The Influence of Large Stake Family Control on Performance: Is It Agency or Entrenchment?

Agency theory posits that the greater degree of control by those with decision-making authority, the greater the overall organizational performance. Conversely, entrenchment theory implies that at extremely high levels of inside control by those with decision authority, organizational performance decreases. Using a nationwide sample of 2,631 privately held and publically traded family businesses, we examined if the relationship of percent family ownership is an agency or entrenchment relationship and found the latter. Specifically, there was a statistically significant negative relationship between percent of family control and sales growth as well as a strong inverse relationship between percent of family controlling the top management team and all measures of financial performance.     

The merger paradox in a mixed oligopoly

This paper examines the set of surplus maximizing mergers in a model of mixed oligopoly. The presence of a welfare maximizing public firm reduces the set of mergers for which two private firms can profitably merge. When a public firm and private firm merge, the changes in welfare and profit depend on the resulting extent of private ownership in the newly merged firm. When the government sets that share to maximize post merger welfare as assumed in the privatization literature, the merger paradox will often remain and the merger will not take place. Yet, we show there always exists scope for mergers that increase profit and increase (if not maximize) welfare. Interestingly, these mergers often include complete privatization.     

Do Environmental Regulations Influence Trade Patterns? Testing Old and New Trade Theories

The relationship between trade liberalisation and the environment has been the subject of a growing body of literature in recent years. One particular focus of attention has been whether environmental regulations are influencing patterns of international trade. This paper aims to examine this issue in the context of the Heckscher‐Ohlin‐Vanek (HOV) model of trade, but also in a ‘new’ trade model characterised by monopolistic competition and differentiated products. Our use of the HOV model improves upon a well cited study by Tobey (1990) in many ways, not least by allowing for the possible endogeneity of environmental regulations. We find no significant relationship between such regulations and ‘dirty’ net exports. The ‘new’ trade model explains the presence of both intra‐ and inter‐industry trade and we again allow for the possible endogeneity of regulations. We believe this to be the first study to assess the role of environmental regulations within a ‘new’ trade model, but also the first to allow for the endogeneity of regulations in a cross‐country model of trade. We find environmental regulations to be a statistically significant determinant of the share of inter‐industry trade (net trade) and we find this significance to increase when endogeneity is controlled for.     

The EU's Free–trade Agreements with Developing Countries: A Case of Wishful Thinking?

Since the middle of the1990s the EU has vigorously pursued a policy of replacing non– reciprocal preferences for the developing countries in the Mediterranean, Latin America and with South Africa, with bilateral free–trade agreements. This article examines the content of these agreements and the empirical evidence on their likely effects and concludes that they are ‘broad’ but ‘shallow’ agreements. The static effect are likely to be very small or negative while the potential dynamic gains are problematic, especially regarding the concept of a ‘lock in’ to trade liberalisation, unless there are greater commitments to trade related issues by both sides and especially by the EU.     

Tracking the relationship between environmental management and financial performance in the service industry

Attention to the relationship between environmental management and financial performance has been growing. Research in this area has, however, tended to focus primarily on manufacturing industries. Our goal in this study is to analyze the relationship between environmental management and financial performance in the context of the service industry. Using a cross-sectional sample of 1,228 service organizations spanning a wide range of business activities, we test a series of five hypothesized relationships using both univariate and multivariate analyses. The results are robust across the dataset and show conclusively that environmental management does indeed positively affect financial performance in the service sector.     

The stability and efficiency of directed communication networks

Abstract. This paper analyzes the formation of directed networks where self-interested individuals choose with whom they communicate. The focus of the paper is on whether the incentives of individuals to add or sever links will lead them to form networks that are efficient from a societal viewpoint. It is shown that for some contexts, to reconcile efficiency with individual incentives, benefits must either be redistributed in ways depending on “outsiders” who do not contribute to the productive value of the network, or in ways that violate equity (i.e., anonymity). It is also shown that there are interesting contexts for which it is possible to ensure that efficient networks are individually stable via (re)distributions that are balanced across components of the network, anonymous, and independent of the connections of non-contributing outsiders.     

Modeling the dynamics of strategic fit: a normative approach to strategic change

This study develops and tests a dynamic perspective on strategic fit. Drawing from contingency and resource‐based arguments in the strategy and organizational theory literatures, we propose a distinctive analytical approach to identify environmental and organizational contingencies that should predict changes in a firm's strategy and the performance implications of such changes. We test our model using extensive longitudinal data from over 4000 U.S. savings and loan institutions during a period when many S&Ls considered changing strategic direction. The findings support our model of dynamic strategic fit. Specifically, we find that (1) the timing, direction, and magnitude of strategic changes can be logically predicted based on differences in specific environmental forces and organizational resources, and (2) organizations that deviated from our model's prediction of dynamic strategic fit (i.e., changed more or changed less than our model prescribed) experienced negative performance consequences. We conclude by discussing the implications of our approach and findings for future research on strategic fit and strategic change. Copyright © 2000 John Wiley & Sons, Ltd.     

The International Competitiveness of CEEC Agriculture

The paper surveys the price competitiveness of agricultural production in Central and East European Countries (CEECs). It draws together empirical work conducted by tje authors and other studies that have estimated domestic resource cost (DRC) ratios for agriculture in various CEECs. The paper identifies that in general CEEC crop production is more internationally competitive than livestock farming. During the mid‐1990s, wheat production in Bulgaria, the Czech Republic, Hungary, Romania and Slovakia was internationally competitive. In contrast, during the same period, milk production was not internationally competitive. However, there is also a considerable degree of variation from country to country; very little of Slovenia's agricultural production is internationally competitive. In the livestock sector the greatest problems lie where large herds have been broken up resulting in fragmented production. This has particularly affected beef and milk production. Considering variations in DRCs by farm type, larger private farms in Hungary and the Czech Republic are more internationally competitive than smaller private farms in crop production. If CEEC producers faced average EU prices for their traded inputs and output, most could be price competitive. However, conclusions should be treated with caution due to sensitivity of DRC ratios to changes in international prices and the choice of the shadow prices for non‐tradeable inputs     

The political economy of tourism in North Africa: Comparative perspectives

Tourism has become a salient sector in the economic‐development strategies of North Africa, despite the fact that the states of the region have met with varying degrees of success in their attempts to expand and develop their tourism sectors. This article adopts a political‐economy approach to the analysis of tourism in North Africa. Its aims are to highlight the main aspects of the region's political economy that have influenced outcomes in the tourism sector of each country, and then to explain the political dynamics that underlie the tourism sectors of the region. This article asserts that all North African states now have embraced tourism—albeit with varying amounts of enthusiasm—as a key economic industry. It examines the relationship between tourism and economic reform in the region, followed by the political dynamics of the sector, arguing that tourism is a very political affair, but for reasons different than in other sectors of the economy. It concludes with some observations on the strategic and developmental challenges that confront the development of tourism in North Africa. © 2000 John Wiley & Sons, Inc.     

An accelerating treadmill and an overlooked contradiction in industrial agriculture: Climate change and nitrogen fertilizer

In this article, we explore if and why farmers are responding to the impacts of climate change with practices that increase greenhouse gas emissions. Our examination focuses on heavy rainfall events and Midwestern corn farmers' nitrogen fertilizer management. Due to climate change, the frequency and intensity of heavy rain events is increasing across the Midwest. These events increase nitrogen loss to the environment and introduces economic risks to farmers. Drawing from a theoretical framework that merges O'Connor's second contradiction of capitalism and Schnaiberg's treadmill of production, we argue farmers' responses to these events reflect the second contradiction, increasing contributions to climate change, and are shaped by treadmill‐like political‐economic pressures. We examine this using a qualitative sample of 154 farmers across Indiana, Iowa, and Michigan. Given profit imperatives, adapting farmers in our sample primarily used increased nitrogen application rates to reduce their vulnerability to heavy rains. As nitrogen rate is directly associated with nitrous oxide emissions, this adaptive strategy is effective but increases agricultural contributions to climate change. This preliminarily suggests that the political‐economic structure encourages farmers to respond to climate change in ways that accelerate the environmental contradictions of industrial agriculture.