Lessons Learned: 50 Years of Information Technology in the Banking Industry – The Example of Deutsche Bank AG

Based on the lessons learned from the last 50 years, statements are derived of which the authors claim that these will continue to be valid in future: Information technology in the banking industry supports business processes – selecting and designing processes will continue to decide about economic success in future. The necessity of handling a growing business volume will still be the major driver for using new information technology in the banking industry. It will be even more important than the aim of reducing costs by automation. Industrialization of IT will also change the use of technology in the banking industry. Hence, banks do not necessarily have to run their systems alone but may outsource services if required. The definition of the major business fields will significantly influence the banks’ IT strategy and, among other factors, will decide on the market success of a bank. Technological development will have an increasing effect on the banking business, will change it, and enable new business models. Successfully dealing with technology-induced changes predominantly depends on a company’s employees.

Banking Competition and SMEs Bank Financing. Evidence from the Italian Provinces

This work investigates whether local differences in banking competition impact on the amount of bank debt used by Italian small and medium sized manufacturing firms. Sample selection and Double Hurdle models are adopted as the process, which results in the choice of bank financing may differ from that determining its amount. Our main finding is that more competitive banking markets seem to be associated with relatively higher usage of bank debt by less transparent firms. On the other hand, a higher banking competition seems to have no effect on the probability of receiving bank loans.

Small business survival and inheritance: evidence from Germany

This paper investigates whether small businesses face financial constraints that affect their survival. A model of moral hazard is developed in which financial constraints arise endogenously. The model predicts that higher private assets relax financial constraints and have a positive effect on the firm’s probability of survival. The empirical analysis confirms that the entrepreneur has a higher propensity to stay in business when she inherits capital. This effect is particularly strong for entrepreneurs who switch from self-employment into wage employment.

Patterns and Determinants of Entry in Rural County Banking Markets

In this paper I consider 115 rural markets in the USA, and both describe and explain patterns of bank and thrift entry over the past 10 years, with particular interest in the decisions of top bank holding companies to enter rural markets and the influence their presence has on entry of smaller banking institutions. The paper explores several dimensions of entry and competition in rural banking markets. In terms of explaining both numbers of banks across markets and gross and net entry within markets, market size and its growth seem to be major factors, consistent with recent literature. The role of leading bank holding companies is found to be important in stimulating entry of smaller rivals. This result is consistent with earlier work suggesting that merger and acquisition activity tends to stimulate de novo entry, while also with the view that large firm presence may be a signal to potential entrants of future growth prospects in the market.

Business Ethics Training: Insights from Learning Theory

This paper explores research in educational psychology and learning theory in a search for insights to enhance business ethics training Useful educational principles uncovered are then applied to the development of an ethics training initiative for sales professionals. The paper concludes with suggestions for future research to help enrich business ethics training.

The business-to-business relationship dimensions in financial services markets

This paper discusses the nature of financial business relationships by drawing on the IMP Group’s theory of industrial relationships. It discusses, among other aspects, the interaction process between banks and their corporate clients, the longevity of relationships, the interdependence between both sides, and the atmosphere of financial services relationships. The conclusions are thought to be interesting and useful for the managers of firms and financial services when setting relationship marketing policies and for academic research on business-to-business services relationships. The field research was done in Portugal and the case method was used.

How does new business formation affect regional development? Introduction to the special issue

This paper gives an overview of the empirical research on the effects of new business formation on regional development and introduces the contributions to this special issue. The effects of new businesses on regional development emerge over a longer time-period of up to ten years. A main focus of the contributions to this special issue is on the distribution of these effects over time and on the magnitude of the overall effect. While the basic pattern found for the different countries and regions is quite similar, the magnitude of the overall effect can be different and may even be negative. There are strong indications, that the type of entrants plays an important role in this respect.

Lending to small businesses: the role of loan maturity in addressing information problems

We investigate what determines the maturity of lines of credit to small businesses. Our results provide strong support for the hypothesis that shorter loan maturities serve to mitigate the problems associated with borrower risk and asymmetric information that are typical of small business lending. We find that maturity is shorter for firm owners that have poor credit histories, are older, and less experienced, and for firms that are more informationally opaque. Supporting the notion that collateral and maturity are substitute mechanisms in mitigating agency problems, we also find strong evidence that maturity increases with collateral pledges, that personal collateral is associated with longer maturities than business collateral, and that collateral types that better mitigate agency problems reduce the sensitivity of loan maturity to informational asymmetries and risk. Finally, while it is argued that relationship lending may mitigate information asymmetry, we find no relation between loan maturity and stronger firm-creditor ties.

Fighting off the big guys: comparing competitive retail services strategies in industrialized and developing world settings

As global trends regarding increased mergers and acquisitions continue, small local retailers must learn how to fend off these strong attackers. We assess key services strategies when small-local retailers compete against large-national retailers in industrialized (USA) and developing world (black South African township) retail settings. Of key interest is how theories generated from industrialized world research apply in developing world settings. We found that small retailers fend off large national retailers using virtually identical strategies regardless of the level of economic development.

Corporate diversification and CEO turnover in family businesses: self-entrenchment or risk reduction?

Our study investigates differences in CEO turnover between focused and diversified firms to determine whether diversification strategies are necessarily associated with governance efficiency in family businesses. We find that large family CEO firms are more likely to engage in corporate diversification than are small non-family CEO firms and their CEOs are seldom replaced. Large family CEO diversified firms also have lower turnover sensitivity relative to focused firms. The results imply that the CEOs of diversified firms have entrenched themselves, thereby increasing agency costs within family businesses. However, we fail to find diversification discounts in family businesses. It is interesting that CEOs tend to diversify their businesses in order to decrease firm risk. Founding families favor risk-reducing decisions in order to maintain family wealth and prestige; suggesting that family businesses are more interested in survival than growth. Although family businesses may benefit from risk reduction, a negative relationship between diversification level and CEO turnover is still evidence of poor corporate governance. Agency theory may not completely account for the adoption of diversification strategies in family businesses and corporate diversification may weaken the effectiveness of internal monitoring mechanisms.

Financial development and the growth of cooperative firms

The purpose of this article is to empirically assess the relationship existing between local financial development and the growth of firms, with a special focus on cooperatives. Using Italian data, a multiplicative interaction model is specified, so as to allow the impact of local banking development to differ between cooperative and non-cooperative firms. The main finding is that although local banking development represents a determinant of firms’ growth, regardless of their legal structure, it plays a special role in boosting the growth of cooperatives. This result provides evidence in favor to the existence of an institutional complementarity relationship between the development of local banking institutions and cooperative firms.

Global Software Piracy: Searching for Further Explanations

This paper identifies that Information and Communication Technology (ICT) has a negative effect on software piracy rates in addition to consolidating prior research that economic development and the cultural dimension of individualism also negatively affect piracy rates. Using data for 59 countries from 2000 to 2005, the findings show that economic well-being, individualism and technology development as measured by ICT expenditures explain between 70% and 82% of the variation in software piracy rates during this period. The research results provide important implications for policy makers and business practitioners to help reduce software piracy.

The effect of new business formation on regional development over time: the case of Germany

We investigate the effects of new business formation on employment change in German regions. A special focus is on the lag-structure of this effect and on differences between regions. The different phases of the effects of new business formation on regional development are relatively pronounced in agglomerations as well as in regions with a high-level of labor productivity. In low-productivity regions, the overall employment effect of new business formation activity might be negative. The interregional differences indicate that regional factors play an important role.

Virtual Decoupling for IT/Business Alignment – Conceptual Foundations, Architecture Design and Implementation Example

IT/business alignment is one of the main topics of information systems research. If IT artifacts and business-related artifacts are coupled point-to-point, however, complex architectures become unmanageable over time. In computer science, concepts like the ANSI/SPARC three-level database architecture propose an architecture layer which decouples external views on data and the implementation view of data. In this paper, a similar approach for IT/business alignment is proposed. The proposed alignment architecture is populated by enterprise services as elementary artifacts. Enterprise services link software components and process activities. They are aggregated into applications and subsequently into domains for planning/design and communication purposes. Most design approaches for the construction of enterprise services, applications and domains are top-down, i. e. they decompose complex artifacts on a stepwise basis. As an alternative which takes into account coupling semantics, we propose a bottom-up approach which is demonstrated for the identification of domains. Our approach is evaluated using a telecommunications equipment case study.

The effects of entrepreneurial orientation, market orientation, and marketing subunit influence on firm performance

The study investigates how an organization’s entrepreneurial orientation moderates the interplay between market orientation and marketing subunit influence on firm performance. The hypothesized model predicts that the positive interaction between market orientation and marketing subunit influence has a weaker effect on firm performance under conditions of high entrepreneurial orientation. The regression and supplementary analyses provide support for most predictions and, most importantly, for a negative three-way interaction effect: At higher levels of entrepreneurial orientation, the positive moderating effect of marketing subunit influence on the market orientation–business performance relationship is reduced. The authors discuss the managerial and theoretical implications of their findings and provide a number of directions for further research.

Business students’ attitudes toward unethical behavior: A multi-country comparison

Business students are confronted early in their academic careers with examples of questionable acts and practices related to individual and corporate integrity. The current study identifies four segments of students with respect to their attitudes toward unethical behavior and is one of the first known attempts to understand country corruption and its impact on students of business. Findings from a worldwide survey of over 6,000 business students suggest that corruption does breed corruption and that business students in more corrupt countries have a greater likelihood than their counterparts in less corrupt countries to equate legal and ethical. It appears that business students in more corrupt countries expect to use the law as their ethical gauge in business decisions.

Technological Innovation and Its Impact on Business Model, Organization and Corporate Culture – IBM’s Transformation into a Globally Integrated, Service-Oriented Enterprise

This article investigates the influence of information and communication technology (ICT) on business transformation. First, the general, ICT-driven development lines of globalization and service-orientation are described. Then, an analysis of the IBM Corporation’s transformation over the past 50 years into a globally integrated, service-oriented company illustrates that ICT innovations must be dealt with by simultaneous adaptation of business model, organization and corporate culture. For many companies the ability to manage this change becomes increasingly critical.

Cultural Crossvergence and Social Desirability Bias: Ethical Evaluations by Chinese and Canadian Business Students

The purpose of this study is to determine whether there are cross-cultural differences between Chinese and Canadian business students with respect to their assessment of the ethicality of various business behaviors. Using a sample of 147 business students, the results indicate cultural crossvergence; the Chinese (72 students) and Canadians (75 students) exhibit different ethical attitudes toward questionable business practices at the individual level but not at the corporate level. A social desirability bias (a tendency to deny socially unacceptable actions and to admit to socially desirable ones) is also found to be a cross-cultural phenomenon, with the Canadians demonstrating a greater bias than the Chinese. Finally, this bias causes respondents to increase their assessment of the un-ethicality of questionable business activities.

Business-to-Business Markets – Status Quo and Future Trends

As a phenomenon of modified value-chain structures the economic importance of business-to-business markets has been growing immensely during the past decades. This paper delivers a quantified overview of the market dimensions in terms of transactional volume. In addition, it explains the causes for this market development such as an increased service orientation in business transactions, higher degrees of customization, and influential factors on a macro level. In this context, future trends in this sector will be outlined as well.

How different are the entrepreneurs in the European Union internal market?—An exploratory cross-cultural analysis of German, Italian and Spanish entrepreneurs

Little research has analyzed the similarities or differences between entrepreneurs from different European Union countries. The European Union is a single market, but also an international business arena where the entrepreneurs from any member state can make their first move in the direction of internationalizing their business. This work presents an exploratory study of the personal values and attitudes of European entrepreneurs based on a cross-cultural analysis of entrepreneurs from Germany, Italy, and Spain. The analysis uses Hofstede’s model to study the cultural and social values of these entrepreneurs, and their personal values have emerged from case studies. The results show that the entrepreneurs of the three different nationalities share a similar pattern of personal values. These findings are discussed and proposals for further empirical research suggested.