Family ownership and firm performance: Influence of family management,family control,and firm size

This study examines the relationship between family ownership and firm performance by considering the influence of family management, family control, and firm size. Using proxy data of 786 public family firms in Taiwan during 2002–2007, this study found that family ownership is positively associated with firm performance. The positive association is strong particularly when family members serve as CEOs, top managers, chairpersons, or directors of the firms; however, the association becomes weak when family members are not involved in firm management or control. The findings suggest that the potential family-ownership effects are more likely to be realized when family ownership is combined with active family management and control. In addition, the association between family ownership and firm performance is stronger in small- and medium-sized enterprises (SMEs) than in large companies.     

Phosphate rock

Large increases in the price of phosphate rock on a permanent basis are unlikely to occur as a result of action by a producer cartel. The reasons for this conclusion include the size of America production and the ability of consumers to resist price increases by lowering consumption.     

Unimodality of price-setting newsvendor's objective function with multiplicative demand and its applications

We present a general solution framework for the price-setting newsvendor problem with a multiplicative stochastic demand. Under mild assumptions, such as increasing price elasticity on the mean demand function and increasing generalized failure rate on the distribution of the random factor, we first prove that both the profit function with respect to price and its derived function with respect to order quantity are quasi-concave. Three applications are then studied under our solution framework: (1) We consider a wholesale price only contract by which a manufacturer sets a wholesale price and a newsvendor determines an order quantity and the retail price, and show that the manufacturer's profit function is unimodal with respect to retailing price or stocking factor under certain conditions. (2) We consider a newsvendor problem in which the demand depends on both the retail price and the level of sales effort, and the cost exerting the sales effort is proportional to the order quantity; we prove that there exists a unique pair of price and sales-effort levels that maximize the total profit. This result is established under a set of mild assumptions on the demand and cost functions. (3) We identify a property in the single-period profit function that satisfies Condition 1 of Huh and Janakiraman (2008), which in turn guarantees the optimality of (s, S) policy for an infinite stationary dynamic inventory-price control system with lost sales and fixed order costs. Finally, the unimodality of the newsvendor problem with a general stochastic and price-sensitive demand is studied.     

传统品牌与网货品牌竞争下的多渠道供应链定价研究

基于传统制造商品牌的双渠道供应链,引入网货品牌的网络直销渠道,构建了两个品牌竞争下的多渠道供应链定价模型。并考虑了两条网络渠道的双重搭便车行为,通过Nash博弈得到供应链成员在分散和集中式决策下的均衡策略。研究表明各博弈方的最优定价和利润是关于渠道间及品牌间交叉价格弹性系数的增函数,且渠道竞争的影响显著于品牌竞争;两个制造商的搭便车行为与自身的最优定价和利润呈正相关,但它们的相互影响取决于直接价格弹性系数;搭便车行为对零售商是不利的。最后采用价格加成契约来协调多渠道供应链,以弥补分散决策下双重边际效应带来的损失。     

Retailer's pricing,credit and inventory policies for deteriorating items in response to temporary price/credit incentives

It is the purpose of this paper to model the retailer's profit-maximizing retail promotion strategy, when confronted with a vendor's trade promotion offer of credit and/or price discount on the purchase of regular or perishable merchandise. At issue is the determination of the three main elements of the retailer's promotion strategy, namely (i) the size of the special order to be placed from the vendor, under the different types of possible trade incentives offered; (ii) the price and/or credit-terms incentives to be passed on to its own customers to stimulate demand on a temporary basis; and (iii) the quantity to be sold under these one-time-only conditions.     

Mean-variance analysis of Quick Response Program

Quick Response Program (QRP) has been well established in fashion supply chains. It is known that QRP may not be equally good to all channel members and some measures have to be taken in order to achieve a win–win situation. However, little is known about the corresponding level of risk associated with QRP and some proposed measures. In light of this, we study QRP via a mean-variance (MV) approach. We illustrate how the measures such as price commitment policy, service-level commitment policy, and buy-back policy can be adjusted to achieve the MV win–win situation in which the channel members can be better off with considerations of both expected profit and risk. Numerical analyses are included and the analytical conditions for achieving both the supply chain channel coordination and the MV win–win situation are derived. Managerial insights are generated.     

Proof of nonparticipation in a price fixing conspiracy

When a group of firms colludes on price, the industry price will rise even when there are some firms that do not participate in the conspiracy. If the government or private parties file antitrust suits, the noncolluders face the problem of establishing their innocence since their prices rise along with those of the colluders. We propose a simple output test. Under various models of oligopoly pricing—Bertrand, Cournot, and Stackelberg—we show that the colluders restrict their output while the noncolluders take advantage of the higher price by expanding their outputs. Thus, distinguishing between colluders and noncolluders involves simply observing the output behavior of the industry members.The authors appreciate the support of the Public Policy Research Center at the University of Florida. We regret that B&R Associates is purely imaginary as is the industry.     

When Do Large Buyers Pay Less? Experimental Evidence

The rise of mega‐retailers has precipitated a growing literature on large‐buyer discounts. According to Rotemberg and Saloner [1986] and Snyder [1998], large buyers' ability to obtain price discounts depends on their relative size and the degree of seller competition. I test experimentally implications of this theory concerning the number of sellers and the sizes of buyers in the market. The results track the comparative‐statics predictions to a surprising extent. Subtle changes in the buyer‐size distribution or number of sellers can create or negate large‐buyer discounts. The results highlight the previously unexplored role of the demand structure in determining buyer‐size discounts.     

Leveraging affiliations by marketing to and through associations

Associations offer a wide range of benefits to their members and thus offer a rich source for understanding relationship marketing practices. Yet, the marketing academic literature is devoid of any frameworks that help us understand the process of marketing to and through associations at the firm level. What are the appropriate dimension(s) of characterizing associations, and how might they be best classified? What are organizational factors that foster or hinder such characterizations, and, what are their consequences and implications?Based on literature review and field interviews with association executives and related exploratory research, we uncover “affinity strength,” or members' attachment to the association, as the key dimension distinguishing associations. We then test to determine antecedent factors (association systems characteristics) that foster or hinder affinity strength as well as its consequences and implications. The major study involved a survey of executives of a wide range of associations, selected from the Encyclopedia of Associations.Certain association systems characteristics do predict affinity strength. Also, affinity strength's relationship with some of the antecedents as well as consequential variables was shown to be stronger or weaker, contingent upon the type of association (i.e., Professional, Cause-based, Common Interest, or Demographic) being considered. Overall, however, attributes of associations (e.g., association systems and outcomes), rather than association types, were more critical in explaining several phenomena pertaining to marketing to and through associations.     

Concurrent pricing and lot sizing for make-to-order contract production

This paper develops a model for the simultaneous (i.e. concurrent) determination of the inventory and pricing policies of a supplier, which produces and supplies a product to a buyer, on the basis of a contractual agreement, calling for the delivery of a specific quantity periodically. Assuming that the customer is rational, i.e. it follows its own optimal purchasing policy, the objective of the supplier is to determine the product's selling price, in conjunction with an appropriate production/inventory policy, so that a predetermined gross profit level is achieved. It is further assumed that the supplier's production batch size is an integer multiple of the buyer's order quantity. In formulating a mathematical model of this situation, the interactions between the product's price, the buyer's economic order quantity and the supplier's selling price, costs and profit are taken into account. For solving this model, a simple iterative algorithm is proposed, which is illustrated through a numerical example. Sensitivity analysis performed on the model demonstrates that it is relatively robust and quite insensitive to errors in estimating the buyer's ordering to carrying cost ratio on the part of the producer.     

A comparative analysis of layoff announcements and stock price reactions in the United States and Japan

Downsizing and layoffs are an important mechanism for U.S. firms to cope with their strategic and economic environment. In contrast, the Japanese tradition of lifetime employment limits the ability of firms to employ layoffs as a strategic measure, relegating its use to conditions of financial distress. This paper provides the first comparison of layoffs in Japan and the United States and examines stock price reactions to layoff announcements in each country from 1990 to 1994. Agency theory and Aoki's cooperative game theory are employed to discuss differences in the governance structures of U.S. and Japanese firms and their implication for stock price reactions. Results show that layoff announcements trigger negative returns for both U.S. and Japanese firms. Specifically, layoff announcements of U.S. firms are associated with a negative 1.78 percent abnormal return, while layoff announcements for Japanese firms are associated with a negative 0.56 percent abnormal return. To better understand the impact of layoffs, this study examines the relationships between stock price reactions and various layoff characteristics (such as whether the layoff is proactive or reactive or whether the layoff is the first in the industry). Implications of the findings are discussed. © 1997 John Wiley & Sons, Ltd.     

Product price and performance level in one market or two separated markets under various cost structures and functions

Market characteristics, including intrinsic demand and customer sensitivity on price and product performance level, are distinct at different markets. Comparisons of various product development strategies in one market or two geographically separated markets are conducted for three classes of products: development intensive products (DIPs) with constant unit cost, marginal cost-intensive products (MIPs) with constant fixed cost, and marginal and development intensive products (MDIPs) with non-constant unit cost and fixed cost. Results show that larger demand size, less customer sensitivity on price and/or more sensitivity on performance level lead to more profit, a higher sale price and a not-lower product performance. The customer reservation or the saturation performance level should be generally adopted though the optimal performance level does exist occasionally. Unit cost and/or fixed cost must increase in performance at an increasing rate for the existence of one optimal performance level. Due to the impact of demand size, one high-end (low-end) MDIP or DIP could be introduced into one low-end (high-end) market at a different price if the demand size is significantly large in the low-end market. For DIPs, offering one niche high-end product is not worse than offering the low-end product into two markets. For MIPs with negligible fixed cost, the product line strategy is not worse than the standard product development strategy. Additionally, the product cost reduction approach adopted in one product line has significant effects on the best product development strategy and sequence.     

Compatibility and competition in airlines demand side network effects

Network effects arising in air transport markets are usually viewed as resulting from the implications of joint production on the cost side. In this paper, we focus on network effects originating on the demand side. We consider a network that links three cities involving two direct and one indirect connection. Two carriers, with asymmetric traffic rights on this network compete sequentially: at the first stage, they choose their departure times; at the second, they set prices. We show that in order to compensate its network disadvantage the ‘weak’ carrier chooses its departure time as close as possible to its competitor's. This is in contrast to the usual maximum differentiation principle. The network effect intensifies price competition. Depending on the size of the market and on consumers valuation of waiting time, various subgame perfect equilibrium configurations are exhibited.     

Personalized pricing and price fairness

Mobile web technology enables discriminatory, or personalized, pricing for many more consumer good categories than has traditionally been the case. Setting prices according to individual valuations, however, generates adverse consumer reaction unless consumers are invited to participate in the price-formation process. Consumer perceptions of price fairness are key to the sustainability of any discriminatory pricing regime. Perceptions of price fairness, in turn, are hypothesized to be shaped by “self-interested inequity aversion” in which prices tend to be regarded as unfair, and purchase probabilities fall, if others are perceived to pay a lower price, while prices tend to be regarded as more fair, and consumers more likely to purchase, if inequity is in the buyers favor. Our experimental data also shows that the implications of inequity aversion for sellers can be at least partially reversed if consumers are allowed to participate in the price-formation process by negotiating the price they pay. The primary implication of our findings is that, in order to be viable, any system of discriminatory pricing for consumer goods should invite consumers to have a stake in the price they pay. Such participatory pricing may provide one way out of the current trap of Hi–Lo, or promotional, pricing that neither retailers nor manufacturers regard as sustainable.     

Sharing the wealth: social comparisons and pay dispersion in the CEO's top team

The antecedents and consequences of pay dispersion are studied using theory that focuses on the social comparisons that occur among members of the CEO's top team. Results from a sample of large public firms indicate that when members of this elite group were similar on a variety of dimensions, and thus likely to compare their pay, the board allowed less dispersion. In addition, pay dispersion was negatively related to company performance, particularly when it exceeded what could be justified by characteristics of the industry, firm, or team. But the strength of that relationship depended on how uniformly members of the team would benefit from subsequent performance gains. Specifically, the negative effect was particularly strong in firms where major differences in compensation—that is, some executives were given significantly more stock options—combined with a volatile stock price to provide only a few team members with the opportunity to realize very large financial gains in the future. The study demonstrates that the social‐psychological factors that affect comparisons among members of the CEO's top team impact the board's pay setting process, which in turn affects pay dispersion, and ultimately firm performance. Copyright © 2010 John Wiley & Sons, Ltd.     

CPF stocks: Prices,returns and volatility

We identify a unique phenomenon in the Central Provident Fund (CPF) stocks where stock prices increase in the absence of fundamental changes in firm value. CPF stocks are stocks endorsed by the Central Provident Fund Board in Singapore as approved investment for its members. CPF stocks offer significant price appreciation and value preservation as well as abnormal returns in the bull market before the October 1987 market crash. We find evidence of noise trading in bull markets and price pressure effects that persist through bearish market conditions.The authors are from the Department of Finance and Banking, National University of Singapore.     

Local impacts of a global crisis: Food price transmission,consumer welfare and poverty in Ghana

This paper takes a local perspective on global food price shocks by analyzing food price transmission between regional markets in Ghana. It also assesses the impacts of food price increases on various household groups. Taking the 2007–2008 global food crisis as an example, we show that prices for domestic grain products are highly correlated with world market prices. This is true both for products for which Ghana is highly import-dependent (e.g., rice) and the products for which Ghana is self-sufficient (e.g., maize). The econometric results also show that price transmission is high between regional producer markets and markets located in the country’s largest cities, and the distance between producer and consumer markets and the size of consumer markets matter in explaining the price transmission. The welfare analysis for households as consumers shows that the effect of world food prices appears relatively modest for the country as a whole due to relatively diverse consumption patterns within country. However, the national average hides important regional differences, both between regions and within different income groups. We find that the poorest of the poor—particularly those living in the urban areas—are hardest hit by high food prices. The negative effect of the food crisis is particularly strong in northern Ghana. The main explanations for this regional variation in the price effect is the different consumption patterns and much lower per capita income levels in the North of Ghana compared to other regions in the country.     

A note on dominant firm market share and economic performance

The hypothesis of a positive concentration-profits relationship has been one of the most thoroughly tested in economics. Market share has been used in a number of these studies as a measure of horizontal dominance by a firm in an industry. Although these studies have shown empirically that a positive relationship exists between market share and rates of return, little theoretical evidence for this relationship exists. The price leadership model can be used to show that a continuous, direct relationship exists between market share and competitive injury. From a simulation exercise based upon the price leadership model, a positive association is demonstrated between increasing market share of the dominant firm (or collusive leading firms) and increasing competitive injury (as evidenced by a greater divergence between the competitive versus price leadership price-output decisions). This exercise establishes market share as a fundamental structrual variable in describing the short run competitiveness within the industry. The results of this model imply that intra-industry cross section studies, utilizing a carefully defined price leader(s) and price followers dictomy, should yield better statistical fits. At the present stage of empirical testing, however, only the roughest approximations using rather arbitrary definitions of the price leader-follower dichotomy have been made.     

Airline Market Power and Intertemporal Price Dispersion

This paper analyzes the empirical relationship between market structure and price dispersion in the airline markets connecting the U.K. and the Republic of Ireland. Price dispersion is measured by the Gini coefficient, calculated using fares posted on the Internet at specific days before takeoff. We control for passengers' heterogeneity in their purpose of travel, as well as for such peak periods as Christmas and Easter. Our finding of a negative correlation between competition and price dispersion suggests that competition is likely to hinder the airlines' ability to price discriminate, although this effect appears to be lessened in peak periods.     

Price promotions in emerging markets

How should price promotion strategies be modified in an emerging market (e.g., India, China) compared to those employed in developed markets (e.g., USA, Canada)? Specifically, how should the presence of middle-class consumers with limited ability to pay, prevalent in an emerging market, influence the depth and frequency of price promotions offered by competing firms? Lay intuition suggests that firms should promote more frequently and offer deeper discounts in emerging markets, in order to effectively sell to limited income, middle-class consumers. We construct a theoretical model that investigates the effect of the middle-class segment on firms' price promotion strategies. Contrary to lay intuition, our analysis reveals precisely the opposite results. First, price promotions offered in an emerging market (with middle-class consumers) are shallower than those offered in a developed market (without middle-class consumers). Second, relatively deep price promotions occur less frequently in an emerging market, compared to a developed market. These theoretical findings are consistent with the empirical evidence we gathered from the supermarkets in India and in Canada.