroy cooperation when it would otherwise be possible.Received: 18 April 2003, Accepted: 20 October 2003, JEL Classification: C72, C73, D74, D82We have benefitted from helpful comments and conversations with Luca Anderlini, Kirk Bailey, Hans Haller, Matthew Jackson, and Takashi Shimizu, and numerous seminar participants. This research is partially supported by the National Science Foundation, and by grants-in-aid for scientific research of the Ministry of Education of Japan. Of course, any remaining error is our own.     

Returns to acquiring firms: The role of managerial ownership, managerial wealth, and outside owners

Since merger and acquisition activity does not unambiguously benefit the shareholders of acquiring firms, the motivation of managers who undertake such actions is unclear. The present study investigates the extent to which the wealth effects of acquisition activity undertaken by firms in one industry—communications and publishing—are related to (1) the ownership and wealth characteristics of both the executives and the board of directors of these firms and (2) the ownership concentration of large outside shareholders. The motivating hypothesis, supported by empirical results, is that these factors contribute to the alignment of executive and shareholder interests.     

Strategic CSR: A Concept Building Meta-Analysis

This study develops the concept of Strategic Corporate Social Responsibility (Strategic CSR) by meta-analyzing the available empirical evidence on the relationship between CSR and corporate financial performance (CFP). Using meta-analytic structural equation modeling on effect size data from 344 primary studies, our study documents four empirical mechanisms explaining how CSR positively affects CFP: by 1) enhancing firm reputation, 2) increasing stakeholder reciprocation, 3) mitigating firm risk, and 4) strengthening innovation capacity. We propose these four mechanisms to identify four causally relevant attributes that allow us to conceptually distinguish Strategic CSR from CSR more generally. Our findings indicate that the four mechanisms combined explain 20 per cent of the CSR-CFP relationship, suggesting that considerable room remains for future empirical research. The development of an empirically informed, causal conceptualization of Strategic CSR responds to a long-heard call for better-specified concepts in empirical CSR research.     

Resale price maintenance: A managerial perspective

Managers can improve firm profits by selecting the appropriate pricing strategy. In this article, we show how managers can use one particular controversial pricing strategy—resale price maintenance (RPM)—to enhance firm profits. We first discuss the antitrust treatment of RPM, both in the United States and internationally. Then we examine the economic effects of implementing RPM in several key contexts: product promotion, quality certification, prestige goods, and online retail. We also discuss the effects of RPM on entry of new firms.     

Money donations,volunteering and organizational efficiency

The purpose of this article is to explain the cross-sectional variation in money donations to charities at the organizational level. Using a unique data base which includes volunteer labor data, this article tests the hypotheses that money donations are positively related to volunteering and the technical efficiency of the firm. Technical efficiency is measured by a number of non-parametric indices. The empirical results indicateinter alia that the more technically efficient the charity, the more money donations it is able to raise. Moreoer, at least for one model, money donations and volunteering are found to be complementary at the organizational level. In addition, the results in this article are not consistent with the well-known hypothesis that government financing crowds out private donations.     

Bargaining over managerial contracts in delegation games: managerial power,contract disclosure and cartel behavior

Modern corporate governance codes include clauses requiring the disclosure of managerial compensation. Such codes have been installed to protect shareholders' interests. In this paper, we explore the impact of such disclosure on consumer welfare. We consider two‐stage delegation games in which owner‐shareholders negotiate about compensation with their managers in the game's first stage. At the end of the first stage, the managerial compensation contract outcomes of the bargaining process are publicly announced. In the second stage, Cournot competition evolves. We prove that sales delegation generates equilibria radically different from relative performance delegation. Using classical Cournot as the benchmark, contractual bargaining over sales compensation gives tougher product market competition—and hence higher consumer surplus. The opposite holds true for relative performance delegation. Then, cartel behavior is promoted, reducing consumer surplus. Copyright © 2007 John Wiley & Sons, Ltd.     

Line managers and HRM: A managerial discretion perspective

Line managers play a central role in HRM practices, but research and theory on how their role is enacted remains underdeveloped. This paper presents a case study of a large U.K.‐based fashion retailer and uses managerial discretion theory to develop a novel understanding of line managers' contribution to the implementation of HRM practices. We describe three distinct ways in which line managers engage with HRM policies and procedures, and propose that line managers make an important contribution to the effective implementation of HRM systems through exerting their cognitive and political abilities to bring about decisions that are well suited to their local situations. Moreover, we find that HR specialists design and manage HRM policies and procedures to afford different levels of managerial discretion in different areas of HRM.     

Linking service level, inventory management and warehousing practices: A case-based managerial analysis

This paper aims to understand how best performing companies strive to improve their service levels, under the assumption that not only inventory management, but also warehouse management plays a key role in achieving this goal. To explore this issue, a case-based analysis was conducted on six companies from the food distribution and pharmaceutical industries. The empirical analysis shows that this assumption holds when the companies deal with a very high number of SKUs; they need to properly manage warehousing processes to guarantee fast, complete and correct deliveries to customers. This results in the adoption of best practices and in relevant investments in technology and equipment peculiar to warehousing. This empirical analysis also shows that, to further improve the accuracy and the speed of the picking and shipping processes, the companies tend to automate their activities, but only when the level of order fragmentation is low and the degree of morphological homogeneity is high.     

企业社会责任经理:角色、职责和胜任能力

近年来,随着企业社会责任意识的提高,企业开展了形式多样的社会责任管理活动.一个新兴的职业群体即企业社会责任经理(CSR Manager)在这个过程中产生,但目前国内外对于该职业群体的研究尚处于起步阶段.企业社会责任经理可以对企业及员工的价值观产生重要影响,有助于帮助企业增强可持续发展能力.为加深对这一职业群体的理解,本文系统梳理了企业社会责任经理的概念和特点、职业角色、工作职责和胜任能力并对国内企业有效设置企业社会责任经理岗位提出了建议.     

CSR leadership,spillovers, and first-mover advantage

Decisions in Economics and Finance - In this paper, I study the conditions under which a CSR leader, that is a firm which commits to invest in socially responsible activities prior to its...     

Multiple banking relationships,managerial ownership concentration and firm value: A simultaneous equations approach

This paper examines how the number of banking relationships affects the interaction between managerial ownership and firm performance, and sheds light on the conditions under which banking relationships play a role in alleviating shareholder–manager conflicts. Our results provide several interesting insights. We document that bank monitoring has substantial value when managers are improperly incentivized, but that it becomes less important when managers are properly incentivized. There is a substitution effect between the value-increasing benefits of managerial ownership and bank monitoring. We also find that any existing free-riding concerns from having too many banking relationships are problematical only when Tobin's Q is high and managerial ownership is high.     

Parental altruism, life expectancy and dynamically inefficient equilibria

This paper presents a continuous time overlapping-generation (OLG) model which generalizes the Blanchard–Buiter–Weil model and clarifies the relationships between dynastic altruism, the length of planning horizons, and dynamic inefficiency. Our main innovation relies on the introduction of parental altruism, whose intensity is variable. We first show that parental altruism and life expectancy do favor overaccumulation. Second, we give a condition that explains why the Ramsey model may only display dynamic efficiency. These theoretical results are illustrated by a parameterization from US data. Our numerical exercises suggest that the US economy is dynamically efficient, mainly because of the shortness of life expectancy.     

Turning data into donations: A predictive model for individual giving

This paper describes a predictive model developed by the Royal National Institute for Deaf People (RNID) for the evaluation of donor management strategies. The high cost of acquiring new donors means that effective donor management is essential throughout the charity sector. Early RNID analysis of donor behaviour used conventional sector approaches. This led to the development of a predictive model that uses a statistically determined segmentation system for current donors with responses of the donor base described by a Markov model. The model is used primarily to evaluate the expected rate of return of possible campaign strategies, but there are many other ways in which the approach is of value, both to the RNID and to the charity sector as a whole.     

Firm value,managerial confidence,and investments: The case of China

The purpose of this article is to test empirically the impact of Chinese managerial confidence on firm value through investment decisions. We use a simultaneous equation model, which treats firm value, investments, and managerial confidence as endogenous to the firm. With a sample of 329 Chinese listed firms and a confidence measure based on management shareholding, the 3SLS regression results show significant interactions among the three variables. Firm value has a positive impact on managerial confidence while the latter's impact on the former turns from positive to negative at a certain point. The results suggest a non‐monotonic relationship between managerial self‐confidence and firm value and imply an optimal level of managerial confidence. Therefore, while the leader selection process encourages confident talents to become decision‐makers, proper measures are required to prevent the confidence transformed into overconfidence.