The Antecedents and Consequences of Affordable Value Innovations for Emerging Markets

Emerging markets offer tremendous growth opportunities for firms. While established multinational firms typically focus on premium segments in emerging markets, they often fail to leverage additional growth opportunities in so‐called good enough or low‐income segments in emerging markets. Customers in these low‐income markets have substantially different requirements and are very price sensitive. Theoretical and case‐based research suggests that innovating for these low‐income segments in emerging markets differs significantly from innovating for premium or traditional Western markets. We argue that tapping successfully into low‐income segments in emerging markets requires the development of new products that meet the low price expectations while at the same time offering also value to customers in these segments. We refer to these new products as affordable value innovations. We analyze the antecedents of affordable value innovation for emerging markets. We draw on institutional theory to derive three potentially relevant antecedents of affordable value innovation for emerging markets. These are bricolage, local embeddedness, and standardization. We test our hypotheses using multiple informant data from 47 multinational corporations involving 103 innovation projects that target low‐income customers in emerging markets. Our empirical analysis shows that all three antecedents have significant effects on the level of affordable value innovation: while bricolage and local embeddedness are positively related to the level of affordable value innovation, standardization has a negative impact. We also examine the relationship between the level of affordable value innovation and performance. We find evidence for our basic assumption that a firm's capability to develop and launch affordable value innovations is key to success in emerging markets. It indicates that a firm's investments in affordable value innovations for emerging markets pay off financially. Finally, a cross‐regional comparison of our data shows that the key findings on antecedents of affordable value innovation and its impact on performance do not vary across various emerging markets. Overall, our findings offer important implications for research on and the practice of innovation for low‐income segments in emerging markets.     

Are there monitoring benefits to institutional ownership? Evidence from seasoned equity offerings

We provide new evidence on the monitoring benefits from institutional ownership by analyzing the impact of institutional ownership on stock price and operating performance following seasoned equity offerings, a setting where the effects of monitoring are likely to be especially important. We find that announcement returns are positively and significantly related to total and active institutional ownership levels and concentration. Post-issue stock returns are positively and significantly related to the contemporaneous post-issue changes in total and active institutional ownership and the concentration of their shareholdings. Operating performance improvements are also related to institutional monitoring in the one, two, and three years following the equity issue. Our results continue to hold even after accounting for the possibility that institutional investors have an informational advantage that enables them to identify and invest in subsequently better performing firms. We also empirically eliminate the possibility that our findings are driven by institutions buying past winners and selling past losers as a way to window-dress their portfolio holdings.     

Co-creation of value — towards an expanded paradigm of value creation

Co-creation is the process by which products, services, and experiences are developed jointly by companies and their stakeholders, opening up a whole new world of value. Firms must stop thinking of individuals as mere passive recipients of value, to whom they have traditionally delivered goods, services, and experiences. Instead, firms must seek to engage people as active co-creators of value everywhere in the system.     

Designing communication architectures for interorganizational multimedia collaboration

Advances in computer and communication technologies have stimulated the integration of digital video and audio with computing, leading to the development of various computer‐assisted collaborations. In this article, we propose a multilevel conferencing paradigm called super conference for supporting collaborative interactions between geographically separated groups of users, with each group belonging to possibly a different organization. In a super conference, each participant must receive and display the composite media stream obtained by mixing media streams transmitted by all the other participants. Hierarchical communication architectures are naturally suited for media mixing in super conferences. We present algorithms for designing hierarchical mixing architectures that optimize real‐time end‐to‐end delays of media. In order to improve their real‐time performance further, we propose multistage mixing techniques by which mixers can carry out mixing concurrently with communication. Surprisingly, the optimal architectures for multistage mixing are widely different from those of monostage mixing (in which, mixing and media communication sequential as opposed to concurrent). Based on real‐time delay constraints of multimedia, we obtain interesting limits on the sizes of both super conferences and groups within super conferences in optimal hierarchical architectures, which go to show their high scalability in terms of both the maximum number of participants and the geographical separation between them.

At the Multimedia Laboratory at the University of California, San Diego, we have implemented a conferencing system on an environment of Sun SPARCstations equipped with digital multimedia hardware. As an interesting application of the conferencing system, we have developed a telepresenter by which users can remotely attend lectures in progress. We present initial experiences with the system.     

Executive Compensation: Excessive or Equitable?

The eighties and nineties have seen much debate about CEO compensation. Critics of CEO compensation support their contention of excessive and inequitable CEO pay based on a number of factors and premises. This paper examines the validity of these arguments. We show why many of these arguments fail to persuade, in part, because they attempt to determine propriety of CEO pay without having a definitive standard for comparison. Arguments based on comparisons between CEO pay and the pay of other individuals or jobs or between CEO pay and firm performance are shown to be an insufficient mechanism to determine the appropriateness of CEO compensation.     

Is performance driven by industry‐or firm‐specific factors? A new look at the evidence

In this study we revisit the question of whether firms' performance is driven primarily by industry or firm factors, extending past studies in two major ways. Firstly, in a departure from past research, we use value‐based measures of performance (economic profit or residual income and market‐to‐book value) instead of accounting ratios (such as return on assets). We also use a new data set and a different statistical approach for testing the significance of the independent effects. Secondly, we examine whether the findings of past research can be generalized across all firms in an industry or whether they apply to a particular class of firms within the same industry. We find that a significant proportion of the absolute estimates of the variance of firm factors is due to the presence of a few exceptional firms in any given industry. In other words, only for a few dominant value creators (leaders) and destroyers (losers) do firm‐specific assets seem to matter significantly more than industry factors. For most other firms, i.e., for those that are not notable leaders or losers in their industry, however, the industry effect turns out to be more important for performance than firm‐specific factors. Copyright © 2002 John Wiley & Sons, Ltd.     

Outsourcing Internal Audit Services: An Empirical Study on Queensland Public-Sector Entities

A study of Queensland public-sector entities suggests outsourcing of internal audit services to be extensive (88%), with 51% of respondent agencies adopting co-sourcing and 37% of the agencies fully outsourcing. Results suggest that internal audit outsourcing is largely adopted for non-financial reasons such as lack of technological know-how and service quality rather than financial reasons. Deficiencies of current governance arrangements concerning internal audit outsourcing include (1) a lack of audit committee involvement in outsourcing processes, particularly in co-sourcing entities, and (2) inadequate segregation of duties whereby the same senior management is involved in key arrangements including selection, approval, negotiation and evaluation of contractual performance.     

The impact of microfinance on poverty and income inequality in developing countries

Economic growth in developing countries provides an opportunity to accelerate progress towards the UN Sustainable Development Goals (SDGs). However, in reality, the number of people living in extreme poverty remains unacceptably high. Utilising the experiences of 34 developing countries for the period 2009 to 2016, the role of microfinance on poverty in these countries is examined. The results imply that the degree to which the existing forms of microfinance effectively reduce extreme poverty is less workable in developing countries, particularly when the hardcore poor are likely being deprived of receiving access to microfinance. It is suggested that governments may need to revise the structure and strategy of microfinance to be more hardcore poor oriented. The hardcore poor have needs beyond pure monetary assistance. More hand‐holding types of assistance are needed as most are also poor in respect of literacy, assets, and skills.     

Does Public Country-by-Country Reporting Deter Tax Avoidance and Income Shifting? Evidence from the European Banking Industry*

In this study, we examine the effect of increased tax transparency on the tax planning behavior of European banks. In 2014, the European Union introduced public country-by-country reporting requirements to the banking industry. Treating this new requirement as an exogenous shock, we find limited evidence consistent with a decline in income shifting by the banks' financial affiliates in the post-adoption period (starting from 2015). We do not, however, find robust evidence of a significant change in the consolidated book effective tax rates among the affected banks. Our findings suggest that increased transparency from public country-by-country reporting can deter tax-motivated income shifting but that it did not appear to materially influence the banks' overall tax avoidance. Our findings have policy implications for the ongoing debate between the European Parliament, the Organisation for Economic Co-operation and Development, and accounting standard-setting bodies on whether to require multinationals to publish country-by-country reports.     

Organisational and professional commitment of early career accountants: do mentoring and organisational ethical climate matter?

This study assesses the effects of mentoring and organisational ethical climate (OEC) on the organisational and professional commitment (PC) of early career accountants (ECAs) (i.e. accounting graduate recruits with three or less years of working experience). The empirical data are based on a questionnaire survey from 86 ECAs in Australian public accounting firms, and hypothesis testing utilises partial least squares analysis. Our results indicate when a career development style of mentoring is adopted there is greater organisational as well as PC. By contrast, a social support mentoring style has no significant impact on organisational commitment (OC) and a negative effect on PC. Further, our data also reveal OEC to be positively associated with OC, and OC in turn having a positive impact on PC. The results imply that fostering a career‐focused mentoring environment and an OEC can increase an ECA's OC and PC. These results have various implications for human resource management at both the accounting firm and professional levels.