The moderating effect of innovative capacity on the relationship between real options and strategic flexibility

In dynamic sectors, organizations should be capable of adapting to unpredictable environmental conditions. Strategic flexibility grants organizations the capacity to respond to the changes in their environment in the direction required, renewing their strategies and making the required organizational changes. The goal of this study is to analyze how the use of real options relates to strategic flexibility from a managerial capacity perspective. Through an empirical study performed on European firms, we confirm that innovative capacity exercises a moderating role between real options and strategic flexibility. The fact that a firm's management has foreseen and contemplated real options does not necessarily lead to their execution; they must also be accompanied by some innovative capacity.     

Acquirers’ earnings management ahead of stock-for-stock bids in ‘hot’ and ‘cold’ markets

The accounting literature has found evidence that acquirers in stock-for-stock M&A have typically managed earnings upwards ahead of a bid. Other literatures have concluded that, when stock prices are high and rising, M&A is higher, more M&A is financed with stock, market sentiment and stockholders’ perceptions of information appear to change, and in these circumstances new (arbitrage) motivations for M&A emerge. This paper revisits earnings management ahead of M&A in the light of these findings, comparing experience in ‘hot’ and ‘cold’ markets. It finds that such earnings management is more pronounced in hot markets; that only in such markets are positive discretionary accruals commonly associated with positive abnormal returns on the announcement of earnings; and that in such markets – against the expectations from signalling theory – these positive returns are not reversed on announcement of a stock-for-stock bid. The results suggest that the economic benefits achieved by engaging in earnings management during hot markets are indeed significant: in hot markets, we estimate that on average share acquirers engage in working capital accrual management equivalent to over a third of the average acquirer’s return on total assets in that year; and that this earnings management is associated with increases in market value which are statistically and economically significant, enabling the bidder to secure control of the target with fewer shares.     

Liberalisation,Financial Risk,and Formal Financial Participation in Pakistan: Hyperinflationary Microeconomic Responses to Moderate Volatility in a Developing Economy

With formal financial inclusion much lower than its neighbours, Pakistan has been the focus of intensive efforts to ‘bank’ the ‘unbanked’. Yet, after a drop in deposits in the wake of Pakistan’s 2008 crisis, deposits are still struggling to return to their mid-1990s’ levels. Focusing on distortions in the banking sector, the Central Bank attributes this to ‘crowding out’ amidst a steep rise in the propensity to consume. This study draws on extensive fieldwork, identifying heightened financial risk driven by multifaceted monetary instability since the liberalisation of the rupee and of Pakistani markets. It proposes that heightened monetary risk has translated into a broad-based shift out of the rupee akin to hyperinflationary responses, but revealed in relatively moderate monetary conditions. It argues that, exposed to global markets, national currency itself has become a risky asset, pushing store-of-value and transactional holdings into unconventional liquid assets. This suggests that monetary stability, expressed in the currency itself and in broader pricing patterns in the economy, is key to the uptake of financial intermediation. The issue at the root of disintermediation in Pakistan, it is argued, is less one of ‘crowding out’ than of disruption to the role of national currency as money itself.     

Empowering young people through participatory film: a postmethodological approach

Children and young people’s voices have often been neglected in tourism research, and this is particularly the case when exploring tourism from the host community’s perspective. The lack of children and young people in tourism research has been attributed to the slow engagement and adoption of alternative and critical methodologies which open up new and fresh ways of interpreting reality. The paper aims to explore the potential for participatory film to uncover the perspectives of marginalised members of the community such as children and young people. We also discuss the use of participatory film as an epistemic philosophy, and as a post-disciplinary form of methodology (or ‘postmethodology’) which is ideologically grounded. The findings suggest that children and young people feel strongly about their community and display feelings of anger and frustration towards tourists who are perceived to not respect the community and the environment. The methodological contribution of this paper lies in the use of an innovative and voice-generative participatory visual method to empower young people to actively participate in tourism research.     

Malleability of taste perception: biasing effects of rating scale format on taste recognition,product evaluation,and willingness to pay

Product-related cues, such as brand or price, can influence consumers’ taste perception. Going beyond this observation, we examine the extent to which a stimulus-extrinsic factor, such as the format of the measurement tool on which consumers describe attributes of a taste sample, influences concurrent taste perception, and in turn, later taste recognition, overall product evaluation, and willingness to pay (WTP). The results of two experiments show that rating scale format (i) influences consumers’ concurrent impression of a taste sample, (ii) systematically biases later identification of the sample in a taste recognition test, and (iii) affects overall product evaluation and WTP. However, scale format (iv) does not influence ratings and downstream judgments when consumers are highly knowledgeable in the product domain. These findings demonstrate that the experience of taste is fleeting and not well represented in memory, and that like other subjective experiences, taste needs to be reconstructed based on accessible cues.     

THE WEALTH DISTRIBUTION WITH DURABLE GOODS*

In the United States, the distribution of houses is less egalitarian than that of earnings for the total population, but these two distributions are remarkably similar for homeowners. Additionally, housing as a fraction of total wealth decreases with the level of wealth. In order to understand the different factors that account for these wealth composition patterns, we introduce illiquid houses and collateral credit in a general equilibrium model of heterogeneous agents with idiosyncratic uncertainty. A combination of very persistent shocks to earnings, frictions in the housing market, and a rental market is necessary to obtain numbers in line with the evidence.     

The effects of perceived product-extrinsic cue incongruity on consumption experiences: The case of celebrity sponsorship

The level of congruity is determined by the degree of match or mismatch between an object and its associated attribute. Product evaluations are positively influenced when there is moderate incongruity between a product and its association; this finding is termed the moderate schema incongruity effect (Mandler 1982). The purpose of the current study was to investigate the influence of incongruity between a product and one of its extrinsic cues on consumers' product evaluations. Furthermore, we examined the moderating role of consumers' level of product knowledge. Incongruity was created by partnering a product with a sponsor. We found that consumers who were highly knowledgeable of the product gave the highest taste evaluations to the moderately incongruent product–sponsor pairing, whereas taste evaluations for consumers with low product knowledge did not differ across product–sponsor pairings. The results of our study have important practical implications for marketers, namely that product–sponsor fit can enhance consumers' consumption experiences.     

EMPLOYMENT PROTECTION AND THE NON‐LINEAR RELATIONSHIP BETWEEN THE WAGE‐PRODUCTIVITY GAP AND UNEMPLOYMENT

This paper studies the relationship between the wage‐productivity gap and the unemployment rate in OECD countries between 1985 and 2007. In particular, we investigate whether differences in the employment protection across countries affect the link between these two variables. We show that the elasticity of unemployment with respect to the wage‐productivity gap is non‐linear and that it switches from a positive to a negative value with stricter employment legislation. From a theoretical point of view, we argue that this result is related to a set of labor market reforms introduced in many OECD countries, which affected the relative strictness of institutions.     

Technology transfer, specific local knowledge and entrepreneurial partner control in international joint ventures

Previous research has sought to demonstrate the influence of control of an IJV on achieving the learning objectives of the partners involved. However, the effect that certain types of learning have on the control of the IJV, which are vital for the success of the internationalization of the entrepreneurial firm, has yet to be explored. The results from case studies of six IJVs show that, during the post-formation stage, the configuration of entrepreneurial partner control over the IJV is conditioned by both technology transfer and by learning specific local knowledge by the entrepreneurial partner. The study also shows that the negative relation between trust and control suggested by the literature is limited to cases where trust has broken down. Greater levels of trust are also compatible with greater control with a view to appropriately exploiting when firms see the need to intensify control or need to implement new control mechanisms in order to properly exploit the resources contributed to the IJV.     

Management in social enterprises: the influence of the use of strategic tools in business performance

If social enterprises are to be competitive in the marketplace, they must use Strategic Management tools to improve efficiency, while maintaining their effectiveness levels. They can achieve this goal by introducing new management methods that make use of innovation. The aim of the current study was to analyze the effect of the use of management tools in social enterprises, referred to here as Social Management, on the effectiveness and efficiency levels of these enterprises. From a sample of 129 work integration social enterprises (WISEs), this study shows the existence of a statistically significant relationship between the application of Strategic Management tools, more commonly found in for-profit organizations, and the effectiveness and efficiency of WISEs in the social economy. The influence of the use of these tools was found to be positive in the case of social effectiveness (improving the employment rate) but negative in the case of economic effectiveness (profitability).