Market disequilibria and their influence on small retail store pricing

In this paper a quantitative model is developed to explain differences in average store price levels. We assume that stores may operate under different economic regimes, that is, under excess capacity or excess demand. Prices are expected to the higher than average in case of an excess demand regime and lower in an excess capacity situation. Actual information regarding the regime that applies to each individual store is not available. Therefore, we propose to use a so-called switching model with endogenous regime choice to analyse the store price differences. The model developed in the paper is estimated using four largely differing types of stores from the Dutch retail trade. These samples consist mainly of small stores.     

Recent developments in the Dutch firm-size distribution

This study investigates the development of the firm-size distribution in the Netherlands using various measures. Data are used for the period 1978 through 1989 covering practically the entire Dutch private sector. The results show a general tendency towards smaller firm sizes in manufacturing industries until 1986, but indicate an opposite development after that year. This tendency towards larger firm sizes after 1986 is also encountered for non-manufacturing industries.This study is part of a research program carried out at the Centre for Advanced Small Business Economics (CASBEC) of the Erasmus University Rotterdam. The authors are grateful to Jan van Dalen, Aad Kleijweg, Jeroen Potjes and Wim Verhoeven for helpful comments and Herman van Schaik for elaborating the original data files. The authors acknowledge a research grant from the Stichting KMO-fonds.     

The ethical decision-making processes of information systems workers

An empirical investigation was conducted to determine whether management information systems (MIS) majors, on average, exhibit ethical decision-making processes that differ from students in other functional business areas. The research also examined whether the existence of a computer-based information system in an ethical dilemma influences ethical desision-making processes. Although student subjects were used, the research instrument has been highly correlated with educational levels attained by adult subjects in similar studies. Thus, we feel that our results have a high likelihood of generalization to the MIS professional community. The results indicate that MIS majors exhibit more socially-oriented ethical decision-making processes than non-MIS majors measured by the Defining Issues Test. The results also indicate that the existence of a computer-based information system in an ethical dilemma may influence ethical decision-making processes. The study makes no statement regarding MIS majors making more (or less) ethical decisions. The business ethics literature is reviewed, details of the study are presented, implications for management are considered, and directions for future research are suggested.David Paradice is Assistant Professor of Management Information Systems in the Department of Business Analysis and Research at Texas A&M University. His research interests focus on the utilization of artificial intelligence in managerial information systems and the influence of those systems on managerial decision-making behavior. His research has been presented at international conferences and has been published in several academic journals. He is co-editing a book of readings in the information systems/ethics area.Roy Dejoie is a doctoral student in the Department of Business Analysis and Research at Texas A&M University. His primary research activities investigate the influence of information systems on ethical decision-making behavior. He is also co-editing a book of readings in the information systems/ethics area.     

STRATEGIC DIRECTIONS IN INVESTMENT BANKING—A RETROSPECTIVE ANALYSIS

The last two decades of the 20th century were extraordinary ones for the investment banking industry. For most of this period, the value of financial services transactions grew at approximately twice the rate of the real economy, creating unprecedented boom times for investment banks. Several firms emerged among the world's most powerful financial service institutions. Yet these years also included one of the most destructive times that investment banks have ever endured. Dozens of firms disappeared—some failing outright, but most by merger into larger competitors, after failing to measure up to the expectations of regulators or of their shareholders. Certainly operating conditions changed greatly from the fairly simple, comparatively sleepy environment of the 1970s. The banking and S&L crisis created many opportunities for investment banks as financial assets migrated from the balance sheets of thrift organizations to the trading arenas of the marketplace. A merger and restructuring boom created additional opportunities for creating new client relationships and for dealmaking. The burgeoning fiscal deficit of the late 1980s also fostered a new emphasis on trading and principal investing. And there was a series of almost uninterrupted booms in one specialized product or another—REITs, junk bonds, emerging market securities, high tech and Internet stocks, among others. Deregulation and technology improvements broke down many regulatory and special barriers to competition and, by the end of the 1990s, wholesale financial markets had become fully globalized and highly competitive. This, of course, meant significant reductions in commissions and spreads, and in the value and exclusivity of banking relationships generally. This article examines the strategic choices of the major surviving investment banks and finds that those firms striving to be major global players have had to meet essential tests of gaining market share and market capitalization. To do this, the firms selected one (or more) of four basic approaches to achieve their goals. Several (Drexel Burnham, Salomon Bros., Bankers Trust) focused on growth through dominance of one or more key trading markets. Several others (Citigroup, JP Morgan Chase, UBS) were caught up in a strategy of growth through continuous acquisition. A few others opted for a show‐stopping “truly” strategic merger (Credit Suisse, Morgan Stanley‐Dean Witter). Only a handful (Goldman Sachs, Merrill Lynch) stuck to a simple strategy of steady internal growth. Those firms that came to dominate their markets through aggressive trading practices have now all disappeared or been folded into others—perhaps because their trading culture became too aggressive for their managers to contain. The multiple‐merger firms have continued to grow by acquiring the customers of their rivals and discarding excess personnel, but in so doing have become enormous organizations that are threatened by the mediocrity of conglomeration. To be successful following a truly strategic deal depends on the underlying strategy being a constant in a highly changeable marketplace—and if “bigger” indeed turns out to be “better,” then the devotees of steady internal growth may be in danger of falling behind. There are pros and cons to each approach, but the article makes the case that the ability to execute strategy is what really counts, and this is increasingly difficult in markets in which commanding market shares have already been established by a few top firms. The final question, however, is whether any of these approaches can be sustained indefinitely. As firms become more diversified across product lines to lower their volatility, they become less specialized and in time perhaps less effective at delivering the market's best and most recent ideas to clients. Such firms also presume that investors choose to own their stocks (they are all public now) because of their market capitalization, liquidity, and steady, market‐indexed growth. But, in fact, sophisticated institutional investors may prefer more specialized, less diversified, more exposed positions with greater upside potential. If so, the industry may find itself coming apart, with firms throwing off talent, divisions, and product lines in an effort to deconglomerate themselves back into something like the lean competitive machines that investment banks were when structured as small partnerships.     

Sustained positive consumption in a model of stochastic growth: The role of risk aversion

In a stochastic economy, long run consumption and output may not be bounded away from zero even when productivity is arbitrarily high near zero and uncertainty is arbitrarily small. In the one-sector stochastic optimal growth model with i.i.d. production shocks, we characterize the nature of preferences that lead to this phenomenon for a stochastic Cobb–Douglas technology. For the general version of the model, we outline sufficient conditions under which the economy expands its capital stock near zero and long run consumption is bounded away from zero with certainty. Our conditions highlight the important role played by risk aversion for small consumption levels.     

Ethical Attitudes of a Cohort of Future Professionals – Implications for the Teaching of Ethics

Business students were asked about their attitudes to the inclusion of ethics in the curriculum and tested on their responses to 'real life' ethical dilemmas. Students' perception of the clarity with which they understood what was meant by ethics was also assessed. Students responded positively to the inclusion of ethical material in the classroom and recorded a high degree of confidence in their understanding of 'ethics'. Some of the issues raised by the responses are discussed in terms of their implications for educational policy and practice.