Alliance or Acquisition? A Mechanisms‐Based,Policy‐Capturing Analysis

Research summary : While alliance researchers view prior partner‐specific alliance experience as influencing firms' subsequent alliance or acquisition decisions, empirical evidence on the alliance versus acquisition decision is surprisingly mixed. We offer a reconciliation by proposing and testing an analytical framework that recognizes prior partner‐specific experiences as heterogeneous along three fundamental dimensions: partner‐specific trust, routines, and value certainty. This allows us to use a policy‐capturing methodology to rigorously operationalize and test our mechanism‐level predictions. We find that all three mechanisms can increase the likelihood of a subsequent alliance or acquisition, and in terms of the comparative choice between alliances versus acquisitions, partner‐specific trust pulls towards alliances, and value certainty pulls towards acquisitions. We conclude with a discussion of the theoretical and empirical implications of our approach and method . Managerial summary : This study focuses on an important corporate decision: When a firm has had an alliance with another firm, how would that experience affect the likelihood of a future alliance or acquisition with that same firm? We first suggest that it will depend on three factors: the level of trust that existed in that prior alliance, the extent to which specific work routines were developed, and the degree to which the firm was able to confidently assess the value of the partner firm's resources. We then find that trust is a particularly strong predictor of future alliances, while confidence regarding value more strongly predicts future acquisitions. In this way, we demonstrate more precisely how past corporate choices can affect (consciously or unconsciously) future ones . © 2017 The Authors. Strategic Management Journal Published by John Wiley & Sons Ltd.     

Do VCs matter? the importance of owners on performance variance in start‐up firms

Adding to the corporate effect literature, we study the effect of owners on firm performance in a new context, that of venture capital firms (VCs) and the start‐up firms in which they invest. After discussing the effect that VC ownership can have on start‐ups, we estimate that start‐up‐specific, owner (VC), and year effects account for significant variance in performance (26.3 percent, 11.2 percent and 3.7 percent, respectively). The effects of industry and investment stage are not statistically different from zero. We also provide an analysis that separates the owner effect into two components: a selection component—which impacts investment—and a management component—which explains significant variance in performance. By examining the owner effect in a different institutionalized form of governance—that of the start‐up and its relationship to VC owners—our study also contributes to an understanding of the ‘ownership’ effect in the strategy literature more generally. Copyright © 2008 John Wiley & Sons, Ltd.     

Sharp Teeth or Empty Mouths? European Institutional Diversity and the Sector‐Level Minimum Wage Bite

The article explores the link between different institutional features of minimum wage systems and the minimum wage bite. We notably address the striking absence of studies on sectoral‐level minima and exploit unique data covering 17 European countries and information from more than 1,100 collective bargaining agreements. Results provide evidence for a neglected trade‐off: systems with bargained sectoral‐level minima are associated with higher Kaitz indices than systems with statutory floors, but also with more individuals actually paid below prevailing minima. Higher collective bargaining coverage can, to some extent, reduce this trade‐off between sharp teeth (high wage floors) and empty mouths (non‐compliance/non‐coverage).     

Big‐Box Stores and Urban Land Prices: Friend or Foe?

This study examined the effect of a new Walmart store on nearby U.S. urban land prices and found that, within one quarter mile of a new Walmart store locale, land prices increased by almost 39% over the four‐year development time period. Supercenters and commercial land sales were instrumental in driving the positive price effects. Robustness tests found a positive land price effect with other big‐box stores, suggesting that the land price effect was not limited to Walmart stores, but in fact, was a big‐box store effect.     

Going short‐term or long‐term? CEO stock options and temporal orientation in the presence of slack

Research summary: We draw on behavioral agency theory to explain how decision heuristics associated with CEO stock options interact with firm slack to shape the CEO's preference for short‐ or long‐term strategies (temporal orientation). Our findings suggest CEO current option wealth substitutes for the influence of slack resources in encouraging a long‐term orientation, while prospective option wealth enhances the positive effect of slack on temporal orientation. Our theory offers explanations for non‐findings in previous analysis of the relationship between CEO equity based pay and temporal orientation and provides the insights that CEO incentives created by stock options (1) enhance the effect of available slack upon temporal orientation and (2) can both incentivize and de‐incentivize destructive short‐termism, depending upon the values of current and prospective option wealth. Managerial summary: We explore how compensation design can play a role in affecting the CEO's preference for short‐ or long‐term strategic projects. When the CEOs have accumulated option wealth, they are more likely to invest in the long term. Yet when they have a large number of recently granted options with the potential to generate significant wealth in the event of successful risk taking, the CEO is more likely to prefer the short term in order to achieve personal wealth gains more quickly. The more liquid assets the firm holds, the weaker both of the aforementioned effects. An implication for boards is that they should anticipate CEO short‐termism if the CEO has been granted new options, underlining the potential negative consequences of option compensation. Copyright © 2015 John Wiley & Sons, Ltd.     

Who's in charge here? Co‐CEOs,power gaps,and firm performance

At the pinnacles of organizations, comparative tests of unity of command and shared command are nearly impossible because only one individual sits atop most organizations. In organizations led by co‐CEOs, however, such a test is possible because co‐CEOs can truly share power. But do they? Our research pits the unity‐of‐command principle against the shared‐command principle and finds overall support for the former, even within the co‐CEO context. Our sample of 71 co‐CEO pairs at publicly traded U.S. firms shows that increasing power gaps between co‐CEOs are positively associated with firm performance. This positive association wanes and turns negative, however, as power gaps become very large. We conclude that whatever benefits the co‐CEO structure might offer likely lie outside the shared command paradigm. Copyright © 2014 John Wiley & Sons, Ltd.     

Fixed‐Term Contracts: Short‐Term Blessings or Long‐Term Scars? Empirical Findings from the Netherlands 1980–2000

Using a comprehensive longitudinal dataset of prime‐age Dutch workers over the period 1980–2000, we examine how a previously held job with a fixed‐term contract influences both the likelihood and the duration of a future spell of unemployment. Analyses show that Dutch workers with fixed‐term contracts experience higher risks of future unemployment and have no shorter spells of unemployment compared to workers with regular contracts. Results also reveal that swifter employment re‐entries among men with fixed‐term contracts can be explained by their job search efforts before unemployment. Our study (partly) invalidates theoretical positions that claim that fixed‐term contracts foster employment security by shortening unemployment durations; suggesting that fixed‐term contracts are a short‐term blessing that could end, for some workers, in a recurrent unemployment trap.     

Foreign‐born academic scientists: entrepreneurial academics or academic entrepreneurs?

Although foreign‐born scholars make up a significant portion of the US professoriate, little is known about how their ‘foreign‐born’ identity directly or indirectly affects their entrepreneurial prowess. This article integrates role identity theory with theoretical arguments from social network and cultural proximity theories to examine whether foreign‐born academic scientists can better be characterized as entrepreneurial academics (strong government grant productivity) or academic entrepreneurs (strong involvement in the creation and commercialization of university‐invented technologies). Our analysis indicates that foreign‐born academic scientists seem more successful in attracting research resources, but are less successful in exploiting their inventions through entrepreneurial activities. They can therefore be best described as entrepreneurial academics. These findings may partially explain the tepid performance of many research‐intensive universities in terms of technology transfer and commercialization. We discuss the policy implications of our findings and provide guidance for academic entrepreneurs.     

Driven by aspirations,but in what direction? Performance shortfalls,slack resources,and resource‐consuming vs. resource‐freeing organizational change

Research summary : Prior literature drawing on the behavioral theory of the firm has not considered how resource constraints impact the direction of organizational change in response to performance shortfalls relative to aspirations. We argue that decreasing financial resources resulting from substantial performance shortfalls and the absence or availability of slack resources together affect the emphasis on different types of organizational change in response to performance shortfalls. Using data on the acquisition and divestment behavior of 530 companies in the information and communications technology sector from 1992 to 2014, we find that the frequency of resource‐consuming acquisitions and of resource‐freeing divestments are affected differently by performance below aspirations and that these relationships are moderated by the level of financial slack. Managerial summary : This paper examines whether firms respond to performance shortfalls with acquisitions or divestments. We argue and show that the closer the firm is to the aspired level of performance, the more likely it is to respond with resource‐consuming acquisitions to close the performance gap, whereas the further it is from aspired performance, the more likely the firm is to respond with divestments to free resources. Financial slack weakens these relationships between performance relative to aspirations and acquisitions or divestments such that it increases the likelihood of a response through acquisitions while it reduces the likelihood of a response through divestments. Copyright © 2016 John Wiley & Sons, Ltd.     

Outsourcing,Occupational Restructuring,and Employee Well‐Being: Is There a Silver Lining?

This study examines the relationship between outsourcing and various aspects of employee well‐being by devoting special attention to the role of occupational restructuring as a conveying mechanism. Using linked employer–employee data, we find that offshoring involves job destruction, especially when the destination is a low‐wage country. In such circumstances, staying employees’ job satisfaction is reduced. However, the relationship between outsourcing and employee well‐being is not entirely negative. Our evidence also shows that offshoring to high‐wage countries stimulates the vertical mobility of employees in affected firms in a manner that improves perceived well‐being, particularly in terms of better prospects for promotion.     

Good to be home? Time‐use and satisfaction levels among home‐based teleworkers

Home‐based teleworking (HbTW) has the potential to provide significant benefits to both employer and employee, but also presents considerable challenges. This paper considers HbTW among UK employees, specifically exploring distinctions in the time‐use of men and women home‐based teleworkers and the impacts of HbTW on employee satisfaction levels, using cross‐section fixed effects panel regression analysis of the British Household Panel Survey. Findings reveal that total time‐use in work activities among men and women home‐based teleworkers is relatively comparable, but the distribution significantly different. For women, housework represents a particular time constraint, reflecting continued presence of the ‘double‐shift’. Homeworkers report greater levels of satisfaction, yet they are more pronounced in respect to paid work than leisure time. Extensive hours of housework reported among women may explain these differences. Nevertheless, home‐based teleworkers report greater levels of satisfaction than other workers, suggesting considerable benefits especially for working mothers.     

Do newly public acquirers benefit or suffer from their pre‐IPO affiliations with underwriters and VCs?

We examine whether pre‐IPO affiliations affect post‐IPO corporate events, namely acquisitions. On the one hand, newly public acquirers may benefit from their pre‐IPO affiliations through residual signaling value or/and resource‐related benefits. On the other hand, newly public acquirers may suffer from those affiliations when conflicts of interests arise during the post‐IPO period. Equity underwriters may have incentive to promote non–value‐creating acquisitions (Type II error), and venture capitalists (VCs) may have incentive to forgo strategically important acquisitions (Type I error). Drawing on a sample of 4,029 acquisitions made by 717 newly public firms, we find that on average the announcement of an acquisition by a newly public acquirer elicits a positive response from investors. The market views more favorably the acquisitions announced by newly public acquirers associated with prestigious equity underwriters, but this reaction becomes negative when the lead underwriter is retained as the acquisition advisor. The market reacts more favorably to acquisitions announced by VC‐backed newly public acquirers, but only when those VCs are committed to a longer lockup period. The effects of pre‐IPO affiliations on expected returns are stronger for newly public acquirers with a high intangible resource base and persist throughout the three‐year post‐IPO period (across each subsequent acquisition announcement). Copyright © 2010 John Wiley & Sons, Ltd.     

What Is a Tree Worth? Green‐City Strategies,Signaling and Housing Prices

We investigate the correlation between curbside tree plantings and housing price movements in Philadelphia from 1998 to 2003, comparing two programs, one by the Philadelphia Horticultural Society (PHS) that requires block-group effort that focuses on low-income neighborhoods and the other by the Fairmount Park Commission that is individual-based without specific target areas. A 7 to 11% price differential is identified within 4,000 feet of the Fairmount tree plantings. We argue that this is largely driven by either social capital creation or a signaling mechanism, on top of an intrinsic tree value (around 2%). Findings using the PHS tree program suggest that development of social capital or environmentally conscious behavior might be a less important channel. Any positive changes brought by the PHS tree plantings were not detected with sufficient statistical power.     

Patent‐backed securities in pharmaceuticals: what determines success or failure?

Recently, there has been growing interest in new financial tools that leverage on intellectual property assets, such as patent‐backed securitizations (PBSs). In this paper we study the potential determinants leading to the success or failure of securitization deals having patents as underlying assets. We develop a conceptual framework that we test on two well‐known US patent securitization deals in the pharmaceutical industry, by using a fuzzy set approach. Results highlight that factors related to the market size, level of competition and expected market life of the assets underlying a PBS can reasonably increase the probability that a deal will succeed. Moreover, a higher quality of the underlying invention and longer patent residual life are likely to reduce the risk of technical obsolescence and sales losses. Finally, the strength of the credit enhancement mechanisms, the flexibility of the deal architecture and the adoption of a diversification strategy are other key factors determining the success of the securitization.     

Collaboration,Co‐operation or Collusion? Contrasting Employee Responses to Managerial Control in Three Call Centres

This article draws on ethnographic studies of three call centres in a single, medium‐sized insurance company to explore how employees responded differently to similar techniques of managerial control. Considering recent discussions of compromise in the workplace, we identify a response to control that sits between implacable resistance and supine acquiescence. We style this collusion and distinguish it from other states of compromise, such as collaboration and co‐operation. Drawing on the work of Edwards et al., we argue that a dynamic and politically sophisticated collusive compromise can exist between parties whose control and developmental concerns are in conflict. From this position, we extend existing theories of compromise: (a) to accommodate different permutations of control and developmental concerns; and (b) to predict when collaboration, co‐operation and collusion are likely to occur under ostensibly similar conditions of managerial control.     

Pro‐Social or Pro‐Management? A Critique of the Conception of Employee Voice as a Pro‐Social Behaviour within Organizational Behaviour

For many years, the employment relations (ER) literature took the perspective that employee voice via trade unions could channel discontent and reduce exit, thereby improving productivity. In organizational behaviour (OB) research voice has also emerged as an important concept, and a focus of this research has been to understand the antecedents of the decision of employees to engage or not engage in voice. In OB research, however, voice is not viewed as it is in ER as a mechanism to provide collective representation of employee interests. Rather, it is seen as an expression of the desire and choice of individual workers to communicate information and ideas to management for the benefit of the organization. This article offers a critique of the OB conception of voice, and in particular highlights the limitations of its view of voice as a pro‐social behaviour. We argue that the OB conception of voice is at best partial because its definition of voice as an activity that benefits the organization leaves no room for considering voice as a means of challenging management, or indeed simply as being a vehicle for employee self‐determination.     

Who's going to provide the funding for high tech start‐ups? A model for the analysis of determinants with a fuzzy approach

The aim of this paper is to understand which factors influence the financial structure of Italian young, high‐tech, innovative firms, and to attempt to formulate a predictive model to determine the ideal financial strategy for a given entrepreneurial project. Venture capital is the most relevant form of financing for high‐technology start‐ups in the United States and is frequently cited as crucial in the technological leadership of the US economy. However, banks are also moving toward establishing a role in capital provision, making innovative offers to meet the financial needs of start‐ups, especially in bank‐centric countries such as Italy. Is it possible to build a robust and ordered set of determinants of the financial strategy of new technology‐based firms? Is it possible to gather them in a model that allows a rigorous analysis? Is it possible to summarize the analysis in a synthetic value of orientation to one or other form of financing? Through a systematic review of the literature and comparison between investors, we have taken the first step toward answering these questions. This work develops a methodology to solve the problem and builds a provisional fuzzy‐set based tool to permit the rationalization of the relevant information and effectively support the reduction of qualitative evaluation of complex phenomena into simple and measurable dimensions. The structure of the model is hierarchical but simple. We consider, as the first level of main determinants (sub‐dimensions), the figure of the entrepreneur, the nature of the project, the financial scenario, and the market characteristics. For each of these, we provide deep insights about their relation with finance. We have verified the value of this approach in the context of ten business cases, by matching the financial strategies undertaken by entrepreneurs and the obtainable conclusions with the fuzzy tool. However, the definition of a robust, predictive model requires more consistent empirical validation, which we intend to develop from this work.     

Fixed Come Hell or High Water? Selection and Prepayment of Fixed‐Rate Mortgages Outside the United States

We examine the decision to prepay a fixed‐rate mortgage in the United Kingdom, Canada, Ireland, Australia and New Zealand. These countries are characterized by having substantial fees which are associated with breaking a fixed‐rate mortgage. We develop a model which allows for fluctuations both in banks’ wholesale rates and credit spreads. We find that households can achieve economically significant benefits both from following an optimal prepayment strategy contingent on the break fee used by their bank and also by selection of fixed interest rate term and (where available) break fee structure.