A problem of discrete choice: Moody's municipal bond ratings

This article focuses on an important discrete choice problem in business and economic research—the determination of general obligation municipal bond ratings by Moody's Investors Service, Inc. The problem is examined by using N-chotomous probit analysis on a data set that is more representative of the population of cities with Moody's bond ratings and that includes measurements for more of the community characteristics said to be examined by Moody's analysts than the data used in previous research. Several new insights on how population, housing, debt, and geographic variables influence municipal bond ratings are obtained from the use of this larger and more varied data sample.     

Privacy versus accessibility: The impact of situationally conditioned belief

The information age we are living in and the technology that supports it, raises new ethical concerns. Among these concerns are privacy — the rights of individuals to withold information they consider sensitive, and accessibility — the rights of individuals to obtain information that is relevant to the decisions they must make. Arguments about potential impacts of information technology on privacy and accessibility mask and underlying conflict — that one person's beliefs about their right to relevant information is likely to conflict with another person's belief's about their right to withold information they consider sensitive. This paper proposes that the conflict is likely to be a function of the role the individuals plays in the decision making situation — situationally conditioned belief (SCB) — rather than a function of the person's underlying ethical values.This paper presents an empirical study involving information privacy and accessibility in routine business and market decisions, designed to reveal the presence of SCBs. The results indicate that SCBs cause a gap in beliefs about information accessibility and privacy. Impacts of the SCB gap are discussed. A negotiation technique called information exchange is suggested as a means of closing the SCB gap in routine business and market transactions. Dr. Laura Lally received her Ph.D. in Information Systems. Dr. Lally pursues research on the impacts of information technology on a nation's culture, on business profitability, and on the ethical choices faced by individuals. She has published articles in Decision Sciences, the Information Society, the Journal of Global Information Management and in the Journal of End User Computing. She is currently investigating the risk factors involved in process reengineering under a grant from the National Science Foundation.     

Geography and International Inequalities: The Impact of New Technologies*

Some writers have predicted that new technologies mean the death of distance, allowing suitably skilled economies to converge with high income countries. This paper evaluates this claim. It argues that geography matters for international income inequalities, and that new technologies will change, but not abolish this dependence. Some activities may become more entrenched in high income countries than they are at present. Others—where information can be readily codified and digitized—will relocate, but typically only to a subset of lower income countries. These countries will benefit, but other countries will continue to experience the costs of remoteness.     

Human capital and financial equilibrium

This article investigates the effect of incorporating human capital—an expansion of the investment opportunity set—into the analysis of portfolio investment decisions. The “production function” of human capital displays decreasing returns to scale. The return on human capital is a product of two factors: a “market” return and return unique to each individual. Financial equilibrium results are derived and tested empirically using U.S. data and an international sample. The main findings are that demand for financial assets relates positively to human capital risk and negatively to financial capital risks.     

The role of information technology in corporate strategy of small and medium enterprises

The crisis of the new economy might have cast doubt on the usefulness of the Internet for business activities. However, it is unquestionable that the possibilities offered by Internet-based technologies in terms of information processing, transfer and collection enable the firm to improve market knowledge and the relationship with clients and suppliers. This work explores, theoretically and empirically, the possibilities offered by the Internet to facilitate the internationalization process of Small and Medium Enterprises (SMEs) as well as to improve the relationship with other firms within the same value chain. Using a wide representative sample of Spanish SMEs, the empirical analysis confirms the benefits of the Internet in both cases.     

Does party identification associate with consumer preferences? Analyzing Finnish consumers in 2009 and 2014

This article examines the association between Finn's political orientation and preferences regarding hedonistic and mundane consumer activities. Data derived from national‐level surveys collected in Finland in 2009 (n=1,202) and 2014 (n=1,351) suggests that political party identification is an important predictor of perceived consumption, even after controlling for the effects of key socio‐demographic factors. In general, supporters of the right‐wing National Coalition Party consider themselves as high‐level consumers more often than the supporters of other political parties do. The results also show that there have been very few temporal changes in the association between party identification and consumption preferences. The effect of party identification is stronger for hedonistic activities than for mundane activities. It is argued that political party identification has similar impact on individual's consumer preferences as other lifestyle and social network factors have. The findings offer us new possibilities for further research addressing consumer activities, and other behavioural correlates of political orientation.     

Institutional consumer representation in the European Community

This contribution is concerned with the possibilities of consumer participation in the formulation of consumer policy by the European Commission. Consumer influence in other EC bodies — such as the European Parliament and the Economic and Social Committee — is considered in so far as they determine the extent of consumer representation at the Commission level. After reviewing the legal basis for consumer representation, special attention is given to the development and the activities of the Consumers Consultative Council and the Consumer Policy Service. Their impact on the entire consumer policy of the Community is analysed as well as the restrictions which they face. Finally, requirements for a more efficient consumer representation at the Commission level are formulated.

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Die Vertretung der Verbraucher in den Institutionen der Europäischen Gemeinschaft

Zusammenfassung Dieser Beitrag beschäftigt sich mit den Möglichkeiten der Beteiligung organisierter Verbraucher am Proze\ der Formulierung der Verbraucherpolitik der EG-Kommission. Der Einflu\ der Verbraucher auf audere Organe der Gemeinschaft — insbesondere das Europäische Parlament und den Wirtschafts- und Sozialausschu\ — wird insoweit berücksichtigt, als er auf die Handlungsmöglichkeiten der Verbraucher auf der Ebene der Kommission zurückwirkt. Nach einem Blick auf die rechtlichen Grundlagen der Verbrauchervertretung setzt sich der Beitrag vor allem mit der Entwicklung und den Leistunger des Beratenden Verbraucherrats (BVR/CCC) und der Verbraucherpolitischen Dienststelle der Kommission auseinander. Der Einflu\ beider Einrichtungen auf die Verbraucherpolitik der Gemeinschaft wird ebenso untersucht wie die Grenzen, die ihrem Handeln gezogen sind. Abschlie\end werden einige Voraussetzungen für eine wirksamere Verbrauchervertretung auf der Ebene der Kommission herausgearbeitet.

     

Forecasting the term structure of interest rates and portfolio planning models

This paper analyzes the impact of interest rate forecast quality—both forecast yields and the covariants matrix of yield forecasts—on optimal portfolios developed by quadratic programming. Forecast equations are estimated for a term structure of government securities because of the importance to banking of such restricted portfolios. A cost/ benefit comparison between actual and optimal portfolios using both forecast and realized yields provides an estimate of the economic value of risk information.     

Defining a right problem in group decision and negotiation: Feeling and evolutionary generating procedures

It is not unusual that decision makers define and solve a wrong problem. Here we develop an operational procedure for defining a right or correct problem. A problem may be represented as—a problem representation defining a problem consists of—two evolving hierarchies of relations, as discussed in the article. Rightness in a problem representation requires rightness in these relations which are beliefs held by a decision maker. Operational definition and validation of rightness in these relations, that is, retaining them as correct, is by feeling and by specified evolutionary generating procedures for examining, changing (evolving), and retaining these relations. Based on rightness in these relations, we discuss right group problem definition and solution in the general case where information is not fully shared (nonshared) among individuals in the group. Thus, our work contributes to procedural rationality—how decisions should be or are made—in individual and group decision-making and associated group decision and negotiation support systems (GDNSS).     

Electronic decision aids: Integration of a consumer perspective

Merchants and manufacturers are rapidly adopting electronic decision aids to help sell a variety of merchandise. These systems provide product information or recommendations based on input from the consumer and affect the way consumers process information. A conceptual framework, based on information processing theory and three strategic consumer difference variables — goal orientation, autonomy, and expertise — is presented. Based on these differences, propositions are derived to guide design of effective electronic decision aids.

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Zusammenfassung Elektronische Entscheidungshilfen: Die Miteinbeziehung der Perspektive des Verbrauchers Händler un Hersteller verwenden in wachsendem Ma\e elektronische Entscheidungshilfen beim Verkauf einer Vielzahl von Waren. Solche Hilfen stellen Produktinformation bereit und liefern Empfehlungen auch aufgrund solcher Dateneingaben, die von der Verbraucherseite kommen, und sie beeinflussen die Art und Weise, wie die Konsumenten Information verarbeiten. Der Beitrag liefert einen begrifflichen Rahmen, der auf der Theorie der Informationsverarbeitung und auf drei Konsumentenvariablen — Zielorientierung, Autonomie und Kompetenz — aufbaut. Auf dieser Grundlage werden Vorschläge für die Gestaltung wirksamer elektronischer Entscheidungshilfen abgeleitet.

     

Market share as a source of market power: Implications and some evidence

This paper investigates the proposition that firms with a high market share enjoy a unique form of market power—“inherent product differentiation.” The analysis is based on a sample of 6492 banks, during the 1970s. Tests tend to control for market concentration, scale economies, and explicit product differentiation as factors influencing rates of return. Test results indicate that market share per se is a source of high profits, regardless of the level of concentration and after controlling for firm size. These findings question the Demsetz (1973) view that high profits of market leaders are due to efficiency rather than to some form of market power.These findings suggest that traditional market models that account only for a single price may be incomplete. The paper suggests a kind of simple model that would account for the existence of multiple prices in a market.     

Dynamic capabilities in international expansion

This article articulates a dynamic capability perspective on international business. The three essential ingredients of dynamic capability—capability possession (distinctive resources), capability deployment (resource allocation), and capability upgrading (dynamic learning)—have become increasingly fundamental to international expansion and global operations. Capability possession is critical to gaining competitive advantages and determining firm-level strategies to exploit such advantages. Capability deployment is crucial to mitigating the disadvantages of foreignness and preempting emerging opportunities. Capability upgrading is essential to the evolutionary development of sustainable advantages and creating new bundles of resources. Each of these capabilities is a necessary condition for sustained success in today’s world economy characterized by increasing technological advancement and business globalization.     

Toward a Knowledge-Based Conceptualization of Internationalization

This conceptual paper contributes to the internationalization literature in response to previous criticisms by enabling the integration of apparently contradictory strands of the literature and incorporation of the potential role of the Internet. Knowledge is at the core of received wisdom on internationalization. This is consistent with the notion that internationalization represents an innovation of the firm and often entails decision-making under conditions of uncertainty, for both of which knowledge is vital. Given the link between knowledge and internationalization, apparent tensions in the literature can be resolved by recognizing its different types, consequently varying roles and diverse sources. Furthermore, network relationships—of growing significance in the literature—yield social capital, which in turn leads to knowledge acquisition and creation; thus it is worthwhile to integrate knowledge and social capital perspectives. Finally, consistent with the knowledge-based approach adopted in the paper, the application of Internet technology is conceptualized in terms of information effects viz., information dissemination, acquisition and sharing which could lead to, respectively, enhanced internationalization, knowledge and social capital.An earlier version of this paper was presented at the 2004 Academy of International Business Conference in Stockholm and the 2003 European Academy of International Business Conference in Copenhagen; the author thanks the respective discussants, Professors Jongmoo Jay Choi and Jan-Erik Vahlne, for their encouraging and helpful comments     

Strategic orientation and new product performance: The roles of technological capability

Although prior research has examined the linkage between strategic orientation and new product performance, existing empirical evidence suggests exploration of the effects of a firm's internal factors on this linkage is required. This study aims to fill the marketing literature gap by addressing how technological capability moderates the strategic orientation‐new product performance relationship. This study measures new product performance as a two‐dimensional construct to avoid the oversimplified bias. Research hypotheses are tested using a sample of 121 information system product projects and a hierarchical regression approach is utilized. Results show that (a) technological capability strengthens the market orientation‐performance relationship and (b) technological capability affects the financial performance effects of market and technology orientations via market performance. Copyright © 2014 ASAC. Published by John Wiley & Sons, Ltd.     

Should retailers adjust their micro-marketing strategies to type of outlet? An application to location-based store space allocation in limited and full-service grocery stores

Many retailers today operate strategically different types of sites: ‘limited-service’ stores—that offer all core products/services but only a shallow assortment of non-core services—and ‘full-service’ sites with deep lines of both core and non-core services. An important question for these retailers is whether and how to adopt a micro-marketing strategy in each of these formats. In a micro-marketing strategy, retailers tailor their marketing mix to the characteristics of the local market in which each store outlet operates—a central issue being whether the allocation of store space across product categories should be location-specific. This paper (i) examines the conditions for such micro-marketing to be beneficial, and (ii) in particular—how these benefits depend on store format. It also (iii) indicates how the pattern of space adjustments to local conditions should differ between formats. The propositions are tested in a grocery retail setting, for a retail chain operating limited-service supermarkets and full-service hypermarkets. Our results suggest that micro-marketing is beneficial in both types of format. Yet, the appropriate way of localizing space allocation patterns is format-specific. While supermarkets should primarily adjust the space shares of food (core) categories, hypermarkets should primarily adapt the space shares of non-food (non-core) categories to local market conditions. The outcomes of the study have conceptual as well as managerial relevance and may prove useful for multi-format retailers in a wide range of settings.     

The impact of formal processes for market information acquisition and utilization on the performance of Chinese new ventures

The authors examine the performance impact of formal market information processes. Specifically, a theoretical model is developed that hypothesizes that formal processes for market information acquisition and utilization have direct and positive main effects on new venture success and is then tested using a sample of 222 new ventures located in China. Findings indicate that new venture success is positively correlated with the use of formal processes for market information acquisition and use. Moreover, the relative importance of formal processes to the acquisition and use of market information depends on whether the new venture serves an emerging or established market. In particular, the impact of formal processes for information acquisition is higher among new ventures that serve emerging markets. In contrast, the impact of formal processes for information use is higher among new ventures that serve established markets. We present managerial implications of our results. For example, a new venture with a strong market orientation can respond quickly to emerging marketplace needs, and can even seize the advantage from incumbents. If it is in an emerging market, however, the new venture management team should strive to excel at information acquisition; in an established market, it is important for the management team to excel at information utilization.     

An empirical examination of the preference structure for the distribution of earnings

A perplexing diversity of theory has persisted concerning the topic of earnings distribution. Empirical studies to date have only added additional inconsistencies. The contradictory findings of earlier studies suggest that shareholders' distribution perferences may not be identical across firms and over time. This study empirically examines the aggregate preference structure for the distribution of earnings by extending existing methodologies to a dynamic model. In the final model tested, distribution perferences are measured in the context of other economic variables. A sample of 97 widely held firms observed over 20 semiannual periods from 1968 to 1977 provided the data base for this study. The results here suggest that the aggregate preferences for the distribution of earnings are dynamic and depend on the relative level of other variables. All of the adjunct variables selected for inclusion in the model—risk, growth, and market environment—were found to have a significant impact on the level of preferences. In each case, the direction of effect was consistent with intuitive positions of those supporting dividend relevance.     

Comparisons between small business data base (USEEM) and Bureau of Labor Statistics (BLS) employment data: 1978–1986

Summary and conclusion The BLS versus USEEM comparison generally points out some major classification differences in the data sets particularly in the classification and growth of larger establishments. USEEM and BLS data generally agree as to the direction of employment growth over the 1978 to 1986 period. Differences occur in 7 of the 63 comparisons of employment growth — but BLS attributes a greater proportion of growth to larger reporting units, USEEM to smaller establishments. BLS and USEEM data have concurring positive or negative growth rates for all size classes in the construction, wholesale trade, services, and finance, insurance, and real estate industries.The fundamental question — in which size classes or units did employment growth primarily occur between 1978 and 1986 — has only indirectly been answered. Some industries — such as construction — produced similar results. Other sectors — such as wholesale trade — produced differences by size category. Clearly some combination of industry restructuring and different classification and collection procedures have affected the results.Researchers, once aware of procedural differences between the data sets, can cite USEEM data for a variety of dynamic uses, particularly in light of these new comparative tabulations available from the Bureau of Labor Statistics. For comparative static analysis, the BLS dataset is more comprehensive and better maintained.     

Breaking new ground: base-of-pyramid service research

Two-thirds of the world's population lives in poverty, a global problem that researchers from a wide variety of disciplines study. Yet there is a fundamental lack of service research pertaining to this huge segment of society, commonly known as the base of the pyramid. This segment offers a rich source of information that could help break new ground in service research, by exploring services in contexts in which its current concepts, models, theories, and generalizations might not apply the same way. This article starts by exploring key contributions in base of the pyramid literature and identifying the main perspectives from which extant knowledge has developed. By revising existing service research priorities to identify useful intersections with base of the pyramid perspectives, this study offers new grounds deriving five research streams that reflect the integration of base of the pyramid research perspectives with service research priorities. Finally, this article details the emerging area of base of the pyramid service research using one of those research priorities, namely, transformative service research, in an effort to specify the relevant objectives, scopes, differences, and similarities and thereby identify common grounds for future service research at the base of the pyramid.     

Executive Forum: University technology transfer to entrepreneurial companies

This article discusses four dimensions of university–entrepreneurial firm collaboration—(1) industry-sponsored contract research, (2) consulting, (3) technology licensing and (4) technology development and commercialization—of which practitioners involved in university–private sector technology interaction need to be aware. The article identifies specific findings in each of the four areas and suggests important avenues for future work.