Performance Evaluation and Corporate Income Taxes in a Sequential Delegation Setting

We consider a setting where a firm delegates an investment decision and, subsequently, a sales decision to a privately informed manager. For both decisions corporate income taxes have real effects. We show that compensating the manager based on pre-tax residual income can ensure after-tax NPV-maximization (goal congruence) for each decision problem in isolation. However, this metric fails if both decisions are nontrivial, since it requires asset-specific hurdle rates and hence precludes asset aggregation. After-tax residual income metrics (e.g., EVA) allow the firm to consistently apply its after-tax cost of capital as the hurdle rate to its aggregate asset base. We show that existing tax depreciation schedules may explain why firms in practice use more accelerated depreciation schedules than those suggested by previous studies. Our findings also rationalize the widespread use of dirty surplus accounting for windfall gains and losses for managerial retention purposes.     

Local country attributes and the emergence of high tech clusters

The aim of this study is to explore the effect of a country’s attributes on the decision of firms to be active globally. We first built a theoretical model, which shows that an initial difference in the business environment may dampen the desire of firms located in countries with a relatively weak business environment to seek a higher level of R&D. The decision not to pursue higher levels of R&D leads, in turn, to lower output and lower scope of activity of global firms in these countries. Moreover, firms with relatively high level of management skills will choose to migrate from a relatively weak country to one with a stronger business environment, creating a brain drain that will further impoverish the weak country.     

Dynamic Capabilities and Organizational Performance: A Meta‐Analytic Evaluation and Extension

We move the dynamic capabilities view (DCV) forward in two important ways by meta‐analysing prior empirical studies. First, we evaluate the two core theoretical tenets of the DCV: (1) Dynamic capabilities are positively related to performance, and (2) this relationship is stronger in industries with higher levels of technological dynamism. We find support for the former (r_c = 0.296) but not for the latter, though results suggest the existence of moderators. Second, we theorize and demonstrate empirically that higher‐order dynamic capabilities are more strongly related to performance than lower‐order dynamic capabilities, lower‐order dynamic capabilities partially mediate the relationship between higher‐order dynamic capabilities and performance, and dynamic capabilities contribute more to performance in developing economies than in developed economies. These findings illustrate how the nature of the dynamic capability and the economic context in which it is utilized shape its value, thus offering a more nuanced conceptualization of the dynamic capabilities‐performance relationship.     

Sequencing R&D decisions in a two-period duopoly with spillovers

Summary. We compare simultaneous versus sequential moves in R&;D decisions within an asymmetric R&;D/Cournot model with linear demand (for differentiated products), general R&;D costs, and spillovers. Simultaneous play and sequential play (with and without a specified leader) can emerge as appropriate formulations, depending on the ratios of spillover rate over demand cross-slope, but not on R&;D efficiency. When at least one ratio is above 1/2, a sequential solution mitigates competition and leads to higher profits for each firm, and to higher social welfare. When uniquely specified, the stronger firm emerges as the R&;D first-mover.     

Memory-Based Store Price Judgments: The Role of Knowledge and Shopping Experience

This paper investigates the processes underlying consumers’ memory-based store price judgments. The numerosity heuristic implies that the greater the number of relatively lower priced products at a store that consumers can recall, the lower will be their overall price image of the store. That is, people use the number of recalled low-price products to judge the overall store price image. We show that this expectation holds only for knowledgeable consumers. Instead, less knowledgeable consumers use the ease with which low-price products are recalled (i.e., the availability heuristic) as a cue to make store price judgments. Therefore, the fewer low-price products they recall, the easier their recall task, and the lower their price perceptions of the store.Field studies using different manipulations tested and confirmed these predictions. Managerial implications for retailers are offered. Theoretical implications for behavioral price perceptions, memory-based judgments, and the use of heuristic cues are also discussed.     

How do social media influencers inspire consumers' purchase decisions? The mediating role of parasocial relationships

In recent years, social media influencers (SMIs) have become part of the strategic communication of firms because the traditional form of mass media communication is losing its effectiveness. Thus, it is imperative to study the effects of communication through SMIs on marketing outcomes, such as purchase intentions. Based on the fairness dimensions, that is, information, distributive, interpersonal, and procedural, and dimensions of source credibility, that is, attractiveness, expertise, trustworthiness, and similarity, this research investigated how technology-oriented SMIs (T-SMIs) foster parasocial relationships (PSRs) with followers. Purposive sampling was employed to collect data from 506 active social media users. Data were analysed through IBM AMOS and SPSS 26. The results of the study suggested that attractiveness, expertise, trustworthiness, similarity, interpersonal, procedural, and information fairness are positively related to fostering PSR with followers. In contrast, distributive fairness does not strengthen PSR with followers; furthermore, the study findings suggested an indirect positive influence of attractiveness, expertise, trustworthiness, similarity, interpersonal, procedural, and information fairness on the purchase intentions of consumers via PSR. This study is useful for academia and industry since it fills important gaps in the literature and provides recommendations to brand managers of technology companies about selecting appropriate SMIs for the endorsement of their brands.     

Do firms underreport information on cyber-attacks? Evidence from capital markets

Firms should disclose information on material cyber-attacks. However, because managers have incentives to withhold negative information, and investors cannot discover most cyber-attacks independently, firms may underreport them. Using data on cyber-attacks that firms voluntarily disclosed, and those that were withheld and later discovered by sources outside the firm, we estimate the extent to which firms withhold information on cyber-attacks. We find withheld cyber-attacks are associated with a decline of approximately 3.6% in equity values in the month the attack is discovered, and disclosed attacks with a substantially lower decline of 0.7%. The evidence is consistent with managers not disclosing negative information below a certain threshold and withholding information on the more severe attacks. Using the market reactions to withheld and disclosed attacks, we estimate that managers disclose information on cyber-attacks when investors already suspect a high likelihood (40%) of an attack.     

A resource orchestration view of supply chain traceability and transparency bundles for competitive advantage

The literature has mostly examined supply chain (SC) traceability and SC transparency separately, ignoring the mutually constitutive relationship of these two related constructs. We draw on the resource orchestration theory and the causal complexity perspective to conceptualize and validate SC traceability and SC transparency as interrelated organizational capabilities that may mutually enhance or compensate each other for competitive advantage. We constructed an original sample from two sources to empirically test this conceptualization using fuzzy set qualitative comparative analysis (fsQCA). Our empirical results reveal that the ability of firms to leverage SC traceability for a high financial performance is contingent upon creating a transparency perception of SC with a wide range of stakeholders. Our results also identified the firm size and its international presence, as having a significant bearing on the ability of firms to leverage SC traceability and SC transparency capabilities for a competitive advantage.     

Can board environmental orientation improve U.S. firms' carbon performance? The mediating role of carbon strategy

Overwhelming evidence from prior research suggests a positive association between corporate board characteristics and carbon performance; however, very little is known about the mechanisms linking the two variables. This study attempts to fill this gap by developing and empirically testing a conceptual model that highlights the role of carbon strategy in the relationship between board environmental orientation (BEO) and carbon performance. We argue that BEO can directly and indirectly influence carbon performance through carbon strategy. Using structural equation modelling to analyse data consisting of 2,301 U.S. firm‐year observations over the 2005–2015 period, we find that the greater the BEO is, the better its carbon performance (i.e., lower greenhouse gas emissions). The results also provide evidence of the mediating effect of carbon strategy on the relationship between BEO and carbon performance. Splitting the sample into high and low carbon‐intensive industries shows a partial mediation effect in high carbon‐intensive industries and a full mediation effect in low carbon‐intensive industries. The findings of the study and its implications for scholars, policymakers, managers, investors, and environmentalists are discussed.