The intentional use of chapter XI: Lingering versus immediate filing

This paper focuses on the timing, i.e. delay or accelerate, of the declaration of Chapter XI prior to financial insolvency. Chapter XI can be declared by firms who believe that the firm can emerge from bankruptcy protection as a re-vitalized organization. The timing of its selection is proposed to be a function of the level of environmental adversity and organizational attributes, especially slack resources. Recent developments in the bankruptcy code and its usage by firms, suggest the increasing use of managerial prerogative in the selection of Chapter XI prior to financial insolvency. Chapter XI protection can allow firms the necessary time for effective reorganization if managerial intervention is exercised. As a result of a more precise timing of selection and a proactive reorganization, there will be a higher probability of re-emerging from bankruptcy as a revitalized organization.     

GOVERNANCE PATTERNS IN BANKRUPTCY REORGANIZATIONS

Recent research has suggested that effective monitoring may assist firms in preventing an eventual bankruptcy filing. Audit committees, board subgroups responsible for monitoring and evaluating the financial health of the firm, may exhibit varying degrees of effectiveness in monitoring firms' decline as a function of their composition. Another monitoring body which has become increasingly important in the corporate community is institutional investors. This study investigates the extent to which audit committee composition and institutional investor holdings are related to the incidence and nature (prepackaged plans and length of time spent in reorganization) of firms bankruptcy filings. Results demonstrate no association between affiliated director representation on audit committees or institutional holdings and the incidence of bankruptcy. These two monitoring groups are, however, associated with the nature of bankruptcy filing. Both audit committee composition and the level of institutional holdings are significantly related to a prepackaged filing and the length of time spent in reorganization during the 5-year period preceding a bankruptcy filing.     

Resolving a dilemma of signaling bankrupt‐firm emergence: A dynamic integrative view

Research summary : Predicting the emergence of bankrupt firms relying on firm signals involves a stigma‐related dilemma. On the one hand, bankrupt firms tend to send positive signals through restructuring to decouple themselves from the stigma of bankruptcy. On the other hand, the preexistence of the bankruptcy stigma may reduce the signaling effectiveness of firms' restructuring efforts, making the outcome prediction difficult. We address this dilemma by developing a dynamic integrative view to extend signaling theory, arguing that subsequent signals from key external stakeholders can effectively help evaluate bankrupt firms' quality and reduce the ambiguity in interpreting firms' restructuring signals. Using a sample of U.S. public bankrupt firms under Chapter 11 reorganization, we find evidence supporting the argument. Managerial summary : Applications of signaling theory to predict reorganization outcomes are in their infancy. The dynamic integrative framework developed in this study is useful in identifying different types of signals and predicting outcomes of firms in crisis. The results of this study can be useful for various decision makers to predict the turnaround potential of bankrupt firms. Our results show that an increase in alliance partners, institutional investors, and securities analysts following a bankrupt firm predicts the firm's reorganization outcome. Moreover, firms that are able to gain positive attention from key stakeholders will also gain positive interpretations of their strategic efforts. Signals from alliance partners and institutional investors amplify the signaling effect of a firm's de‐diversification effort in predicting its reorganization outcome. Copyright © 2015 John Wiley & Sons, Ltd.     

Linking Product Development Outcomes to Market Valuation of the Firm: The Case of the U.S. Pharmaceutical Industry*

The purpose of this research was to examine empirically the effects of new product development outcomes on overall firm performance. To do so, first product development and finance literature were connected to develop three testable hypotheses. Next, an event study was conducted in order to explore whether the changes in the stock market valuation of firms are influenced by the outcomes of efforts to develop new products. The pharmaceutical industry was chosen as the empirical context for the present study's analysis largely because the gate‐keeping role played by the Food and Drug Administration (FDA) provides a specific event date on which to focus the event study methodology. As such, this study's events were dates of public announcements of the FDA decisions to approve or to reject the New Drug Applications submitted by the sponsoring firms. Consistent with the efficient market hypothesis, this study's results show that market valuations are responsive strongly and cleanly to the success or failure of new product development efforts. Hence, one of this study's key results suggests that financial markets may be attuned sharply to product development outcomes in publicly traded firms. This study also finds that financial market losses from product development failures were much larger in magnitude than financial market gains from product development successes—indicating an asymmetry in the response of financial markets to the success and failure of new product development efforts. Hence, another implication of this study's results is that managers should factor in a substantial risk premium when considering substantial new development projects. The present study's results also imply that managers should refrain from hyping new products and perhaps even should restrain the enthusiasm that the financial community may build before the product fully is developed. The effect on firm value is severe when expectations about an anticipated new product are not fulfilled. Managers in effect should take care to build reasonable and realistic expectations about potential new products.     

Did the Retreat of UK Trade Unionism Accelerate during the 1990–1993 Recession?

It is widely believed that recessions are periods of accelerated structural change, with major reorganizations or adjustments being made under intense pressure. These changes are made to ensure the survival of firms, exploit opportunities created by difficulties facing other firms, or take advantage of temporary falls in the opportunity cost of initiating and carrying out changes. This line of argument suggests that we should expect to see firms making major changes in their investments in human capital, and in their industrial relations practices. Our results are only partially consistent with this view. What seems to be clear from the data generated by our surveys is that firms are not reluctant to make changes in their bargaining strategies and industrial relations systems. This should be no surprise. Unlike investments in plant and equipment, these changes do not require much cash, and the opportunity cost of making them is much lower in recessions than in booms. However, the observed changes in union recognition have not occurred primarily in firms that were severely affected by the recession. Increases in pay decentralization and reorganization of work-force arrangements were no more likely to be initiated by distressed firms than by firms only moderately affected by the recession. It follows, then, that the retreat of UK unionism observed during the 1990–3 recession was, in the main, a continuation of existing secular trends. The mild acceleration in the pace of change revealed by our survey may be cyclical, but the trend is unlikely to be reversed as recovery gathers pace.     

Corporate governance and the bankrupt firm: An empirical assessment

The incidence of bankruptcy has risen dramatically among firms of all types and sizes in the past decade. Little is known, however, about the effects of alternative governance structures on the propensity of an organization to file Chapter 11 bankruptcy. Relying on logistic regression for periods 5 years and 3 years prior to the bankruptcy, as well as the contemporaneous period, we examine the relationships among independent/interdependent board composition and the structure of CEO/board chairperson positions and the filing of bankruptcy. While controlling for a series of financial indicators and firm size, the results illustrate robust explanatory power for the governance variables for both lagged periods.     

Service transition: A viable option for manufacturing companies with deteriorating financial performance?

When manufacturing firms venture into services, they often do so either in reaction to deteriorating performance or to further enhance their financial position. While extant literature argues that firms are most likely to succeed with strategic change processes out of a healthy position, the majority of manufacturers have started their service maneuver in reaction to deteriorating performance. To date, no empirical studies examine whether a healthy financial situation is a necessary requirement for successful service transition. Drawing on configuration theory and employing qualitative comparative analysis, the present study demonstrates that an increasing focus on services can lead to success for both types of firms. However, depending on their financial situation, firms should tap different resource and knowledge sources to implement the service transition: Whereas healthy companies should focus on customers as a knowledge source, companies in an inferior financial situation need strong links with suppliers to turn their services transition into financial success.     

Using DEA window analysis to measure efficiencies of Taiwan's integrated telecommunication firms

Taiwan's telecommunication firms are faced with an important challenge arising from a situation in which the growth rate of telephone subscribers has gradually decreased owing to limited market size and the policy of continuous deregulation propagated by the government. To deal with the challenge, several acquisitions among telecommunication firms have taken place and have caused the three currently leading firms to capture a market share of more than 80%. Considering how acquisitions and related strategies might affect the firms, this paper uses data envelopment analysis (DEA) under constant and variable returns-to-scale to measure firms’ efficiencies over the period 2001–2005. Because there are only three firms, DEA window analysis is employed to increase the number of decision-making units so that discriminating power can be increased. According to the results, the first finding shows that the acquisitions are justified by exhibiting higher scale efficiency (but lower pure technical efficiency) in the short run. The second finding indicates that adjusting the strategies such as enlarging market share to improving financial portfolios helps firms to achieve better scale size. The third finding justifies government efforts to privatize state-owned enterprises and liberalize the market to strengthen competitiveness.     

The Form of Relationship between Firm‐Level Product Innovativeness and New Product Performance in Developed and Emerging Markets

This study compares the new product performance outcomes of firm‐level product innovativeness across a developed and emerging market context. In so doing, a model is constructed in which the relationship between firm‐level product innovativeness and new product performance is anticipated to be curvilinear, and in which the nature of this relationship is argued to be dependent on organizational and environmental factors. The model is tested using primary data obtained from chief executive officers and finance managers in 319 firms operating in the United Kingdom, an advanced Western market, and 221 firms from Ghana, an emerging Sub‐Saharan African market. The model is assessed using a structural equation model multigroup analysis approach with LISREL 8.5. In the United Kingdom and Ghana, the basic form of the relationship between firm‐level product innovativeness and business success is inverted U‐shaped, but the strength and/or form of this relationship changes under differing levels of market orientation, access to financial resources, and environmental dynamism. While commonalities are identified across the two countries (market orientation helps firms leverage their product innovativeness), differences are also observed across the samples. In Ghana, access to financial resources enhances the relationship between product innovativeness and new product performance, unlike in the United Kingdom where no moderation is observed. Furthermore, while U.K. firms leverage product innovativeness to their advantage in more dynamic environments, Ghanaian firms do not benefit in this way: here, high levels of innovation activity are less useful when markets are more dynamic. If the study's findings generalize, there are a number of implications for managers of both emerging and developed market businesses. First, managers in both developed and developing market firms should focus on determining and managing an optimal balance of novel and intensive product innovativeness within the context of their unique institutional environments. Second, for emerging market firms, a market orientation capability helps businesses leverage local market intelligence, enabling them to compete with multinational giants flocking to emerging markets, but typical developed market learning approaches may be insufficient for multinational firms when seeking to compete in emerging markets. Third, for emerging market firms, access to finances helps deliver product innovation success (although this is not the case for developed market firms, possibly due to strong financial institutions). Finally, unlike developed market firms, burdened by institutional voids at home, emerging market firms appear to be less capable of competing on an innovation front in more dynamic market conditions. Accordingly, policymakers in emerging markets should consider identifying ways to help businesses raise market orientation levels, and seek to create conditions that enhance access to financial capital (e.g., direct financing, matching grants, tax rebates, or rewarding firms that innovate creatively and intensely). Likewise, since environmental dynamism is likely to be a growing issue for emerging markets, efforts to help firms become more adept at keeping up with more agile developed market counterparts are needed.     

New Product Strategies: What Distinguishes the Top Performers?

In this second article for The Journal of Product Innovation Management , Robert G. Cooper shows that firms can be clustered according to five general types of new product strategies. Depending on the measure of success, some strategies are more successful than others. One strategy, however, stands out for its success on all measures. Others are consistently unsuccessful. The strategies are described in such ways that managers can position the strategies of their own firms and compare their results with those of the firms Professor Cooper studied.     

The plurality of co-existing business models: Investigating the complexity of value drivers

Business models are key tools to provide a means of operationalizing theories about firm and industry level strategies, and to understand the nature of value drivers and the role of marketing in these processes. In this paper we assess empirical evidence for a plurality of co-existing business models within firms by developing a typology of business models in a single industry, the New Zealand Wine industry. We examine the co-existence of the types of models using in-depth analysis of seven case firms that vary in size and ownership. Our findings show how value creation is done in the context of interactions and they provide support for multiple business models that co-exist alongside each other with varying degrees of separation. Plurality better explains the complexity of value drivers and strategies for firms in this rapidly changing industry environment, where businesses are under extreme financial pressure. Our findings challenge assumptions that firms have (or should have) a single business model thus allowing a plurality of approaches within a single firm or industry that shifts the focus from implementing strategy A or B or C, to implementing strategy A and B and/or C.     

Exploring proactive market strategies

Proactivity is an important driver of firm performance and for the creation of customer value on business-to-business markets. It is however not entirely clear what it is proactive firms actually do to achieve success. By investigating proactive firms' market strategies, i.e. the sets of activities they perform in order to create superior customer value, a holistic overview of the activities involved in proactive market strategies is provided. Through a case study of five proactive firms, proactive activities are identified. Using three strategic orientations—customer, competition, and innovation orientation—unique proactivity profiles are created, reflecting the patterns in the identified proactive activities. Through these profiles, three overarching proactive market strategies are forwarded: market shaping, customer engagement, and innovation leadership. These are proposed to act as generic proactive market strategies, representing coordinated proactive activities driven by multiple strategic orientations and aimed at creating customer value. These generic strategies help us understand of the role of proactivity in crafting high-performing market strategies by representing different routes to success.     

Capabilities as marketable assets: A proposal for a functional categorization

While it is through creating and marketing products that firms achieve success, there are also significant opportunities for them to create value by exploiting the capabilities they utilize in creating products. However, seeing capabilities in this light demands new ways of thinking about product markets and marketing policies.     

Impact of Strategic Type on Success Measures for Product Development Projects*

Does the strategic type of firm affect which success measures should be used for product development (PD) projects? This paper theorizes that it should and finds that it does because the PD projects undertaken are usually an expression of the strategic type of the firm. The purpose of this research is to affirm a 1996 survey of members of the Product Development & Management Association (PDMA) that proposes that firms' PD performance measures should vary by their strategic type. Thus, for example, prospectors, the strategic type most likely to introduce new products to new markets, should place greater importance on PD success measures consistent with their characteristic strategies of changing product lines and early market entry. In contrast, defenders, the strategic type most likely to maintain stable product lines for existing markets, should place greater importance on PD success measures consistent with their characteristic strategies of stable product lines and market penetration. Analyzers, a hybrid type between prospectors and defenders, should prefer measures consistent with their characteristic strategies for improving products and being early followers in newer markets. To relate strategic types to specific success measures for PD projects, this paper proposes a model of the relationship based on the degree of project newness to the firm and then catalogs measures of PD project success and groups them according to degree of project newness. The research findings are based on survey responses from 222 individuals who are employed by financial service providers, who identified their firms by strategic type and rated the importance of PD success measures to their firms. The importance of 21 performance measures is compared by strategic type to find significant differences among prospectors, analyzers, and defenders. This research finds several significant relationships. prospectors, for example, attach greater importance to customer satisfaction, launch timeliness, and product return on investment, all of which may be characterized as relating to a higher degree of project newness to the firm. defenders and analyzers, on the other hand, attach more importance than prospectors to measures of unit volume, cost reduction, and margin goals, all of which relate to a lower degree of project newness to the firm. In short, because prospectors seek to introduce new products to new markets, they consider important those measures, which accord with greater product and market newness. The major conclusion of this paper is that strategic type affects the importance of project performance measures and that all firms should not use the same success measures. Firms should contextualize their success in PD projects based on their strategic type. This conclusion resonates with previous findings that strategy is a key determinant of PD success, though it is infrequently included in PD success studies. This paper, therefore, challenges the implicit assumption in the mainstream of PD success literature that success can be determined without regard to firm strategy.     

The Roles of Sustainability Orientation and Market Knowledge Competence in New Product Development Success

Firms’ sustainability orientation (SO) is widely understood as a strategic resource, which can lead to competitive advantage and superior (financial) performance. While recent empirical evidence suggests a moderate and positive relationship between SO and financial performance on a corporate level, little is understood about the influence of SO on new product development (NPD) success. Building on the natural‐resource‐based view (NRBV) of the firm, we hypothesize that firms’ SO positively influences NPD success, because of efficiency gains and differentiation advantages. However, scholars have also argued that the win–win paradigm postulated by NRBV might not always hold because NPD managers might find it difficult to balance sustainability objectives with the needs of their customer and the competitive dynamics in their markets. It is, therefore, proposed that market knowledge competence (MKC) is an important capability, which helps firms to balance social and ecological objectives with economic goals such as profitability and market share. Using data from 343 international firms from 24 countries that was collected by the Product Development and Management Association, structural equation modeling results suggest that (1) SO positively influences NPD and that (2) this relationship is partially mediated by firms’ market knowledge capabilities. The findings suggest that strategic‐level SO and MKC are complementary in that they help in balancing trade‐offs between sustainaility objectives and profitability goals. In this way, the study contributes to a better understanding of how critical NPD practices can help managers to translate firms’ SO into NPD success. The article concludes by highlighting implications for product innovation managers.     

The Solar Shakeout – Capital Market Reactions to Bankruptcy Announcements in the German Solar Industry

This paper investigates how bankruptcy announcements in the German solar industry affect the stock market returns of announcing firms and their competitors. We show that German solar firms experience negative capital market reactions to their own bankruptcy announcements and to the announcements of their competitors. Cross-sectional analysis reveals that these negative information externalities are magnified by higher leverage. Further analysis also indicates that these negative information externalities are valuable predictors in short-term default probability models.     

Getting business-to-business salespeople to implement strategies associated with introducing new products and services

Strategy implementation remains a perennial challenge for firms. While several studies have examined implementation phenomena at the firm level, we know little about what firms can do to get their salespeople to implement strategies for new products and services. Understanding salespeople's individual-level implementation is of particular importance as salespeople are the frontline employees of the firm responsible for implementing strategies with customers. Drawing from motivation, opportunity, and ability (MOA) theory, this examination investigates factors impacting the implementation of strategies associated with introducing new products and services by the salesperson. We use a sample of 277 business-to-business salespeople to test our hypothesized relationships. The findings show both positive and negative moderation among the implementation MOA variables and also provide broad support for their proposed drivers. Additionally, the identified implementation facets of responsiveness and effort are found to positively impact implementation success.     

PDMA Research on New Product Development Practices: Updating Trends and Benchmarking Best Practices

Product development professionals may have the feeling that yet another buzzword or magic bullet always lurks just around the corner. However, researchers have devoted considerable effort to helping practioners determine which tools, techniques, and methods really do offer a competitive edge. Starting 30 years ago, research efforts have aimed at understanding NPD practices and identifying those which are deemed “best practices.” During the past five years, pursuit of this goal has produced numerous privately available reports and two research efforts sponsored by the PDMA. Abbie Griffin summarizes the results of research efforts undertaken during the past five years and presents findings from the most recent PDMA survey on NPD best practices. This survey, conducted slightly more than five years after PDMA's first best-practices survey, updates trends in processes, organizations, and outcomes for NPD in the U.S., and determines which practices are more commonly associated with firms that are more successsful in developing new products. The survey has the following objectives: determining the current status of NPD practices and performance; understanding how product development has changed from five years ago; determining whether NPD practice and performance differ across industry segments; and, investigating process and product development tools that differentiate product development success. The survey findings indicate that NPD processes continue to evolve and become more sophisticated. NPD changes continually on multiple fronts, and firms that fail to keep their NPD practices up to date will suffer an increasingly marked competitive disadvantage. Interestingly, although more than half of the respondents use a cross-functional stage-gate process for NPD, more than one-third of all firms in the study still use no formal process for managing NPD. The findings suggest that firms are not adequately handling the issue of team-based rewards. Project-completion dinners are for the most frequently used NPD reward; they are also the only reward used more by best-practice firms than by the rest of the respondents. The best-practice firms participating in the study do not use financial rewards for NPD. Compared to the other firms in the study, best-practice firms use more multifunctional teams, are more likely to measure NPD processes and outcomes, and expect more from their NPD programs.     

Corporate reputation and sustained superior financial performance

Good corporate reputations are critical because of their potential for value creation, but also because their intangible character makes replication by competing firms considerably more difficult. Existing empirical research confirms that there is a positive relationship between reputation and financial performance. This paper complements these findings by showing that firms with relatively good reputations are better able to sustain superior profit outcomes over time. In particular, we undertake an analysis of the relationship between corporate reputation and the dynamics of financial performance using two complementary dynamic models. We also decompose overall reputation into a component that is predicted by previous financial performance, and that which is ‘left over’, and find that each (orthogonal) element supports the persistence of above‐average profits over time. Copyright © 2002 John Wiley & Sons, Ltd.