‘Trojan horse’ or ‘Workhorse’? the evolution of U.S.–Japanese joint ventures in the United States

Foreign investors and their domestic joint venture partners must find ways to share the benefits of the venture if both sides are to be satisfied. Some work in the literature on joint ventures has asserted that there is a danger in all joint ventures, and especially joint ventures with Japanese, that one side will exploit the venture for its own gain, using it as a Trojan Horse. To test this assertion, we build a full data set of Japanese firms with joint ventures in the United States and track the ventures over time. Our data show that the Japanese partners do not take actions consistent with the Trojan Horse hypothesis. Copyright © 1999 John Wiley & Sons, Ltd.     

MARKETS VS. MANAGEMENT: WHAT ‘DRIVES’ PROFITABILITY?

This study addresses the issue of the relative degree of variance in ROA accounted for by industry, corporate, and SBU effects while controlling for the business cycle and the interaction between the business cycle and industry. Two key articles, Schmalensee (1985) and Rumelt (1991), are discussed in detail. Research results on a recent data base (COMPUSTAT), using variance components analysis (VARCOMP) are presented that not only confirm most of the Rumelt (1991) findings, but also suggest the existence of a corporate effect, heretofore undetected.     

Who Is “Misleading” Whom in Real Estate Transactions?

The observation that real estate agents sell their clients' homes cheaper and faster than their own homes has been well identified in the literature and interpreted as evidence of an agency problem originated from information asymmetry. This article studies whether this well‐known result holds true for all types of agents and clients, and whether information asymmetry is the full story. By using the Multiple Listing Service (MLS) data from Indiana, we find that, after controlling for observables, mainly homes owned by institutional clients are sold cheaper and faster than agent‐owned homes, and the differences are mainly driven by less and moderately experienced agents. Besides information asymmetry, we also find evidence of motivation heterogeneity—institutions themselves are very motivated to sell, and therefore are willing to sell cheaper in order to sell faster.     

Ain't it “suite”? Bundling in the PC office software market

Research Summary: We examine the importance of office suites for the evolution of the personal computer (PC) office software market in the 1990s. An estimated discrete‐choice model reveals a positive correlation of consumer values for spreadsheets and wordprocessors, a bonus value for suites, and advantages for Microsoft products. We employ the estimates to simulate various hypothetical market structures to evaluate the profitability, welfare, and competitive effects of suites under alternative correlation assumptions. We find that firms benefit greatly from bundling components (i.e., a spreadsheet and a word processor) when the correlation of consumer preferences over the components in the bundle is positive. Our work adds another aspect to the recent work in the strategy literature that examines benefits from bundling when there are complementary relationships across the products in the bundle. Managerial Summary: Our research helps managers understand the conditions under which product bundling is likely to be most profitable. We show that one key to enhanced profitability is the correlation in consumer preferences over the individual products. We consider the performance implications of bundling under a variety of alternative market structures and competitive environments. Our analysis reveals that firms benefit greatly from bundling when the correlation of consumer valuations over the products is positive. Consumers benefit as well. Hence, bundling is a win‐win for firms and their customers. Since profits increase by more than consumer surplus, bundling leads to increased value capture by the firms. Consequently, it may be profitable for firms to invest in actively increasing the correlation in consumer preferences over products in the bundle.     

Are all ‘sharks’ dangerous? new biotechnology ventures and partner selection in R&D alliances

We examine how new biotechnology firms (NBFs) select pharmaceutical firms as R&D allies as a function of value creation and value appropriation considerations. We develop a theoretical framework to understand partnering decisions accounting for both, a potential partner's ability as well as incentives to appropriate and create value within an R&D alliance. Our empirical findings show that NBFs are more likely to ally with pharmaceutical firms with the ability to create value, as long as these firms have the incentives to use their skills to create rather than appropriate value. Our study highlights the double‐edged sword nature of value creation skills and provides a deeper understanding into the contextual factors that determine when potential R&D partners will perceive such skills as increasing appropriation risks. Copyright © 2012 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.     

Free To Choose? Dimensions of Private-Sector Wage Determination, 1979–1994

Deregulation of the system of pay determination in Britain was started in 1979 with the removal of incomes policy. The objective was to give employers the freedom to determine wage increases without the restrictions of pay norms or statutory limits. Instead, companies would be able to link changes in pay to the fortunes of the individual enterprise or establishment. By the mid-1990s, had these attempts to decentralize wage negotiations changed the determinants of wage settlement outcomes in Britain? We address the influence of industrial relations institutions and labour market pressures on wage increases between 1979 and 1994 using evidence from the CBI’s Pay Databank. Despite the direction of the Conservative Government’s policy, the external institutional forces of the labour market, particularly the rate of inflation and comparability, appear to exert an enduring influence, both qualitatively and quantitatively, on pay determination.     

Mass or Only “Niche Customization”? Why We Should Interpret Configuration Toolkits as Learning Instruments

In order to configure individual products according to their own preferences, customers are required to know what they want. While most research simply assumes that consumers have sufficient preference insight to do so, a number of psychologically oriented scholars have recently voiced serious concerns about this assumption. They argue that decades of consumer behavior research have shown that most consumers in most product categories lack this knowledge. Not knowing what one wants means being unable to specify what one wants—and therefore, they conclude, the majority of customers are unable to use configuration toolkits in a meaningful way. In essence, this would mean that mass customization should rather be termed “niche customization” as it will be doomed to remain a concept for a very small minority of customers only. This pessimism stands in sharp contrast to the optimism of those who herald the new possibilities enabled by advances in communication and production technologies as the dawn of a new era in new product development and business in general. Which position is right? In order to answer this question, this research investigates the role of the configuration toolkit. Implicitly, the skeptic position assumes that the individual customers' knowledge (or absence of knowledge) of what they want is an exogenous and constant term that does not change during the interaction with the toolkit. However, learning theories suggest that the customers' trial‐and‐error interaction with the configuration toolkit and the feedback information they receive should increase their preference insight. If this was true and the effect size strong, it would mean that low a priori preference insight does not impede customers to derive value from mass customization. Three experiments show that configuration toolkits should be interpreted as learning instruments that allow consumers to understand their preferences more clearly. Even short trial‐and‐error self‐design processes with conventional toolkits bring about substantial and time‐stable enhancements of preference insight. The value of this knowledge is remarkable. In the product category of self‐designed watches, the 10‐minute design process resulted in additional preference insight worth 43.13 euros on average or +66%, measured by incentive‐compatible auctions. A moderator analysis in a representative sample shows that the learning effect is particularly strong among customers who initially exhibit low levels of preference insight. These findings entail three contributions. First, it becomes evident that the interaction with mass customization toolkits not only triggers affective reactions among customers but also has cognitive effects—a response category not investigated before. Second, it suggests that the pessimism regarding the mass appeal of these toolkits is not justified—mass customization has the potential to truly deserve its name. The prerequisite for this, and this normative conclusion is the final contribution, is that the toolkit should not be interpreted as a mere interface for conveying preexisting preferences to the producer. Rather, it should be treated as a learning instrument. Several suggestions are made for how firms employing this innovative business model could design their toolkits towards this end.     

When can you trust “trust”? Calculative trust,relational trust,and supplier performance

Our research empirically assesses two distinct bases for trust: calculative trust, based on a structure of rewards and penalties, versus relational trust, a judgment anchored in past behavior and characterized by a shared identity. We find that calculative trust and relational trust positively influence supplier performance, with calculative trust having a stronger association than relational trust. Yet, important boundary conditions exist. If buyers invest in supplier‐specific assets or when supply side market uncertainty is high, relational trust, not calculative trust, is more strongly associated with supplier performance. In contrast, when behavioral uncertainty is high, calculative trust, not relational trust, relates more strongly to supplier performance. These results highlight the value of examining distinct forms of trust. Copyright © 2015 John Wiley & Sons, Ltd.     

‘Thinking Outside the Box’? Trade Union Organizing Strategies and Polish Migrant Workers in the United Kingdom

This article focuses on the responses of British trade unions to the arrival of Polish workers since the 2004 enlargement of the European Union. It is argued that existing definitions and explanations of UK trade union engagement with migrant workers do not capture the strategies that have been used to engage with these migrant workers. We suggest that there have been two sets of responses. First, recruitment and organization activity has centred on inclusion and has been undertaken on new terrains using innovative strategies. Second, we point to the importance of new linkages locally, regionally, nationally and internationally in organizing these new labour market entrants.     

The Introduction of Works Councils in German Establishments — Rent Seeking or Rent Protection?

Some recent empirical studies seem to suggest that German works councils engage in rent-seeking activities rather than in the creation of joint establishment surplus. However, those cross-sectional studies do not address the issue of causation. We address this issue by investigating the factors that influence the employees' decision to introduce a works council in their establishment. Councils are more likely to be adopted in establishments with a very poor sales situation and poor employment growth. They are also more likely to be adopted in establishments where management does not pursue an expansive market strategy. Altogether, our results support the hypothesis that employees introduce works councils to protect the quasi-rents they have created by their efforts and human capital investments.     

Is there a “Dark Side” to Monitoring? Board and Shareholder Monitoring Effects on M&A Performance Extremeness

Research summary: W e investigate the effects of monitoring by boards of directors and institutional shareholders on merger and acquisition (M&A ) performance extremeness using a sample of M&A deals from 1997 to 2006. Both governance research and legal reforms generally have espoused a “raise all boats” view of monitoring. We instead investigate whether monitoring may serve as a double‐edged sword that limits CEO discretion to undertake both value‐destroying M&A deals and value‐creating ones. Our findings indicate that the relationship between monitoring and M&A performance is more complex than previously believed. Rather than “raising all boats” in a shift towards better M&A outcomes, monitoring instead is associated with lower M&A losses, but also with lower M&A gains . Managerial summary: M ergers and acquisitions (M&A s) are a quintessential corporate activity. There were $3.8 trillion worth of M&A deals in 2015, despite scholars and practitioners reporting that M&A s often perform poorly. We question the widespread belief that more vigilant monitoring by boards of directors and large shareholders will raise M&A performance, overall. Put differently, does monitoring constrain CEO s' discretion to pursue bad deals, while simultaneously encouraging them to pursue good ones? We find that monitoring limits both large M&A losses and large M&A gains. Contrary to widely held beliefs, our results indicate that constraining executives' ability to pursue value‐destroying M&A deals does not simultaneously encourage or enable CEO s to pursue value‐creating deals . Copyright © 2017 John Wiley & Sons, Ltd.