Avoiding digitalization traps: Tools for top managers

Digital transformation is fundamentally changing the business landscape. It is also affecting the roles of top managers within firms. Our survey of more than 160 senior managers in Europe suggests that digitalization, rather than encouraging more decentralized forms of management, will lead to an expanded role for headquarters and further empowerment of top managers. While acknowledging the benefits of the digital transformation, in this Executive Digest we identify five key challenges for newly empowered top managers and offer solutions for these digitalization traps.     

Contextualized representations of brand extensions: Are feature lists or frames the basic components of consumer cognition?

According to the common view in consumer behavior, consumers represent brands and product categories mentally as lists of independent product features and engage in feature matching when they evaluate brand-product category compounds such as brand extensions. However, we demonstrate that brand extension concepts are subject to context effects and largely contextually organized — empirical evidence which suggests that they are represented by more flexible mental structures than independent feature lists. As an alternative, brand extensions (e.g., McDonald's Theme Park) may be viewed as conceptual combinations in which the original brand or company name (e.g., McDonald's) acts on the head concept of the extension category (e.g., theme parks) as a modifier. Moreover, we suggest that the contextual and relational structure of brand extensions may be explained more adequately by mental frames than feature list representations.     

Why parallel trade may raise producers' profits

This paper shows that a manufacturer may benefit from parallel trade. In addition to an intuitive condition about the effect of demand shocks, this occurs when competitive retailers must order inventories before they know the realization of demand and for products whose sale value drops at the end of the demand period. For these types of products, letting retailers trade unsold inventories generally results in larger orders placed with the manufacturer and higher manufacturer profit. The model provides a simple explanation as to why the volume of parallel trade is now very large and accepted by manufacturers for some products such as automobiles, clothes, toys, consumer electronics, musical recordings, cosmetics and perfumes.     

A simple model of brain circulation

This paper analyzes the allocation of two types of individuals differentiated by talent between two countries where they choose to be workers or entrepreneurs. An equilibrium with international migration exists when countries' talent endowments are sufficiently different. It is consistent with one-way or two-way migration whether individuals are entrepreneurs or workers. Although allowing migration increases domestic welfare in one country and decreases it in the other, it is always supported by majority voting in both countries.     

Minimum return guarantees,investment caps,and investment flexibility

We study the merits of capped retirement products with guarantee for investors who have the flexibility to dynamically adjust their investment strategy. All contracts under consideration are fairly priced such that the net profit of the provider is zero. Without the rider, an expected utility maximizing CRRA investor does not want an investment cap. Here, she commits herself to a strategy a priori. With the flexibility rider, the optimization problem changes and the optimal strategy is a response to an exogenously set price. A fair pricing then anticipates the optimal response of the investor. We show that the maximum expected utility of the investor can, for anticipated fairly priced products, be obtained for a finite cap. Thus, a capped product design can give a Pareto improvement to the otherwise uncapped contract version.     

Illustrating the Power of fsQCA in Explaining Paradoxical Consumer Environmental Orientations

Prior research on proenvironmental and prosocial behavior focuses primarily on explaining consistent rather than paradoxical tendencies. Even though this field receives wide attention from different scientific disciplines, findings for many causal factors of such proenvironmental orientation are contradictory. Nevertheless, knowing who those individuals are who think and behave in a pro‐/antienvironmental way or show a paradoxical behavior in this regard becomes useful for many different parties in human societies including public policy makers, governmental and nongovernmental environmental protection organizations, and for‐profit firms. Therefore, this study identifies those individuals who show neither consistent proenvironmental nor consistent antienvironmental tendencies as the “walkers‐only” and “talkers‐only” (i.e., for short, “walkers” and “talkers”). The former are defined as persons who put much effort into the recycling of waste materials but do not support pollution standards, whereas the latter term describes individuals who have a strong opinion with regard to the support of pollution standards yet do not engage in recycling efforts. The present study reports evidence of the existence of walkers and talkers. Further, this research is the first study to employ “fuzzy‐set qualitative comparative analysis” to identify the complex antecedent conditions for some individuals’ paradoxical belief–behaviors in the field of socially and environmentally directed behaviors and orientations. The findings yield valuable insights both into the applicability and benefits of configural analysis and for public policy makers and managers in waste management and recycling industries.     

Remittances and the human capital of children: New evidence from Kyrgyzstan during revolution and financial crisis, 2005–2009

We analyze the effect of the receipt of remittances on the education and health of children in Kyrgyzstan during a volatile period of their recent history, 2005–2009. The country experienced revolution in 2005 and the global financial crisis beginning in 2008. Both events impact human capital investment, and the changes vary by region of the country. We use fixed effects estimation and fixed effects, instrumental variables estimation to isolate the effects of remittances and other events on human capital. We find that boys aged 14–18 in remittances’ receiving households are less likely to be enrolled in school than other children. We also find that girls in remittances’ receiving households are more likely to be malnourished (thin). Both effects are relatively small. Remittances do not improve the human capital of children left behind. However, we do find an overall positive improvement in school enrollment among young children between 2005 and 2009 but a negative trend in enrollment among older boys and girls. Nutrition improves over time. Regional differences are apparent in these trends in nutrition and education.     

Dealing with Wicked Issues: Open Strategizing and the Camisea Case

The purpose of this article is to demonstrate, based on an extensive study of the Shell-led Camisea gas project in Peru, how what we believe to be a new approach to dealing with stakeholders, focusing on sense-making and combining industry dynamics and stakeholder empowerment, was developed. The project’s success was measured by the fact that, unlike similar projects around the world, it did not meet with major opposition during its 4-year life span. Those involved in the Camisea project succeeded in creating an open approach to building stakeholder relationships, allowing them to navigate through a number of diverse and challenging socio-political and ecological issues. An integral part of Shell’s approach was acting upon its commitment to high standards of operation and values. The insights from this case clearly indicate that stakeholder management and theorizing can profit from a less controlled, open and sense-making oriented strategizing with stakeholders.     

Western popular music consumption by highly involved Chinese music fans

This paper explores the development of Western popular music consumption for highly involved Chinese consumers. This research is exploratory and uses semi-structured online interviews. The consumption of Western popular music in China is deeply embedded in the changing political and social context. In the late 1980s and early 1990s, an underground culture of ‘dakou’, cut tapes and CDs, developed, which was a decisive and formative influence for many of our respondents. Later this was supplemented by counterfeit tapes/CDs, and by Internet downloads, which also increased access to Western music. However, both recorded and live music are still censored in China. Our respondents agreed that the political restrictions on music have prevented China from developing a 'normal' music market, and created a market which is almost entirely based on illegal downloading. As the lifestyle choices of our respondents were deeply influenced by the consumption of Western music, many of them ultimately decided to leave China and live abroad.     

A cost-minimization approach to the international transfer of HRM/IR practices: Anglo-Saxon multinationals in the Federal Republic of Germany

The existence of host-country and country-of-origin effects is analysed by using the concept of fiscal federalism as a theoretical analogy. It is argued that multinationals try to minimize the costs of centralization and decentralization associated with cross-national personnel policy. The higher the costs of decentralization, the more likely is the existence of country-of-origin effects. The opposite holds true for increasing costs of centralization. This is tested empirically by comparing the human resource management and industrial relations (HRM/IR) practices of US and British subsidiaries operating in Germany with those of native German firms. Based on 297 valid cases, it is shown that the existence of decentralization costs is associated with country-of-origin effects in various areas of personnel management, such as the use of variable compensation, employee ownership and initial vocational training. In contrast, in the field of industrial relations (co-determination, compliance with collective bargaining), there are strong pressures to adapt to local norms, leading to host-country effects. These results indicate that a rationalistic cost-minimization approach is well suited to explaining the patterns of host- and home-country effects in regard to the HRM/IR practices of multinational enterprises.