Too Busy to Mind the Business? Monitoring by Directors with Multiple Board Appointments

We examine the number of external appointments held by corporate directors. Directors who serve larger firms and sit on larger boards are more likely to attract directorships. Consistent with Fama and Jensen (1983), we find that firm performance has a positive effect on the number of appointments held by a director. We find no evidence that multiple directors shirk their responsibilities to serve on board committees. We do not find that multiple directors are associated with a greater likelihood of securities fraud litigation. We conclude that the evidence does not support calls for limits on directorships held by an individual.     

Innovations in Shopper Marketing: Current Insights and Future Research Issues

Shopper marketing refers to the planning and execution of all marketing activities that influence a shopper along, and beyond, the entire path-to-purchase, from the point at which the motivation to shop first emerges through to purchase, consumption, repurchase, and recommendation. The goal of shopper marketing is to enable a win–win–win solution for the shopper–retailer–manufacturer. Shopper marketing has emerged as a key managerial practice among manufacturers and retailers, who are eagerly embracing innovations in the different aspects of shopper marketing. We review current and potential innovations in shopper marketing. We identify the managerial challenges to achieving new win–win–win solutions among shoppers, manufacturers, and retailers in shopper marketing and outline future scenarios and research issues related to these challenges.     

On choosing which game to play when ignorant of the rules

This paper suggests a theory of choice among strategic situations when the rules of play are not properly specified. We take the view that a “strategic situation” is adequately described by a TU game since it specifies what is feasible for each coalition but is silent on the procedures that are used to allocate the surplus. We model the choice problem facing a decision maker (DM) as having to choose from finitely many “actions”. The known “consequence” of the ith action is a coalition from game f _i over a fixed set of players \(N_i\cup\{d\}\) (where d stands for the DM). Axioms are imposed on her choice as the list of consequences (f ₁,..., f _m ) from the m actions varies. We characterize choice rules that are based on marginal contributions of the DM in general and on the Shapley Value in particular.     

What happens after a single surgical intervention for hidradenitis suppurativa? A retrospective claims-based analysis

Objective Hidradenitis suppurativa (HS) is often treated by surgery. The risk of recurrence after surgery is common and the consequences are substantial, but neither has been quantified using a claims database. This study aimed to estimate the burden associated with non-curative surgery in HS patients.

Methods A retrospective analysis was performed of health insurance claims data from Q1 1999 to Q2 2011 in a US claims database. The analysis included 2668 adults with ≥1 diagnosis of HS and ≥1 claim for skin surgery within 6 months after diagnosis. Healthcare resource utilization and medical costs were compared using multivariate regressions.

Results Overall, 46% of HS patients had ≥1 indicator of non-curative surgery. The incidences of inpatient, emergency department, and outpatient visits were 88%, 40%, and 30% higher, respectively, for patients with non-curative surgery vs patients without indicator of non-curative surgery (all p?<?0.001). Average medical costs were $11,858 and $6427 for patients with and without indicators of non-curative surgery, respectively. The difference of $4185 (p?<?0.001) was mainly driven by inpatient costs (difference = $2685; p?<?0.001).

Limitations Indicators of non-curative HS surgery were defined based on an empirical algorithm.

Conclusions Non-curative HS surgery occurred in almost half of all cases and represents a significant burden on patients and payers in terms of resource utilization and costs.     

Factors influencing strategic alliance outcomes in a manufacturing supply chain: Role of alliance motives,interdependence, asset specificity and relational capital

Integration of various theories is essential to completely understand and explain strategic alliances in a supply chain. The purpose of this paper is to develop a framework by integrating the features of transaction cost theory, resource-based theory, contingency theory, social exchange theory, and Kelley's personal relationship theory and test the framework through empirical research. The present study addresses the impact of strategic alliance motives, environment, asset specificity, perception of opportunistic behavior, interdependence between supply chain partners, and relational capital on strategic alliance outcomes. Besides, the study has also tested the role of relational capital as a central mediating construct. A sample of 2156 companies representing different industries in manufacturing in Malaysia was selected for the distribution of questionnaire. We tested the structural model using structural equation modeling (SEM). Based on the results, we conclude the following significant relationships: (1) strategic alliance motives and perception of opportunistic behavior on interdependence and relational capital, (2) interdependence on relational capital, (3) environment on strategic alliance motives, (4) relational capital on strategic alliance outcomes, and (4) the mediating role of relational capital. The current study adds significantly to the body of knowledge on strategic alliances and can help managers identify factors that influence the success of strategic alliances and provide a proper direction to develop robust and effective collaborative relationships between supply chain partners.     

Business groups and foreign direct investments by developing country firms: An empirical test in India

Drawing on recent theoretical explanations, we develop hypotheses on the relationship between business group affiliation and FDI by developing country firms. We hypothesize a positive relationship between business group affiliation and FDI overall, as well as between business group affiliation and FDI into advanced countries and into developing countries. In addition, we argue that the impact of business group affiliation on FDI varies in strength among business groups based on their size and diversification. We also empirically test the hypotheses in a sample of firms from one large and important developing country, India.     

Do Style-Goods Retailers’ Demands for Guaranteed Profit Margins Unfairly Exploit Vendors?

Retailers, particularly those in the style-goods and fashion apparel industry, are increasingly demanding guaranteed profit margins (GPMs) from their vendors. Under a GPM stipulation, a vendor has to offer a rebate to maintain the retailer’s target margin on the item if the retailer is compelled to take a markdown from the initial price to sell out the ordered quantity for the season. Vendors dispute retailers’ claim that a GPM is a “win-win” mechanism for both parties. They rather view it as a coercive device. The authors examine this issue in a multistage game with demand uncertainty. Interestingly, the analysis shows that depending on the level of demand uncertainty, it may be optimal for the vendor to lower rather than raise his wholesale price upon being asked for a GPM. Further, the analysis shows that under conditions of low demand uncertainty the provision of a GPM by the vendor to the retailer can indeed yield higher profits for both parties than in the NO GPM case.     

Why are firms unlevered?

In this paper, we examine why firms have no debt in their capital structure. We reject the hypothesis that zero-leverage policies are driven by entrenched managers attempting to avoid the disciplinary pressures of debt. These firms do not have weaker internal or external governance mechanisms. The debt initiation decisions of these firms are not preceded by shocks to their entrenchment, such as takeover threats or the emergence of activist blockholders. Our evidence supports the hypothesis that these firms are financially constrained. Zero-debt firms are small, young, conserve cash from cash-flow, and are more likely to lease their assets. When they have access to a line of credit, they face stricter covenants and higher all-in costs than comparable control firms. They lose market share in economic downturns, consistent with the financial constraints explanation, but inconsistent with theories of predation which suggest that they may be voluntarily stockpiling debt capacity.     

A microcomputer‐aided support environment for Xerox quality improvement teams: A case study

Although successful total quality management (TQM) emphasizes the role of teams, the quality literature does not provide a clear picture of the conditions that enable high‐performance teamwork. This case study describes the impacts of a microcomputer‐aided support environment implemented to support quality improvement teams (QITs) at Xerox. The support environment, called the Quality Support Center or QSC, was proposed and implemented explicitly to aid Xerox QITs in intensifying quality practice. The QSC features a comprehensive software tool kit, which, in conjunction with human facilitation, is designed to support correct use of Xerox structured meeting and quality processes and tools and facilitate team coordination over time. Impacts—realized from implementing solutions proposed by QITs using the QSC, as well as impacts on the work of QITs—have been substantial and far‐reaching, indicating that use of the QSC has contributed significantly to the business bottom line and quality intensification. The contribution of contextual enablers to these impacts is assessed using Hackman's [1] influential model; QSC software is described as reinforcing and augmenting these contextual enablers. Practical implications of this study stem from its documentation of the impacts of use of the QSC in the award‐winning TQM environment of Xerox. This study contributes to theory development as well by mapping features of the Xerox TQM environment on to the Hackman model. The mapping suggests the relevance of frameworks drawn from group research for modeling contextual enablers of high‐performance teamwork in TQM settings, especially as the need for theory in assessing QIT performance enablers has been emphasized [2].     

Strategic investments in Japanese corporations: do foreign portfolio owners foster underinvestment or appropriate investment?

This paper investigates the effect of foreign ownership on strategic investments in Japanese corporations. Foreign owners are typically portfolio investors who frequently buy and sell shares and hold diversified portfolios of small stakes in many firms. Prior research has presented two conflicting perspectives on the role of such investors: (a) their frequent trading leads to pressure for short‐term returns that fosters underinvestment; (b) their active trading fosters appropriate investments. We investigated the relationship between foreign ownership and strategic investments using dynamic panel data analysis of a sample of 146 Japanese manufacturing firms from 1991 to 1997. We found that foreign ownership enhances strategic investments (in R&D and capital intensity) to a greater extent when firms have growth opportunities than when they lack such opportunities. We conclude that foreign ownership fosters appropriate investment. Copyright © 2006 John Wiley & Sons, Ltd.