Joining the pack or going solo? A dynamic theory of new firm positioning

The question of new firm positioning in the marketplace and entrant's subsequent long-term performance lies at the heart of strategic entrepreneurship. We suggest a dynamic theory of new firm positioning that hinges on an important feature of the competitive environment: industry-level product diversity. The key argument is that industry-level product diversity drives imitation or differentiation at entry, which in turn shapes the exit likelihood of new entrants. So, in our theory, the extent of the new entrant's product portfolio overlap with all the industry's incumbents takes center stage. Support for our logic is obtained from the analysis of the life histories of 640 British motorcycle producers during the period 1899–1993.     

Are the determinants of capital structure country or firm specific?

In this paper we investigate the capital structure determinants of Greek, French, Italian, and Portuguese small and medium-sized enterprises (SMEs). We compare the capital structures of SMEs across countries and differences in country characteristics, asset structure, size, profitability, risk, and growth and how these may impact capital structure choices. The results show that SMEs in these countries determine their capital structure in similar ways. We attribute these similarities to the country institutional and financial characteristics and the commonality of their civil law systems. However, structural differences arise due to firm specific effects. We find that size is positively related to leverage while the relationship between leverage and asset structure, profitability and risk is negative. Growth is not a statistically significant determinant of leverage for any of the four countries. Our main conclusion is that firm-specific rather than country facts explain differences in capital structure choices of SMEs.     

Drug testing and corporate responsibility: The “ought implies can” argument

Most of the debate about drug testing in the workplace has focused on the right to privacy. Proponents of testing have had to tackle difficult questions concerning the nature, extent, and weight of the privacy rights of employees. This paper examines a different kind of argument — the claim that because corporations are responsible for harms committed by employees while under the influence of drugs, they are entitled to test for drug use. This argument has considerable intuitive appeal, because it seems, at least at first glance, to bypass the issue of privacy rights altogether. The argument turns, not on rights, but on the nature and conditions of responsibility. We may therefore call it an ought implies can argument.In spite of its initial appeal, however, the argument does not succeed in circumventing the claims of privacy rights. Even responsibility for the actions of others does not entitle us to do anything at all to control their behavior; we must look to rights, among other things, to determine what sorts of controls are morally permissible. In addition, the argument rests on unjustified assumptions about the connection between drug testing and the prevention of drug-related harm. Jennifer Moore is Assistant Professor of Philosophy at the University of Delaware. She does teaching and research in business ethics and business law and is co-editor of the anthology, Business Ethics: Readings and Cases in Corporate Morality, published by McGraw-Hill.     

‘Never let a good crisis go to waste’: moral entrepreneurship,or the fine art of recycling evil into good

Moral entrepreneurship is the fine art of recycling evil into good by taking advantage of situations given or constructed as crises. It should be seen as the ultimate generalisation of the entrepreneurial spirit, whose peculiar excesses have always sat uneasily with homo oeconomicus as the constrained utility maximiser, an image that itself has come to be universalised. A task of this essay is to reconcile the two images in terms of what by the end I call ‘superutilitarianism’, which draws on the lore of both superheroes and utilitarianism. After briefly surveying the careers of three exemplars of the moral entrepreneur (Robert McNamara, George Soros and Jeffrey Sachs), I explore the motives of moral entrepreneurs in terms of their standing debt to society for having already caused unnecessary harm but which also now equips him with the skill set needed to do significant good. Such a mindset involves imagining oneself a vehicle of divine will, which would be a scary proposition had it not been long presumed by Christians touched by Calvin. In conclusion, I argue that moral entrepreneurship looks most palatable – and perhaps even attractive – if the world is ‘reversible’, in the sense that every crisis, however clumsily handled by the moral entrepreneur, causes people to distinguish more clearly the necessary from contingent features of their existence. This leads them to reconceptualise past damages as new opportunities to assert what really matters; hence, a ‘superutilitarian’ ethic that treats all suffering as less cost than investment in a greater sense of the good.     

“Greed is good” ... or is it? Economic ideology and moral tension in a graduate school of business

This article reports the results of an exploratory investigation of a particular area of moral tension experienced by MBA students in a graduate school of business. During the first phase of the study, MBA students' own perceptions about the moral climate and culture of the business school were examined. The data gathered in this first part of the study indicate that the students recognize that a central part of this culture is constituted by a shared familiarity with a set of institutionally reinforced premises about human behavior and motivation including the ideas that: 1) people are self-interested utility-maximizers, 2) individuals should be unimpeded in their pursuit of their own self-interest through economic transactions, and 3) virtually all human interactionsare economic transactions. The data further indicated that the business students experience a degree of tension between this ethic of self-maximizing and the everyday ethics prevalent in our broader culture, in which altruism and selflessness are central elements. The final section of the study was an effort to see whether and how these institutionally sanctioned premises were integrated into the students' arguments about the relationship between self-interest and social responsibility.Janet S. Walker is currently a PhD candidate in The University of Chicago's Committee on Human Development. Previously, Ms. Walker worked in both public and private sector organizations, conducting economic research in the United States and abroad. Ms. Walker's current research focusses on understanding economic activity as meaningfully embedded in a psychological and cultural context. Ms. Walker is also pursuing certification in clinical psychology.     

Venture capital reputation: a blessing or a curse for entrepreneurial firm innovation—a contingent effect of industrial distance

This study investigates whether venture capital reputation is a blessing or a curse for entrepreneurial firm innovation by using data from 1553 observations of venture capital investments on entrepreneurial firms in China’s New Over-the-Counter (OTC) Market. Advantages that venture capital brings to entrepreneurial firms have been widely acknowledged in extant research. However, our research emphasizes the potential resource outflows rather than inflows when firms are embedded in a shared reputable venture capital, and finds that the curse effect of venture capital reputation on entrepreneurial firms is manifested. Furthermore, we develop the concept of venture capital “intra-industrial reputation” and “extra-industrial reputation” to give a contingent answer to the “blessing or curse” question. The conclusions are drawn indicating that the curse effect is contingent on industrial distance. Venture capital intra-industrial reputation is positively linked to entrepreneurial firm innovation, whereas extra-industrial reputation exerts a strong negative impact, which is responsible for the curse effect.     

Reversing the lead,or a series of unfortunate events? NYMEX,ICE, and Amaranth

A number of studies compare the efficiency and transparency of floor trading with automated/electronic trading systems in the competition for order flow. Although most of these studies find that electronic systems lead price discovery, a few studies highlight the weaknesses of electronic trading in highly volatile market conditions. A series of unusual events in 2006, sparking extreme volatility in natural gas futures trading, provide an ideal setting to revisit the resilience of trading system price leadership in the face of high volatility. We estimate time‐varying Hasbrouck‐style information shares to investigate the intertemporal and cross‐sectional dynamics in price discovery. The results strongly suggest that the information share is time‐dependent and contract‐dependent. Floor trading dominates price discovery in the less liquid longer‐maturity contracts, whereas electronic trading dominates price discovery in the most liquid spot‐month contract. We find that the floor trading information share increases significantly with realized volatility. © 2009 Wiley Periodicals, Inc. Jrl Fut Mark 29:1130–1160, 2009     

Official bailouts,moral hazard and the ‘speciality’ of the international interbank market

We analyse the evolution of emerging market loan spreads at a more disaggregated level than other studies on the subject, providing statistical support to the assumption of the ‘speciality’ of the international interbank market, to the extent that the pricing of interbank credit is insensitive to the nature (public or private) of the borrower. In sharp contrast, the public or private nature of other borrowers, such as corporates or financial firms, causes significant differences in spreads. These results could be interpreted as evidence of the possible role played by implicit government guarantees in the international interbank market, which lower the incentives for participants to monitor counterpart risk very closely. Furthermore, the specificity of banks is witnessed by the fact that only spreads on loans to emerging market banks have clearly declined following the 1995 Mexican bailout, whereas evidence on the pricing of lending to corporates and financial firms is more ambiguous. Although, on the one hand, this might support the view that financial assistance from the IMF gives rise to moral hazard, on the other hand, contrary to expectations, spreads on loans to Asian banks, among the major candidates in the current policy debate on moral hazard, have been unaffected by the IMF's response to Mexico's crisis.     

Making implicit CSR explicit? Considering the continuity of Japanese “micro moral unity”

While there are many studies that address how well Japanese companies have adopted explicit CSR practices, our understanding of their own views on such practices is still limited, particularly of the difference in their views before and after the process of making implicit CSR explicit. The present research thus aims to address this apparent change by providing comparative case studies of two Japanese companies selected from two different time periods. The findings indicate there is a continuity observable in the mindset of these companies not a change. This contradicts existing literature and suggests that the process of making CSR explicit has not been accompanied by any real change in their mindset. The result shows that ethically questionable practices have been going on behind the explicitly articulated CSR policies and implies the difficulties of delegating the power to address societal issues to business organisations. This is important particularly now when the expectations of the public regarding the responsibilities of business towards society are on the rise.     

Implementation of interorganizational cost management and its infrastructure: the case of a Korean ‘Chaebol’ firm

In this paper, purchasing innovation in the case of a distribution company is analysed from an interorganizational cost management (IOCM) perspective. In this company, purchasing costs play an important strategic role. This study suggests that a new practice of IOCM is necessary that is suitable for Korea's economic circumstances, including the family-controlled conglomerates (Chaebols) that dominate the entire economic system. The strong need to reduce purchasing costs within Chaebols and the Korean government policy that promotes joint growth of large and small firms are crucial factors in the successful implementation of IOCM practices. We also discuss the infrastructure that enables effective IOCM in the long term, thereby adding new findings to academic research in the area, and practical implications of this benchmark case for other companies planning purchasing innovations.     

Morality or economic interest? The impact of moral motives and economic factors on the purchase of fair trade groceries

In this article, we compare the impact of moral motives and economic factors on the purchase of fair trade groceries. Moral motives are measured by three different constructs, which are derived from different theoretical perspectives: one from the classical theory of attitude, one from the subjectively expected utility theory and one from the norm‐activation model. The empirical results of the analysis show that moral motives as well as economic factors are important determinants for explaining the purchase of fair trade groceries. Furthermore, the study indicates that the impact of moral motives is greater than that of economic factors, and among the moral factors, the personal norm is especially explanatorily powerful.     

Zimbardo's “Stanford Prison Experiment” and the relevance of social psychology for teaching business ethics

The prevailing pedagogical approach in business ethics generally underestimates or even ignores the powerful influences of situational factors on ethical analysis and decision-making. This is due largely to the predominance of philosophy-oriented teaching materials. Social psychology offers relevant concepts and experiments that can broaden pedagogy to help students understand more fully the influence of situational contexts and role expectations in ethical analysis. Zimbardo's Stanford Prison Experiment is used to illustrate the relevance of social psychology experiments for business ethics instruction. F. Neil Brady is an Associate Professor of Management at San Diego State University. He has published a dozen articles in the field of business ethics, three of which have appeared in the Academy of Management Review. Jeanne M. Logsdon is an Assistant Professor of Management at Santa Clara University. Her research on various aspects of corporate social performance has appeared in the Journal of Business Ethics, Research in Corporate Social Performance and Policy, and California Management Review.     

“Social credit effect” in a sharing economy: A theory of mind and prisoner's dilemma game theory perspective on the two-way review and rating system

Using random samples, we conducted three studies to explore the relationships among interpersonal mentalizing in predicting future sharing economy service usage. The primary focus of this research was to examine Uber passengers' theory of mind in a broader theoretical base of human abilities. The results confirm the dimensions of interpersonal mentalizing such as their experience with the sharing economy service and their current star ratings from the Uber driver. In addition, this study confirms that the dimensions of interpersonal mentalizing are dependent on the situation and the ratings they received from the Uber driver. In extreme rating situations (1-star rating), interpersonal dimensions did not have an effect on their negative beliefs about the two-way evaluation system. However, with moderate (3-star) and high ratings (4.75 and above star rating), the interpersonal dimensions such as nonverbal cues and the ability to shape behaviors and interactions serve as determinants of Uber passengers' belief in the evaluation system, which then leads to their future usage of the sharing economy services. In sum, these findings shed light on the complementary role of the autonomous abilities of Uber passengers to improve their star ratings, which then leads to their future usage of sharing economy services.     

Commentary on: “Toward a theory of agency and altruism in family firms”

Agency theory would predict a low incidence of agency costs within family firms because of the fusion of ownership and control. The concept of altruism challenges this oversimplification. However, the interesting findings by Schulze et al. rely upon two assumptions that should be examined in future research.     

United Announces “Discovery of Califormia”, a Special Promotion For the New Year

United Airlines has announced the launch of its “Discovery of California” promotion, which will be first available on its Beijing to Los Angeles route in the New Year. For the whole month of January, 2005, passengers will be able to fly roundtrip from Beijing to Los Angeles for just RMB4,980 in Economy Class with United Airlines. In order to add more fun to the trip to California, United is also giving each passenger one free ticket for admission to Universal Studios Hollywood, valued at RMB400.     

Business marketing in France: can the case be made for “French exceptionalism” or is it just a slight variation?

Purpose: The aim of this article is to elucidate the state of B-to-B marketing research in France by conducting a review of theoretical and empirical studies in this field that have been published over the last three decades.

Methodology/approach: Authors identified relevant literature sources, and proceeded with classifying the publications according to their main theme of study (as determined by reviewing the topic, the abstract, and/or keywords). To extract the main articles, authors explored multiple electronic databases, including Source Premier (EBSCO), Elsevier Science Direct, Google Scholar, and Cairn.info. This methodology has allowed comparisons both in time and in relation to similar works done in other countries. The analysis focuses on the main contributions of French literature in the B-to-B domain and establishes that progress has been made in understanding the issues of B-to-B marketing in France, as well as in the development of the theory in this field.

Findings: The review shows that B-to-B marketing research in France, although under-represented in relation to its B-to-C counterparts, is gradually emerging from the shadows and covers important topics that are increasingly diverse and varied. By identifying the main topics studied by French B-to-B marketing researchers, this work advances this academic discipline while also providing valuable information.

Originality/value: This study is the first attempt to conduct an in-depth examination of the state of B-to-B marketing research in France. Findings yielded by this literature review would be beneficial to both B-to-B marketing researchers and practitioners and promotes this research field.