Risk aversion and auction design: Theoretical and empirical evidence

Auctions are inherently risky: bidders face uncertainty about their prospects of winning and payments, while sellers are unsure about revenue and chances of a successful sale. Auction rules influence the allocation of risk among agents and the behavior of risk-averse bidders, leading to a breakdown of payoff and revenue equivalence and a heightened significance of auction design decisions by sellers. In this paper, we review the literature on risk aversion in auctions, with an emphasis on what can be learned about auction design from theoretical modeling and empirical studies. We survey theoretical results relating to the behavior of risk-averse agents in auctions, the comparison of standard auction formats in the presence of risk aversion and implications for auction design. We discuss standard and more recent approaches to identifying risk preferences in empirical studies and evidence for the significance of risk aversion in auction applications. Finally, we identify areas where existing evidence is relatively scant and ask what questions empirical research might ask given the theory and where further theoretical research may be beneficial given existing empirical results.     

Tolerance of executive failure in American and Japanese organisations

The attainment of organisational goals requires that organisations manage the kinds and frequency of executives' failures. Although a number of economic, sociological, and organisational theories offer guidance in explaining tolerance of executive failure and its impact on performance, little empirical work has been done exploring the dynamics of the phenomenon. This lack of research becomes especially bothersome because the careful management of failure may be a major difference between Japanese and American management styles. The present study was undertaken to begin the systematic examination of executive failure in Japan and the United States. In a study of American and Japanese executives, only economic theory and convergence theory were supported. Japanese and American executives enjoy equal tolerance of their failures, but tolerance varies in terms of economic conditions and the degree of the failure. Japanese organisations appear to manage low level failures well and serious failures poorly. Americans are better at managing serious executive failures, but are poor at handling low level failures.     

Cross-Cultural Preparation of Australian Expatriates in Organisations in China: The Need for Greater Attention to Training

The historically unprecedented pace of internationalising organisations in the last twenty years has made the need for cross-cultural awareness, sensitivity and adaptability of expatriates in the daily operations of international businesses in host nation subsidiaries much more salient. One of the key aspects identified in literature as contributing towards achieving intercultural effectiveness of expatriates is cross-cultural training. The research presented in this paper examines the training provided to Australian expatriates in China, a nation that has loomed large in the current and future trading and expansion plans of many Australian corporations since it opened its doors to international commerce in the late 1970s. While academic literature has given increasing attention to recognising the skills necessary to achieve intercultural effectiveness in China, organisations are continuing to give scant time and resources to developing their expatriates' China awareness. Based on information gathered through semi-structured interviews conducted with Australian expatriates in Shanghai, this research indicates that while Australian organisations are recognising the need to employ expatriates that have prior China knowledge, organisational preparation remains negligible.     

Teleworking: benefits and pitfalls as perceived by professionals and managers

This study explores how teleworking is perceived by employees and highlights its possible benefits and pitfalls. Interviews with sixty-two teleworkers in five UK organisations provide a comprehensive view on this mode of work. In particular the study examines teleworking impact on effectiveness, quality of working life, and family life.     

Strategic planning and strategic management in Australian organisations

Many planning and organisational aspects of 48 Australian organisations were examined. The empirical information tends to suggest that the process of adopting the strategic management concept is well advanced in some Australian organisations. Irrespective of size and ownership status, some organisations have already adopted strategic planning, and the process of evolution is continuing towards the final stage of strategic management. The increasing environmental volatility and growing international exposure of organisations in Australia and elsewhere in the Asia Pacific region will increase the pressure to implement international management systems, including strategic management.     

The Effect of Consumer Switching Costs on Prices: A Theory and its Application to the Bank Deposit Market

As demonstrated by Klemperer (1987), if households face a cost of switching among brands of a differentiated good, pricing is likely to be more competitive, the greater is the fraction of customers that move into or around the market. I generalize this theory to a world with arbitrary market structure and test it empirically using panel data on bank retail deposit interest rates. I find that the amount of household migration in a market has a significant competitive influence on price markups, that is, a positive effect on the level of deposit interest rates. Consistent with the model, the magnitude of this effect depends in some cases upon the degree of market concentration.     

Development of new B2B venture corporate brand identity: A narrative performance approach

The development and role of brand identity in new B2B ventures is not well explored despite the challenge for such organisations in establishing reputational legitimacy. Previous research defines corporate brand identity as stable and endogenous to the organisation based either on the reputational capital of the organisation or the founder. We challenge this view in this paper from a conceptual and empirical perspective. Combining narrative theory and performativity theory this article suggests brand identity develops as a narrative performance. The study employs a narrative case analysis of interviews and archival data generated during a three-year period to examine the development of corporate brand over time. This study shows that the development of corporate brand identity and the context of the development of new B2B venture are closely intertwined processes and provides a framework for understanding the phenomenon. Brand identity is not a stable core emanating from inside the company but develops over time through a reciprocal sensemaking and dynamic interactions between company and the key external stakeholders in its context. We conclude that brand identity is built not only upon the reputational capital of past behaviours but of the brand itself as it explores and interacts within its brand eco-system.     

Trying to become a different type of company: dynamic capability at Smith Corona

Smith Corona, formerly one of the world's leading manufacturers of typewriters, was challenged to exercise dynamic capability in the face of the dissipation of its main product category. A study of the last two decades of the life of the company shows how Smith Corona tried to alter its resource base by leveraging existing resources, creating new resources, accessing external resources, and releasing resources. Using the extended case method, this study advances dynamic capability theory by confronting it with an empirical case. The Smith Corona case provides rich insights into the resource alteration processes by which dynamic capability operates, and highlights resource cognition as a missing element in dynamic capability theory. Copyright © 2010 John Wiley & Sons, Ltd.     

Plant Exit, Vintage Capital and the Business Cycle

Despite the large literature on plant exit behavior, little attention has been paid to the vintage capital theory as an alternative hypothesis to learning. Learning models predict that exit rates decrease with plant age and the vintage capital theory predicts that exit rates increase with the age of capital. We use a panel of Norwegian manufacturing plants and construct an index of capital age to distinguish between the effects on exit rates. The empirical results imply that there is both a learning effect and a vintage capital effect. We also find that exit rates depend on the business cycle, and increase in severe downturns.     

Diversity is strategy: the effect of R&D team diversity on innovative performance

Diversity in the workplace has attracted significant interest in organisations that want to attract and retain talented employees. Breakthrough innovation requires a wider knowledge base, and organisations increasingly rely on multidisciplinary R&D teams to identify scientific developments that bridge gaps and reduce time to market. However, research on the performance implications of R&D team diversity remains limited and the empirical evidence inconsistent. This paper investigates the impact of surface and deep-level diversity on R&D teams’ innovative performance and how diversity dimensions interact to drive innovation. We find supportive evidence that R&D team characteristics influence innovation outcomes, confirming our hypothesising that diversity is a valuable strategy for an organisation to pursue as it provides greater cognitive ability. Each diversity facet however has its own distinct effects depending on the novelty of innovation and industry. Yet, diversity is not solely positive and excessive heterogeneity could be detrimental to R&D team performance. Our findings suggest that high diversity in gender or skills in cognitively diverse teams might be negative attributes to take into consideration. Senior managers and organisations should therefore consider the appropriate mix of capabilities to benefit from creativity in diverse R&D teams and avoid possible conflict and distrust associated with diversity.     

Tax Structure and Natural Vacancy Rates in the Commercial Real Estate Market

A number of studies have postulated that the Economic Recovery Tax Act of 1981 (ERTA 1981) was responsible for the dramatic overbuilding that occurred between 1981 and 1986, primarily because returns became less sensitive to "real" demand. While there has been much research on how equilibrium or "natural" vacancy rates in the real estate market are determined, beginning with Rosen and Smith's seminal paper in 1983, virtually none of this work has dealt with the impact of the tax environment. This study makes an initial attempt to answer this question with respect to equilibrium vacancies resulting from tenant (or owner) turnover. A formal model is developed that considers as an objective function the landlord's desire to maximize his/her after-tax equity returns in an environment of monopolistic competition in which individual projects face downward-sloping demand curves, owing to market conditions and a degree of heterogeneity among tenants in search costs or some other characteristic. The natural vacancy rate is shown not to depend directly upon the tax environment, but to depend indirectly upon it only to the extent that equilibrium market rents are lowered. The nature of the vacancy response depends critically upon the shape of the tenant demand response relationship upon its transition to a lower-rent region. This response is interactive with the degree of turnover and supply responsiveness within individual markets.     

The Effect of IT and Co-location on Knowledge Dissemination

Due to the increasing globalization of businesses, new ideas for innovation need to be disseminated rapidly both within and across different departments and divisions. Frequently, ideas and information are dispersed over globally distributed organizations or team members. As a result, the exchange of knowledge has become not only very important for innovation but also highly complex. To facilitate this knowledge exchange, electronically mediated interactions are growing rapidly, replacing traditional face‐to‐face communications. However, literature provides contradicting results regarding the effectiveness of computer‐mediated communication (CMC) versus face‐to‐face communication. This study attempts to reconcile differences in the literature on the benefits of CMC technologies and co‐location. Focusing on knowledge dissemination in technology development processes in high‐technology firms, the study investigates the relative impact of CMC technologies and co‐location of research and development (R&D) staff, as well as the mutual interaction between them. The present article hypothesizes that CMC technologies and co‐location of R&D staff have a positive impact on knowledge dissemination. Further, it is hypothesized that it is more favorable to co‐locate R&D staff than to invest in CMC technologies and that the effects of co‐location and CMC interact negatively. These hypotheses are tested using empirical data collected from 277 high‐technology firms in the United States, and the results are generalized by conducting the same test on data from 125 high‐technology firms in the Netherlands. Tests are conducted in a real‐world setting, differing from previous comparative studies that mainly used laboratory experiments. Empirical results support the main effects of CMC technologies and co‐location of R&D staff on knowledge dissemination. Other empirical results contradict conventional wisdom. Investing in CMC technologies is found to be favorable over co‐locating R&D staff for knowledge dissemination. Moreover, the two communication channels strengthen each other. The discussion section presents the contours of a firm‐level theory on communication infrastructures and knowledge dissemination, focusing on the scope and the heterogeneity of knowledge dissemination, which may explain these initially surprising results. From the arguments it follows that the choice for investment in co‐location or CMC technologies depends on the scope of knowledge dissemination that has to be facilitated. Furthermore, the conclusion is made that effective knowledge dissemination requires a balanced investment in co‐location and information technologies to be able to deal with the heterogeneous but interdependent types of knowledge dissemination.     

Research priority setting in food and health domain: European stakeholder beliefs about legitimacy criteria and processes

Dietary factors are the most important risk factors affecting health and well-being of population in every Member State of the European Region. Finding sustainable solutions to the food and health challenges is one of the key issues that today’s society urgently needs to address. Research prioritisation thus has an essential role in directing public resources to addressing these challenges. However, the processes of prioritisation among the food and health funders are rarely subject to scrutiny and the calls for democratizing science continue, as a means of enhancing both input legitimacy (with its focus on the processes of decision-making) and output legitimacy (the utility and impact of such decisions). The current study examines what conceptualisations of legitimacy (input and output) are held by the European stakeholders of the food and health research and innovation (R&I) process such as business organisations, non-governmental organisations (NGOs) and public sector organisations. We analyse stakeholder views from a series of European Awareness Scenario Workshops across nine EU countries (N = 295). The content and thematic analysis of the outputs identified six criteria determining conceptualisations of legitimacy: Influence; Representation; Procedural issues; Epistemic focus; Strategic vision; and Impact. The statistical analysis of the coded data highlighted stakeholder differences with business sector organisations being significantly less concerned about influence and representation than either NGO or public sector organisations. The results indicate that input legitimacy is of major concern to civil society and public sector actors. They reflect the wider debate about the way in which food and health R&I should be funded and policy decisions conducted, suggesting a need for better delineation of stakeholder roles and power differentials in this process. The findings are discussed with reference to the current discussions about Responsible Research and Innovation.     

A basic model for evaluating R&D performance: theory and application in Italy

Nowadays the public R&D laboratories have a fundamental role in countries' development, supporting businesses as they face the technological challenges in the turbulent world scenarios. Measuring the performance of R&D organisations is crucially important to decisions about the level and direction of public funding for research and development. This research considers the public laboratories like systems and develops a mathematical model based on the measurement of R&D activities with k‐indices. The score obtained from the research laboratories evaluation (relev) methodology synthesises in single value financial, scientific and technological aspects. It is an indicator, for R&D manager and policy maker, of performance in relation to other research organisations or in a time series. The method is an instrument of strategic planning and can be used for the improvement of individual activities and the overall performance of public R&D bodies.     

When does incentive compensation motivate managerial behaviors? An experimental investigation of the fit between incentive compensation,executive core self-evaluation,and firm performance

We develop and test an integrative model that examines the fit between compensation schemes, executives' characteristics, and situational factors. We propose that a fit among all three factors is crucial to motivate desirable managerial behaviors. Using a specially designed management simulation, our study demonstrates that the effectiveness of incentive compensation to motivate managerial behaviors depends on executives' core self-evaluation and firm performance. Our results show that, relative to fixed salary compensation, executives with higher core self-evaluation respond to incentive compensation with greater perseverance, competitive strategy focus, ethical behavior, and strategic risk taking during organizational decline. However, these interaction effects are not present during organizational growth. Our theory and empirical evidence provide significant insights into the complex relationships among compensation schemes, executives' characteristics, firm performance, and managerial behaviors. Copyright © 2012 John Wiley & Sons, Ltd.     

国防人力资本对国防工业企业产出贡献度的实证分析

本文主要研究国防人力资本对国防工业产出的增长效应,以及其对国防产出的贡献度.本文借鉴C-D生产函数、Lucas舶的人力资本模型以及二元经济理论,把国防人力资本作为影响国防工业产出的要素纳入到国防工业生产增长的实证分析模型中,从理论上分析国防工业企业中国防人力资本对国防工业产出的贡献度,用实证分析模型进行数理分析.通过分析国防工业产出增长与劳动力投入、物质资本投入、人力资本投入之间的关系,提出建立实证分析模型以及分析该模型的合理性及其现实意义,并建议加强国防工业企业中国防人力资本投入.     

Careers in public sector science: orientations and implications

There is consensus that the world of science is changing (Ziman, 1994; see for example Nowotny et al., 2002). The environment in which scientists work is typified now as increasingly dynamic, managerialist and commercialised. This paper focuses on how scientists within different organisational and national contexts understand and enact their careers in the face of such changes. Based on empirical work in the UK and New Zealand, this paper introduces four career orientations evident in the career accounts of these participants. The categories are further analysed in terms of the key drivers to career: science, the organisation and the individual. Implications for career management are discussed in each section. In conclusion, the paper makes two related contributions. First, the evidence presented poses a challenge to highly individualised notions of the career actor central to current career thinking, instead revealing scientists' continued attachment to old institutional arrangements alongside new and emerging ways of understanding career. Second, with reference to the issue of career management of research scientists, the study highlights the need for those involved in management to look beyond employing organisations to other life interests, and science itself. It argues the need for those involved in career management to recognise the variety of legitimate ways to run a scientific career.     

Reliability performance of fault-tolerant digital control systems

This paper presents the results of a generic reliability analysis of fault-tolerant digital control systems (F-T DCS). This analysis differs from previous efforts at estimating the reliability performance of F-T DCS in the sense that this analysis relies extensively on actual experience with redundant computer systems rather than on theoretical evaluations. The dominant contributors to the frequency of failure of F-T DCS are (1) failures within common or shared equipment, (2) software failures, and (3) inadvertent operator actions. Other contributors include loss of electric power, spurious signals that originate from within the DCS, lack of coverage, common cause failure (CCF) of redundant hardware, CCF of instrument channels, and physical damage from externally initiated events (e.g., high temperature). Much variation is expected in the reliability performance of F-T DCSs. Although some systems may operate for 10 or 15 years without experiencing system failures, other systems may fail several times during the same time interval. This variation is expected among systems of different architectures as well as among systems of the same architecture. Because most failures of DCSs can be traced to some kind of CCF, particularly software failures and inadvertent operator actions, CCFs should probably receive more attention than they are presently given when selecting an F-T DCS.     

How to leverage the impact of R&D on product innovation? The moderating effect of management innovation

Although research and development (R&D) is a key indicator of (technological) innovation, scholars have found mixed results regarding its effect on product innovation and firm performance. In this paper, we claim that variations in R&D effectiveness can be explained by changes in a firm’s social system, in particular in its management innovation. It is still unclear how management innovation influences R&D effectiveness in terms of product innovation. In this study, we address this theoretical and empirical gap in the innovation literature. Our theoretical arguments and findings from a large-scale survey among Dutch firms show that R&D has a decreasingly positive relationship with product innovation, particularly for firms with low levels of management innovation. However, in firms with high levels of management innovation, this relationship becomes more J-shaped, especially in small and medium-sized firms. Our findings also appear to indicate that management innovation may be more important for competitive advantage than just R&D. Overall, our insights reveal that management innovation is a key moderator in explaining firms’ effectiveness in transforming R&D into successful product innovation.     

Why Do Earnings Fall with Job Displacement?

Displaced workers experience reduced earnings for many years. While this empirical phenomenon is well established, the theory of displacement‐induced earnings loss is scattered. Policy discussion often interprets displacement‐induced losses through the lens of specific human capital theory but there are other credible theories with different causal mechanisms and different interpretations. This paper reviews theories of costly job displacement and discusses their consistency with the available empirical evidence for the United States. We find that specific human capital theory and matching theory have considerable but far from conclusive empirical support. We suggest avenues for better discriminating among theories.