A FRAMEWORK FOR ANALYZING CHANGES IN STRATEGIC PERFORMANCE

In this paper we present a framework for analyzing changes in strategic performance. Traditional measures for comparing the strategic performance across firms or over time have been return on investment (ROI) and its component ratio, return on sales (ROS). We decompose the ROS ratio into four separate ratios that capture the impact of changes in a firm's productivity, price recovery, product mix and capacity utilization on its profitability. These ratios help to highlight the micro sources of strategic success or failure. They can be used to assess changes in the performance of a firm compared to itself over time, or to other firms in its industry group. This framework can also be used to evaluate changes in the dynamic performance of an industry as a whole. We illustrate the use of these ratios with a 4-year analysis of the performance of a large manufacturing company. We also demonstrate how the technique can be applied to an industry with an evaluation of the performance of U.S. telecommunications firms between 1975 and 1987, a period during which the industry experienced a progressive increase in competitive pressure.     

REGULATIONS AND STRATEGY: EVIDENCE ON ADVERTISING

This article evaluates the impact of the introduction of incentive regulation on firms’ advertising spending among the population of local exchange carriers in the United States telecommunications industry between 1988 and 2001. The results show that the hybrid rate of return method and other intermediate incentive schemes have a negative relationship with advertising spending. Conversely, the introduction of pure price caps schemes has had a positive and significant impact on firms’ advertising spending. These results highlight the importance of incentive compatible mechanism design in motivating firms to be market oriented and strive for superior performance.     

A Psychologically Based Model of Voter Turnout

We analyze a psychologically based model of voter turnout. Potential voters experience regret if they fail to vote, which is the motivation for participation in voting. Regret from abstention is inversely related to the margin of victory. Voters on the winner's side experience less regret than those on the loser's side. We show that the unique equilibrium involves positive voter turnout. We show that the losing side has higher turnout. In addition, voter turnout is positively related to importance of the election and the competitiveness of the election. We also consider scenarios in which voters are uncertain about the composition of the electorate's political preferences and show similar phenomena emerge.     

PRICING REGULATIONS AND NETWORK TECHNOLOGY INVESTMENTS: A RETROSPECTIVE EVALUATION

This article evaluates the impact of the introduction of incentive regulation on technology deployment, as evaluated using two technology deployment metrics, among the population of local exchange carriers in the USA between 1988 and 2001. The regulatory schemes are disaggregated into five categories, permitting examination of heterogeneity among regulatory schemes. The results show that the rate of return method and the other intermediate incentive schemes implemented have had a negative impact on technology deployment. Conversely, the introduction of pure price caps schemes had a positive and significant impact on firms’ technology deployment. These results highlight the importance of appropriate incentive compatible mechanism design in motivating firms to adopt the new and important technologies that have been developed.     

REGULATION AND JOB CREATION: AN ANALYSIS OF INSTITUTIONAL CHANGE AND ITS CONSEQUENCES

The study evaluates the impact of changes in price regulation, an important institutional feature of firms’ environments, on average human resource deployment levels among the United States local exchange telecommunications companies using contemporary historical data between 1988 and 2001. The data permit a natural experiment approach for the evaluation. Firms regulated via rate of return approaches have employed significantly less staff. These employment levels have been 15 percent lower than that of firms regulated via incentive regulation. The study is a direct test of a principal dynamic capabilities idea that firms reconfigure resources in the face of environmental changes to retain their competitive advantages. These results signify the importance of designing regulations possessing requisite incentive properties in enhancing firm level employment and support the key premises of the dynamic capabilities perspective.