Product recalls,corporate social responsibility,and firm value: Evidence from the Chinese food industry

Product recalls frequently occur in the Chinese food industry, which is closely linked to public health and social security and attracts significant attention from the government, media, and public. We manually collect food recalls from listed firms in China from 2008 to 2016 and use an event study methodology to investigate the economic consequences of product recalls. First, we find that product recalls result in significantly negative abnormal returns for listed firms. Second, the level of corporate social responsibility (CSR) mitigates the negative effect of food recalls on the wealth of shareholders. Our results are robust to different specifications and measures. This study provides timely evidence and important policy implications for the ongoing food safety crisis in China. The government should release appropriate policies to improve firms’ product quality and activities on CSR in the food industry, which in turn helps the firms obtain benefits.     

Ground beef recalls and subsequent food safety performance

The U.S. Food Safety Inspection Service recalled more than 370 million pounds of meat and poultry products and oversaw 680 Class 1 recalls over 1998–2014. The cost to firms was about $109 million in lost market value (Pozo and Schroeder, 2016). Thomsen and McKenzie (2001) argue that firms internalize the costs of recalls, and Marino (1997) asserts that high food safety costs lead to food safety investment, but no research has examined the impact of recalls on plant food safety performance. Using performance on tests for Salmonella conducted by the Food Safety Inspection Service as a measure of food safety, this article examines the performance on Salmonella tests of ground beef plants with Class 1 recalls. The results show that plants have high Salmonella levels before and during the year of the recall and have much lower levels afterward. The paper also shows that ground beef plants with recalls are less likely to meet the FSIS standard for Salmonella and that the likelihood of failing to meet the standard increases as the standard becomes more stringent.     

Variations in ownership behavior and propensity to diversify: a study of the Indian corporate context

The relationship between ownership and diversification has been the focus of renewed debate between financial economists and strategic management scholars. While financial economists hold that manager‐controlled firms tend to reflect higher levels of diversification, strategy researchers argue that ownership and diversification are not systematically related. In throwing light on this debate, this study uses a fine‐grained definition of ownership groups to explore how the different objectives and monitoring predispositions of distinct ownership groups might influence diversification strategy. The empirical examination is set in India to offer a striking contrast from the predominantly U.S.‐based studies that have shaped the ongoing debate. Findings show that diverse ownership groups adopt different postures in monitoring and/or influencing organizational diversification. While some ownership groups are closely associated with focused strategies, and some encourage diversification, others are quite indifferent. These results suggest that the context‐specific variation among ownership groups is germane to our understanding of diversification strategy. Copyright © 2002 John Wiley & Sons, Ltd.     

Strategic and deterrent pricing responses to antitrust investigations

This paper examines the issue of the effects of antitrust on pricing through two empirical studies. The first analyzes time series of prices in five industries involved in antitrust cases to determine whether the various stages of the antitrust process influenced pricing behavior. Some evidence of a ‘deterrent’ effect is found, with real prices lower than their pre-investigation level following the conclusion of the case; a major part of the pricing reaction occurs prior to the filing of formal charges. The second study provides additional evidence of the existence of such a ‘strategic’ reaction to the onset of investigation through an examination of prices in 23 industries investigated but not charged with price fixing.     

The celler kefauver act and the deterrent effect

The purpose of this paper is to identify the major determinants of innovation and to examine whether they affect small firms differently than large firms. Using a cross-section of 247 four-digit SIC industries, we present an econometric analysis testing the hypothesis that innovation rates in 1982 were significantly influenced by market structure, and that these influences had disperate effects among large and small firms. We find that, while market structure does explain the variation in innovation rates across industries, the relationships are not always consistent with certain previously maintained hypotheses. Similarly, we find that innovation activity for large firms responds to a different market activity than does innovation for small firms.     

The three faces of corporate renewal: Institution,revolution, and evolution

We examine corporate renewal by taking a structural approach and focusing on the routines and rules that are part of large, established, bureaucratic organizations. We characterize approaches to the management of innovation in terms of three different themes–institutional, revolutional, and evolutional strategies. The first two approaches involve intentional efforts to encourage innovation, either within the current organizational paradigm (institutionalizing innovation) or moving away from it (revolutionary innovation), while the evolutional approach involves less conscious efforts to manage what is viewed as a random, probabilistic process. This paper uses simulation methodology to explore the effectiveness of these strategies on organizational innovation, performance, and resources. The behavior of the simulated organizational units is guided by assumptions of a learning model. Results indicate that innovation strategies sometimes have unintended effects that are both positive and negative in nature. Several lessons on managing innovation are offered.     

The Cash Recovery Method of Calculating Profitability: An Application to Pharmaceutical Firms

The problems with commonly used accounting profit rates are well documented. In this paper an alternative to accounting profit rates, the cash recovery method is investigated and improved. This improved method is used as a means to estimate profitability in the pharmaceutical industry on a firm level. The profitability estimates give a similar rank order to the accounting profitability rates, but have different magnitudes.     

From crisis to opportunity: environmental jolt,corporate acquisitions,and firm performance

This study incorporates the external environmental context into the study of corporate acquisitions by examining the performance implications of corporate acquisitions during an environmental jolt that alters the levels of environmental munificence. We posit that compared to the periods before and after an environmental jolt, corporate acquisitions during a jolt would be positively related to firm performance. Furthermore, we suggest that organizational slack would improve firm performance and accentuate the positive relationship between corporate acquisitions and firm performance during an environmental jolt; however, it would have negative impact on firm performance and make the acquisition‐performance relationship more negative before and after a jolt. Using the Asian Economic Crisis as a natural experiment, we found general support for our core arguments based on a sample of firms from Hong Kong and Singapore. Our work demonstrates that firms can capitalize on the opportunities created by the changes in an environmental jolt. Copyright © 2009 John Wiley & Sons, Ltd.     

Profitability,concentration and trade flows: Issues of non-linearity and exogeneity

This paper deals with the econometric estimation of a traditional profitability model employing cross-section data for 110 4-digit Canadian manufacturing industries for the period 1972–1976. A series of estimations and statistical tests suggest that the relationship between industry price—cost margins and the Herfindahl index of concentration is non-linear, non-monotonic but exhibits an everal upward trend across concentration classes. Empirical evidence regarding the disciplinary effect of imports does not support the import competition hypothesis.     

The relationship between corporate diversification and corporate social performance

Does diversification affect firm response to stakeholder demands and social issues? Despite extensive interest in corporate diversification in the strategy literature, the relationship between diversification and corporate social performance (CSP) remains largely unexplored. In this study, I propose that the level of diversification will be positively related to the CSP of firms. However, when diversified firms have a strong focus on short‐term profit, it may discourage firm response to stakeholder demands and investment in social issues, thereby negatively moderating the positive relationship between the level of diversification and CSP. Empirical testing on a sample of U.S. firms generally supports my predictions. Copyright © 2012 John Wiley & Sons, Ltd.     

The Relationships of Informal High Performance Work Practices to Job Satisfaction and Workplace Profitability

Recent empirical evidence reveals considerable divergence between management reports and employee reports regarding organizational high performance work practices (HPWPs). This divergence implies that employees may not participate in some HPWPs that are formally present in their organizations, but also, that employees may participate in HPWPs that are not formally present in their organizations. In this study, we examine the implication of the latter case (i.e., employee participation in “informal” HPWPs) for employee‐level and organization‐level outcomes. Our analyses, using data from the Statistics Canada Workplace and Employee Survey, suggest that employee participation in informal HPWPs is associated with enhanced job satisfaction and workplace profitability in a similar way as employee participation in formal HPWPs is associated with these outcomes.     

The role of informal institutions in corporate governance: Brazil,Russia, India,and China compared

This paper argues that the role of informal institutions as well as formal ones is central to understanding the functioning of corporate governance. We focus on the four largest emerging economies: Brazil, Russia, India, and China—commonly referred to as the BRIC countries. Our analysis is based on the Helmke and Levitsky framework of informal institutions and focuses on two related aspects of corporate governance: firm ownership structures and property rights; and the relationship between firms and external investors. We argue that for China and some states of India, “substitutive” informal institutions, whereby informal institutions substitute for and replace ineffective formal institutions, are critical in creating corporate governance leading to enhanced domestic and foreign investment. In contrast, Russia is characterized by “competing” informal institutions whereby various informal mechanisms of corporate governance associated with corruption and clientelism undermine the functioning of reasonably well set-out formal institutions relating to shareholder rights and relations with investors. Finally Brazil is characterized by “accommodating” informal institutions which get around the effectively enforced but restrictive formal institutions and reconcile varying objectives that are held between actors in formal and informal institutions.     

Linking corporate strategy to capital structure: diversification strategy,type and source of financing

This study examines the relationship between corporate strategy and capital structure, specifically the diversfication and financing strategies of a firm. The results show that equity financing is preferred for related diversification and unrelated diversification is associated with debt financing. Additionally, firms diversifying through acquisitions are more likely to use public sources of financing and those emphasizing internal development of new businesses depend primarily on private sources of financing. Using simultaneous equation estimation, we found a reciprocal relationship between a firm's financial strategy and its corporate diversification strategy. Mode and nature of diversification are also reciprocally interrelated. © 1998 John Wiley & Sons, Ltd.     

Design, innovation and corporate integration

Functional integration is a new trend in corporate organization. By changing the balance between functional differentiation and integration, functional integration gives up some supposed economies of scale and benefits from division of labour in order to increase the degree of interaction and task-sharing between diverse functions. The aim is to achieve faster response to threats and opportunities in the persistent turbulent business environment of today. The exact location of the new functional boundaries and inter dependencies differs from industry to industry; in some cases external integration, say with customers or suppliers, may be justifiable. Advantage can be taken from new forms of organization such as flatter hierarchies, the building of interfunctional teams, and the adoption of new design and manufacturing control technologies.
The paper gives examples of functional integration and discusses implications and problems generated by its adoption. Some of the implications may eventually induce radical rethinks on a whole range of presuppositions about corporate structure, relationships between the firm and its suppliers and customers, the role of management, industrial relations and the socio-cultural impact of increasing reliance on automated information systems.     

The price of corporate professionalisation: analysing the corporate capture of professions in the UK

Recent debates on the organisation of expert labour focus upon either the growing dominance of managerialism over traditional professions or the unwillingness/inability of new expert occupations to professionalise. Such arguments frequently disregard expert occupations that continue to deliberately pursue professionalisation to improve their status and influence in organisations and wider society, and therefore overlook the consequences of contemporary professionalisation for expert labour. Here we critically examine one ‘corporate profession’, project management in the UK, which has pursued ‘corporate professionalisation’ by renegotiating relationships with the state, individual members and private corporations, with some degree of success. Combining documentary analysis and interviews with professional association officials and practising project managers, this article analyses the pressures behind the corporate professionalisation strategies of this expert occupation, assessing the impact of moves towards a new model of corporate professionalism that marginalises the interests of professionals while embracing employer agendas.     

Learning to let go: Social influence,learning, and the abandonment of corporate venture capital practices

Research summary: This study examines the abandonment of organizational practices. We argue that firm choices in implementing practices affect how firms experience a practice and their subsequent likelihood of abandonment. We focus on utilization of the practice and staffing (i.e. career backgrounds of managers), as two important implementation choices that firms make. The findings demonstrate that practice utilization and staffing choices not only affect abandonment likelihood directly but also condition firms' susceptibility to pressures to abandon when social referents do. Our study contributes to diffusion research by examining practice abandonment—a relatively unexplored area in diffusion research—and by incorporating specific aspects of firms' post‐adoption choices into diffusion theory. Managerial summary: When do firms shut down practices? Prior research has shown that firms learn from the actions of other firms, both adopting and abandoning practices when their peers do. But unlike adoption decisions, abandonment decisions need to account for firms' own experiences with the practice. We study the abandonment of corporate venture capital (CVC) practices in the U.S. IT industry, which has experienced waves of adoption and abandonment. We find that firms that make more CVC investments are less likely to abandon the practice, and are less likely to learn vicariously from other firms' abandonment decisions, such that they are less likely to exit CVC when other firms do. Staffing choices also matter: hiring former venture capitalists makes firms less likely to abandon CVC practices, while hiring internally makes abandonment more likely. Plus, staffing choices affect how firms learn from the environment, as CVC managers pay attention to and learn more from the actions of firms that match their work backgrounds; i.e., firms that staff CVC units with former venture capitalists are more likely to follow exit decisions of VC firms, while those that staff with internal hires are more likely to follow their industry peers. Our results suggest that firms wanting to retain CVC practices should think carefully about the implementation choices they make, as they may be inadvertently sowing seeds of abandonment. Copyright © 2015 John Wiley & Sons, Ltd.     

Sales force reactions to corporate social responsibility: Attributions, outcomes, and the mediating role of organizational trust

Corporate social responsibility (CSR) is gaining momentum among researchers and practitioners. In spite of this extensive interest, systematic research regarding the effects of CSR on other stakeholder groups, besides consumers, remains sparse. Based on a field study in a global Fortune 500 consumer packaged goods company, we examine sales force attitudinal and behavioral outcomes of company's partnership with a United Nations (UN) philanthropic organization. Specifically, we seek to examine whether sales force perceptions of CSR motives influence their evaluation of CSR actions. Findings indicate that egoistic-driven motives negatively influence salesperson trust in the company, whereas stakeholder- and values-driven motives positively influence salesperson trust; however, strategic-driven attributions do not have an influence on salesperson trust. The results further reveal the mediating role of trust in the relationship between sales force attributions and outcomes including loyalty intentions and positive word-of-mouth.     

The competitive bidding process: Beyond probability models

In this article, the author reviews various approaches to competitive bidding. He then goes on to describe the results of a study of factors important to general construction contractors in developing a bidding strategy. These factors are synthesized into a general view of strategic bidding that emphasizes a wide range of information flows and describes the final bid outcome as a function of company objectives, costs, risk and desirability of the job.