Vertically Related Markets,Foreign Competition and Optimal Privatization Policy

This paper examines the optimal privatization policy in vertically related markets in which an upstream public firm competes with a foreign private rival in supplying a produced input to the domestic and foreign downstream firms competing in the domestic market. It shows that if the upstream public firm's market share is sufficiently high, full nationalization is optimal and the resulting profit margin is positive. However, complete privatization is never optimal. Numerical simulations reveal both the diverse optimal privatization regimes and the patterns of optimal privatization levels with varying numbers of the domestic and foreign downstream firms.     

Relationship between management ownership and firm value among the business group affiliated firms in Korea

In this paper, we revisit an old issue on the relation between management ownership and firm’s value. The Korean panel data on the business group firms, allows us to compute ownership right and control right separately for each business group affiliated firm. Our measures are different from the similar measures on the Korean firms as in Baek et al. (2004) or Joh (2003). Rather than confounding the two offsetting effects, this paper tests convergence of interest hypothesis and entrenchment hypothesis separately. Empirical findings show that, given control right, there is no clear-cut relation between firm value and the inside management ownership for most firms with the inside management ownership less than 42%, that there is a positive relation between firm value and the inside management ownership for those firms with the inside management ownership higher than 42%, and that, given ownership right, profitability decreases as control right increases.     

Effects of Network Embeddedness on the Relationship Between Environmental Volatility and Interfirm Contracts

Purpose: This study examines the effects of an embedded network on the contractual relationship between exchange parties under conditions reflecting varying levels of environmental volatility and investigates the role of an important network factor—the embedded network—in the contractual relationship between manufacturers and their suppliers.

Methodology: The empirical test was conducted with manufacturing companies in the context of manufacturer–supplier relationships. Construct measures were based on existing measures and previous research. Measurement reliability and validity were established using exploratory and confirmatory factor analysis and an overall measurement model was assessed with structural equation modeling using LISREL.

Findings: The results of a survey of manufacturers indicate that firms in an embedded network preferred “soft” contracts even when they face volatile environments, whereas those facing volatile environments in a less embedded network preferred “hard” contracts with explicitly specified written requirements. Network partners carefully evaluated embedded networks (a critical factor that has not received enough attention) before forming contractual relationships in a network perceiving interfirm relationships differently.

Originality: The study introduces network embeddedness to explain governance mechanisms in volatile environments and shows that the explicit recognition of embedded network may facilitate the development of contracts with specific provisions as the contractual relationship evolves.     

The theory of repurchase decision-making (TRD): Identifying the critical factors in the post-purchase decision-making process

A theory particularly designed to explain re-buying decision formation is lacking. This research developed and tested a theory of repurchase decision-making (TRD) that more comprehensively explains individuals’ post-purchase decision-making processes. Two studies were conducted in a full-service restaurant setting for the development of this theory. Specifically, important factors generating the repurchasing intention were identified through an exploratory qualitative approach in Study 1. In this qualitative approach, a new set of belief items and salient referents in a re-buying decision-making process were also identified. The proposed model merging the model of goal-directed behavior (MGB) with identified factors and belief constructs from Study 1 were tested in the second study. Our results demonstrated that incremental amounts of total variance in the re-buying decision were explained by the TRD. Newly integrated constructs in combination with the original variables in the MGB were found to play a critical role in the re-buying decision-making process. The implications of this study are presented and discussed.     

Subjective model selection rules versus passive model selection rules

In this paper, the choice of a particular functional form based on the objective of the author is called the subjective model selection rule and the choice of a particular functional form using pre-selected model selection criteria is called the passive model selection rule. The objective of the author is the analysis of equilibrium, an efficient input choice, the study of the returns to scale function, the estimation of the elasticity of substitution, and the evaluation of the technical progress. Depending on the chosen objectives, economic restrictions such as the homogeneity, homotheticity, and regularity condition (positivity, monotonicity, and quasiconcavity) can be imposed. Various well-known functions beginning from the Cobb–Douglas (CD) to a globally well-behaved polynomial series are listed and the performances are compared with respect to the possibility of extracting economic interpretation, usefulness for advanced studies, computational easiness, and the potentiality of extending the given function to a more complex function. The isoquants and three dimensional output surfaces are plotted for a series of production functions using the transportation data of Zellner and Revankar (1969). Barnett and Jonas (1983) imposed the sufficient conditions for quasiconcavity of production functions while Gallant and Golub (1984) imposed the necessary and sufficient conditions. The strength and weakness of the above two methods are discussed. These methods are extended for three input cases using the U.S. electric power industry data of Nerlove (1963) and Greene (2008).     

Intraday price formation and bid–ask spread components: A new approach using a cross‐market model

This study examines the intraday formation process of transaction prices and bid–ask spreads in the KOSPI 200 futures market. By extending the structural model of Madhavan, A., Richardson, M., and Roomans, M. ( 1997 ), we develop a unique cross‐market model that can decompose spread components and explain intraday price formation for the futures market by using the order flow information from the KOSPI 200 options market, which is a market that is closely related to the futures market as well as considered to be one of the most remarkable options markets in the world. The empirical results indicate that the model‐implied spread and the permanent component of the spread that results from informed trading tend to be underestimated without the inclusion of options market information. Further, the results imply that trades of in‐the‐money options, which have high delta values, generally incur a more adverse information cost component (the permanent spread component) of the futures market than those of out‐of‐the‐money options, which have relatively low delta values. Finally, we find that the adverse information cost component that is estimated from the cross‐market model exhibits a nearly U‐shaped intraday pattern; however, it sharply decreases at the end of the trading day. © 2011 Wiley Periodicals, Inc. Jrl Fut Mark     

The relationships among overall quick-casual restaurant image,perceived value,customer satisfaction,and behavioral intentions

The purpose of this research is to explain the relationships among overall quick-casual restaurant image, perceived value, customer satisfaction, and behavioral intentions in the quick-casual restaurant industry. The findings indicate that overall quick-casual restaurant image significantly influences perceived value, and overall quick-casual restaurant image and perceived value had a significant role in influencing customer satisfaction. Additionally, overall quick-casual restaurant image, perceived value, and customer satisfaction are significant predictors of customers’ behavioral intentions. Finally, customer satisfaction can act as a partial mediator in the relationship between overall quick-casual restaurant image/perceived value and behavioral intentions. Furthermore, we discuss the theoretical and managerial implications of the findings and future research ideas.     

The effect of interfirm dependence structures on governance mechanisms

Despite recent developments regarding the study of interdependence structures, previous research has rarely investigated the simultaneous effect of both interdependence magnitude and interdependence asymmetry on governance mechanisms among exchange parties. A survey of manufacturing companies has been used to test a theory about the interactive effect of buyer dependence and supplier dependence on inter-firm governance. The analysis of the survey supported the proposition that both buyers and suppliers that are highly dependent on each other (high interdependence magnitude and low interdependence asymmetry) may choose to rely on monitoring and the norm of information sharing. However, when a buyer's dependence is low regardless of the supplier's dependence level, the buyer does not rely on the norm of information sharing (buyer's relative interdependence advantage, buyer's relative interdependence disadvantage, and low interdependence magnitude). On the other hand, when the supplier's dependence on the buyer is low, the buyer relies on monitoring regardless of its dependence level (buyer's relative interdependence disadvantage and low interdependence magnitude). However, this study did not empirically measure performance. Further research should be done on the effect of congruence between the governance mechanism and its antecedents on buying performance.