Reassessing marketing boards as hybrid arrangements: evidence from Canadian experiences

In this article, we reassess the role of marketing boards and similar arrangements that have played an important role in numerous agro‐food sectors of developed countries over almost a century. Referring to transaction cost economics and to more recent contributions on the allocation of decision and property rights, we interpret these arrangements as hybrid modes of governance. We hypothesize that uncertainty is the leading force pushing toward these organizational solutions and we explore forms of uncertainty at stake and their impact in shaping various types of hybrids. We also explore the role of institutional embeddedness in providing marketing boards and the like their legitimacy. Using numerous examples from Canadian marketing boards, we discuss the benefits and point out flaws of these arrangements. We conclude on the need to assess comparatively the role of these solutions with respect to, for example, a system of bilateral contracts.     

The Effect of Explicit Communication on pricing: Evidence from the Collapse of a Gasoline Cartel

We study the collapse of collusion in Québec's retail gasoline market following a Competition Bureau investigation, and show that it involved two empirical regularities: high margins, and asymmetric price adjustments. Using weekly, station‐level prices we test whether collusion was successful, and whether asymmetric adjustments were part of the cartel's strategy. We do so in the markets targeted by the investigation, and in markets throughout the province with similar pre‐collapse pricing (cyclical markets). Our results suggest that stations in both target and cyclical markets adjusted pricing following the announcement: margins fell (by 30%/15% in target/cyclical markets), and adjustments became more symmetric.     

Timing the Start of Material Substitution Projects: Creating Switching Options under Volatile Material Prices

Firms developing new products often face the challenge of making investment decisions under uncertain input–cost conditions due to the price volatilities of the materials they use. These decisions need to be made long before the final products are launched on the market. Therefore, firms that invest in the opportunity to switch materials in a timely manner will have the flexibility to react to material price changes and realize competitive advantages. However, volatile material prices may also cause a firm to delay investment. Using real‐options reasoning, this paper studies the influence of input‐cost fluctuations on the timing decision to start new product development (NPD) and thus create the follow‐on opportunity to later replace an existing product. A model that combines waiting and switching options to derive influencing factors of the flexibility value that triggers the investment is developed and tested on a sample of material substitution projects from manufacturing firms. The results show how price uncertainty of the new and the old material, their joint price development, the expected project duration, and competitive preemption are related to the propensity to delay the start of NPD. The findings provide new insights on how timing in adopting materials can be used to hedge exposure to volatile material prices. The insights are relevant for adopters and producers of new materials, as well as for policy makers who strive for supporting the diffusion of new materials.     

Using templates and linguistic patterns to define process performance indicators

Process performance management (PPM) aims at measuring, monitoring and analysing the performance of business processes (BPs), in order to check the achievement of strategic and operational goals and to support decision-making for their optimisation. PPM is based on process performance indicators (PPIs), so having an appropriate definition of them is crucial. One of the main problems of PPIs definition is to express them in an unambiguous, complete, understandable, traceable and verifiable manner. In practice, PPIs are defined informally – usually in ad hoc, natural language, with its well-known problems – or they are defined from an implementation perspective, hardly understandable to non-technical people. In order to solve this problem, in this article we propose a novel approach to improve the definition of PPIs using templates and linguistic patterns. This approach promotes reuse, reduces both ambiguities and missing information, is understandable to all stakeholders and maintains traceability with the process model. Furthermore, it enables the automated processing of PPI definitions by its straightforward translation into the PPINOT metamodel, allowing the gathering of the required information for their computation as well as the analysis of the relationships between them and with BP elements.     

Effects of Firm Size,Financial Leverage and R&D Expenditures on Firm Earnings: An Analysis Using Quantile Regression Approach

As documented in the literature, the effects of firm size, financial leverage, and R&D expenditures on firm earnings are inclusive. Our hypothesis is that the inconsistent empirical results of such effects may be driven by the regression models implemented in data analysis. Using the quantile regression (QR) approach developed by Koenker and Basset (1978), this study analyses S&P 500 firms from 1996 to 2005. We find that the effects of firm size, financial leverage and R&D expenditures on firm earnings differ considerably across earnings quantiles. Comparing the results from the QR approach with those from the ordinary least squares (OLS) and least absolute deviation (LAD) methods, this study further explains the puzzling relationship between firm size, financial leverage, R&D expenditures and firm earnings.     

Regime shifts in stock–flow I(2)–I(1) systems: the case of US fiscal sustainability

In the last two decades, fiscal sustainability has been tested through the use of non‐stationary time series analysis. Two different approximations can be found in the literature: first, a univariate approach that has focused on the stochastic properties of the stock of debt and, second, a multivariate one that has focused on the long‐run properties of the flows of expenditures and revenues, i.e., in the stochastic properties of the deficit. In this paper we unify these approaches considering the stock–flow system that fiscal variables configure. Our approach involves working in an I(2) stochastic processes framework. Given the possibility of the existence of regime shifts in the sustainability of US deficit that the literature has pointed out, we develop a new statistic that can be applied to test several types of I(2) cointegration and multicointegration relationships allowing for regime shifts. To test for these kinds of changing long‐run relationships we propose the use of a residual‐based Dickey–Fuller class of statistic that accounts for one structural break. We show that consistent estimates of the break fraction can be obtained through the minimization of the sum of squared residuals when there is I(2) cointegration. The finite sample performance of the proposed statistic is investigated by Monte Carlo simulations. The econometric methodology is applied to assess whether the US fiscal deficit and debt are sustainable. Copyright © 2010 John Wiley & Sons, Ltd.     

Does Managerial Behavior Determine Farm Technical Efficiency? A Case of Grape Production in an Economy in Transition

This study explores how farmers' managerial behavior in their production planning processes influences the economic performance of their farms, measured through input‐oriented and output‐oriented technical efficiency. A conceptual framework in which differences in managerial behavior were assumed to be due to bounded rationality was developed. The 3‐year means (2006–2008) from a panel data set on grape‐producing family farms in FYR Macedonia were analyzed. Technical efficiency was estimated with the nonparametric data envelopment analysis approach. The impact of farmers' managerial behavior was assessed in a second‐stage regression. The results suggest that bounded rationality in farmers' production planning decisions causes inefficiency. Copyright © 2011 John Wiley & Sons, Ltd.     

Least Squares Asymptotics in Spurious and Cointegrated Panel Regressions with Common and Idiosyncratic Stochastic Trends*

This article makes an analytical study of the effects of the presence of both common and idiosyncratic stochastic trends on the pooled least squares estimator. The results suggest that the usual result of asymptotic normality depends critically on the absence of the common stochastic trend.     

Bridging the gap: How sustainable development can help companies create shareholder value and improve financial performance

This study examines the effect of integrating sustainability into corporate strategy on various aspects of shareholder value creation and financial performance in the British capital market. The employed method is based on the content analysis of corporate disclosures and a new technique for assessing the adoption of the corporate sustainability concept (embracing the environmental, social, and financial aspects of a company's policies at the same time). Using extensive data of FTSE 350 firms covering the years 2006–2012, 65 companies were selected as meeting corporate sustainability criteria. For the above period, we find that these firms were characterized by higher financial risk exposure, lower asset growth rates, lower BV/MV ratios, lower EVA ratios, and higher MVA ratios. Such relations were generally present among different size and industry groupings. The results support the thesis that firms that incorporate sustainability issues into their business operations are better able to leverage their resources toward stronger financial performance and shareholder value creation than other companies. The paper contributes to the literature by offering a more holistic approach to corporate sustainable performance measurement and shedding additional light on its relation to financial performance in the context of the recent global financial crisis and its direct aftermath.