No such thing as a global manager

With the continuing growth of globalization, companies need to pay careful attention to selecting and managing people who may become their “global managers.” The best way to achieve this is by coming up with a clear concept of what constitutes such a manager. But the examination of a wide set of possible characteristics indicates that there seems to be no distinct set of such individual qualities, so there is no consistent way to point out what a global manager is. What we are left with is the search for good “conventional” managers with a global mindset who could succeed in the international marketplace.     

Does the “management approach” contribute to segment reporting transparency?

Segment reporting creates an opportunity for companies to add value to the information they disseminate about their industry and geographic operations. This article examines the “management approach” to segment reporting from a user perspective that should be of great interest to corporate financial executives. The management approach to segment reporting requires companies to report segment financial information consistent with the way they manage their businesses. We conclude that, despite more segment data being reported, the potential of the new management approach to significantly benefit users is compromised by uneven compliance among reporting companies. The complicity of external auditors in compliance shortcomings should concern all stakeholders in the financial reporting process. Noting two high-profile examples of accounting fraud, we comment on how the management approach sheds light on Enron's operations, while WorldCom concealed important segment information due to probable auditor malfeasance.     

Global talent management and global talent challenges: Strategic opportunities for IHRM

The need for multinational firms to be as competitive in the global marketplace as possible has increased dramatically over the past twenty years. For international human resource management this has meant many strategic opportunities to international human resource management. An excellent example of such an opportunity is that which exists regarding the management of talent. This opportunity began to develop in the late 1990s with the advent of the challenge of “global talent management.” During the past few years this opportunity has expanded to include challenges dealing with talent shortages, talent surpluses, locating and relocating talent, and compensation levels of talent. Together, these conditions are all “global talent challenges”. In this article we describe these several global talent challenges and the strategic opportunities they present to firms and propose the implications of these for firms and for the field of international human resource management.     

Old habits die hard: A tale of two failed companies and unwanted inheritance

This article examines whether state-owned enterprises inherit the problems and stigmas resulting from the actions and inactions of their predecessor firms. In this direction, we advance two main theories of inherited background: the “wanted inheritance” and “sins of the father” perspective. We shed light on this issue using the cautionary tale of two failed companies: Ghana Airways (GA) and Ghana International Airlines (GIA). Our data indicate that GIA acquired some wanted inheritance such as former employees and their expertise, but this was accompanied by unwanted inheritance such as tainted ‘image’ and years of dissatisfaction of their customers from Ghana Airways, which affected its operations and precipitated its untimely demise. We conclude by outlining the implications of our findings for management and governments.     

Serving unfair customers

Companies commonly adopt “the customer is always right” maxim as a basic premise for delivering quality service. A close examination of customer behavior, however, reveals that customers can be not only wrong but also blatantly unjust. Unfair customers take advantage of being “always right” by demanding unwarranted privileges and compensation, adversely affecting companies and, in some cases, employees and other customers. Companies can actually strengthen their ability to deliver quality service by dealing effectively with unfair customers.     

Negotiating free trade

We develop a dynamic bargaining model in which a leading country endogenously decides whether to sequentially negotiate free trade agreements with subsets of countries or engage in simultaneous multilateral bargaining with all countries at once. We show how the structure of coalition externalities shapes the choice between sequential and multilateral bargaining, and we identify circumstances in which the grand coalition is the equilibrium outcome, leading to worldwide free trade. A model of international trade is then used to illustrate equilibrium outcomes and how they depend on the structure of trade and protection. Global free trade is not achieved when the political-economy motive for protection is sufficiently large. Furthermore, the model generates both “building bloc” and “stumbling bloc” effects of preferential trade agreements. In particular, we describe an equilibrium in which global free trade is attained only when preferential trade agreements are permitted to form (a building bloc effect), and an equilibrium in which global free trade is attained only when preferential trade agreements are forbidden (a stumbling bloc effect). The analysis identifies conditions under which each of these outcomes emerges.     

Co-creating brands: Diagnosing and designing the relationship experience

The traditional goods-dominant logic of marketing is under challenge and leading researchers are now emphasizing the new service-dominant logic [Vargo, S.L., Lusch, R.F., Evolving to a new dominant logic for marketing. J Mark 2004; 68 (1): 1-17.]. One of the key foundational propositions of this logic is the customer as “always being a co-creator of value” where “the brand becomes the experience” [Prahalad, C.K., The co-creation of value. J Mark 2004; 68 (1): 23.]. In this paper, the authors examine the concept of brand relationship experience in the context of co-creation and service-dominant logic and outline a conceptual model for designing and managing the customer experience. Case study research illustrates how this model helps in the design and management of the brand relationship experience for an innovative new product.     

Why do venture capital firms exist? theory and canadian evidence

This paper investigates the role of venture capitalists. We view their “raison d’être” as their ability to reduce the cost of informational asymmetries. Our theoretical framework focuses on two major forms of asymmetric information: “hidden information” (leading to adverse selection) and “hidden action” (leading to moral hazard). Our theoretical analysis suggests four empirical predictions.1. Venture capitalists operate in environments where their relative efficiency in selecting and monitoring investments gives them a comparative advantage over other investors. This suggests strong industry effects in venture capital investments. Venture capitalists should be prominent in industries where informational concerns are important, such as biotechnology, computer software, etc., rather than in “routine” start-ups such as restaurants, retail outlets, etc. The latter are risky, in that returns show high variance, but they are relatively easy to monitor by conventional financial intermediaries.2. Within the class of projects where venture capitalists have an advantage, they will still prefer projects where monitoring and selection costs are relatively low or where the costs of informational asymmetry are less severe. Thus, within a given industry where venture capitalists would be expected to focus, we would also expect venture capitalists to favor firms with some track records over pure start-ups. To clarify the distinction between point 1 and point 2, note that point 1 states that if we look across investors, we will see that venture capitalists will be more concentrated in areas characterized by significant informational asymmetry. Point 2 says that if we look across investment opportunities, venture capitalists will still favor those situations which provide better information (as will all other investors). Thus venture capitalists perceive informational asymmetries as costly, but they perceive them as less costly than do other investors.3. If informational asymmetries are important, then the ability of the venture capitalist to “exit” may be significantly affected. Ideally, venture capitalists will sell off their share in the venture after it “goes public” on a stock exchange. If, however, venture investments are made in situations where informational asymmetries are important, it may be difficult to sell shares in a public market where most investors are relatively uninformed. This concern invokes two natural reactions. One is that many “exits” would take place through sales to informed investors, such as to other firms in the same industry or to the venture’s own management or owners. A second reaction is that venture capitalists might try to acquire reputations for presenting good quality ventures in public offerings. Therefore, we might expect that the exits that occur in initial public offerings would be drawn from the better-performing ventures.4. Finally, informational asymmetries suggest that owner-managers will perform best when they have a large stake in the venture. Therefore, we can expect entrepreneurial firms in which venture capitalists own a large share to perform less well than other ventures. This is moral hazard problem, as higher values of a venture capitalist’s share reduce the incentives of the entrepreneur to provide effort. Nevertheless, it might still be best in a given situation for the venture capitalist to take on a high ownership share, since this might be the only way of getting sufficient financial capital into the firm. However, we would still expect a negative correlation between the venture capital ownership share and firm performance.Our empirical examination of Canadian venture capital shows that these predictions are consistent with the data. In particular, there are significant industry effects in the data, with venture capitalists having disproportionate representation in industries that are thought to have high levels of informational asymmetry. Secondly, venture capitalists favor later stage investment to start-up investment. Third, most exit is through “insider” sales, particularly management buyouts, acquisitions by third parties, rather than IPOs. However, IPOs have higher returns than other forms of exit. In addition, the data exhibit the negative relationship between the extent of venture capital ownership and firm performance predicted by our analysis.     

Marketing: Who's really minding the store globally?

In today's highly competitive global marketplace, firms have increasingly turned to outsourcing. In fact, it is not just “blue collar” jobs being outsourced, but “white collar” jobs, as well. Even marketing, “the window to the company's worldwide customer base,” is feeling outsourcing pressures. This article takes a look at the corporate implications of outsourcing global marketing functions and reports the findings of a telephone survey conducted among U.S. and Canadian marketing executives. U.S. firms were found to outsource marketing activities more frequently than Canadian firms, often at the expense of control and customer satisfaction.     

Twin deficit or twin divergence? Fiscal policy, current account, and real exchange rate in the U.S.

In spite of concerns about “twin deficits” (fiscal and the current account deficits) for the United States economy, empirical evidence suggests that “twin divergence” is a more usual feature of the historical data, i.e., when fiscal accounts worsen, the current account improves and vice versa. This paper empirically studies the effects of fiscal policy (government budget deficit shocks) on the current account and the real exchange rate, during the flexible exchange rate regime period. Based on VAR (Vector Auto-Regression) models, we identified “exogenous” fiscal policy shocks after controlling for business cycle effects on fiscal balances. In contrast to the predictions of most theoretical models, the U.S. results suggest that an expansionary fiscal policy shock, or a government budget deficit shock, improve the current account and depreciate the real exchange rate. Increases in private savings and declines in investment contribute to the current account improvement while a nominal exchange rate depreciation, as opposed to a relative price level change, is mainly responsible for the real exchange rate depreciation. The “twin divergence” of fiscal balances and current account balances is also explained by the prevalence of output shocks, i.e. output shocks — more than fiscal shocks — appear to drive the co-movements of the current account and the fiscal balance.     

Once more, with feeling: Empathy and technology in customer care

Information technology is reshaping relationships between companies and customers, often bringing benefits to both. The unfettered use of technology, however, can erode customer care. For a company to care for customers, its managers and front-line employees must listen empathetically to what they have to say. But a rash of ‘innovations’ aimed primarily at reducing costs has made many companies opaque to their customers, who are—as a consequence—inadequately served and increasingly frustrated. Equally damaging is the resulting estrangement of employees from customers, a separation that dampens the empathy upon which true care for customers depends. As a number of innovative companies have shown, though, technology need not necessarily sour relations between businesses and those they serve. Indeed, technology can actually enrich them if senior managers (1) affirm their commitment to active, empathetic involvement with customers; (2) understand the ways in which current procedures and systems mediate interactions with customers; and (3) promote the deployment of social networks and other technologies to help customers tell their stories, and to enable workers and managers alike to hear them. Only when employees can step into their customers’ shoes can companies add authenticity to the claim: “We care for you.”     

The service imperative

Services dominate the world's established economies (such as those of the US, Germany, and Finland) and are becoming increasingly important in developing economies, including those of China and India. Yet most companies, national governments, and universities do not put much energy into service research, innovation, or education. This ironic juxtaposition of facts has led us, along with others, to promote a focus on service research and service innovation across companies and institutions. We call this the “service imperative.” In this article, we present our view of the service imperative as a burning platform that is giving birth to many hopeful directions for the future of the global economy. We believe that companies and nations that embrace the service imperative will prosper and benefit, as will individuals who do the same. We also contend that widespread embracing of the service imperative can lead to improved quality of life for people worldwide.     

Avoiding a “me” versus “we” dilemma: Using performance management to turn teams into a source of competitive advantage

Teams are pervasive in today's world of work. Unfortunately, in many cases teams do not live up to their promise and, instead, lead to disappointing results. In this installation of Human Performance, we discuss how to design and implement performance management systems that include a good combination of both “me” and “we” considerations. We offer the following research-based recommendations: (1) use measures of individual and team performance, (2) use measures of processes and outcomes, (3) develop performance measures using input from inside and outside the team, (4) gather performance information using sources from inside and outside the team, (5) foster team learning and development, and (6) reward both individual and team performance. We discuss implementation guidelines for each of these recommendations that will help maximize individual and team performance as well as alignment among individual, team, and organizational goals. Implementing performance management systems following our recommendations will help organizations turn teams into an inimitable and sustainable source of competitive human capital advantage.     

Developmental management: Theories,methods, and applications in entrepreneurship,innovation, and sensemaking

This paper summarizes the best papers of the Global Innovation and Knowledge Academy (GIKA) conference, which took place in July 2013 in Valencia, Spain. The Journal of Business Research has published a special issue entitled “Developmental management: Theories, methods, and applications in entrepreneurship, innovation, and sensemaking”. All of them went through many rounds of double-blind reviews and revisions. Theories, methods, and applications are the three pillars to solve the issues in entrepreneurship, innovation, and sensemaking. Entrepreneurship contributes to the quality and future hopes of a sector, economy or even a country. The role of the entrepreneurs is crucial in creating value. Innovation has become important as the global economy seeks to escape from a period of major recession. In organizations, sensemaking consists of cognitive strategies for interpreting reality. It is interesting to examine how these three issues interacting with each other. And these papers contribute to various perspectives of these interactions in different countries.     

Characteristics and practices of “Christian-based” companies

There is a sizeable group of self-described Christian companies which have declared their belief in the successful merging of biblical principles with business activities. As these companies have become more visible, an increasing number of anecdotal newspaper and magazine articles about these companies have appeared. Surprisingly, no rigorous research has been conducted prior to our recent study. This article provides national estimates of the size and predominant characteristics of self-identified Christian companies. In addition, the study investigated the types of relationships these companies maintained with their employees, customers, communities, and suppliers.Nabil Ibrahim is an Assistant Professor of Business Administration at Augusta College, Augusta, Georgia. He has published articles, case studies, and professional papers in the areas of business policy and strategy.Dr. Leslie W. Rue is Professor of Management in the College of Business Administration at Georgia State University. He is the author of over forty articles, cases, and papers that have appeared in academic and practitioner journals. He has coauthored eight textbooks in the field of management.Dr. Patricia P. McDougall is an Assistant Professor of Management at Georgia State University. Her research focuses primarily on new venture strategies and international entrepreneurship and has been published in several academic journals. Dr. G. Robert Grenne is an Associate Professor of Management at Old Dominion University, Norfolk, Virginia where he teaches strategic management and entrepreneurship. He is a Contributing Editor to Spiritual Fitness in Business and has published articles in various academic and practitioner journals.     

Global Location Strategy

The essence of global strategy is the worldwide mobilization of the firm's resources behind global objectives. Global companies see national markets as part of a single world market. This perception fundamentally effects their strategy, including questions of geographic location, i.e., where to locate the firm's plants and other facilities. In general, methods for evaluating geographic location have not received a great deal of attention in the literature. Those that have been forwarded focus on an individualistic country-by-country evaluation of potential sites which is at odds with the more integrative view of world markets currently adopted by global companies. This article applies and adapts portfolio screening as developed in the corporate strategy literature to the special problem of international site location. It provides a simple yet effective method for viewing the global geographic positioning of the firm relative to world markets. Secondly, geographic analysis is further developed as a tool for identifying and interpreting global competitive strategy.     

Decision under uncertainty: A poet's view The leap of judgment in a famous frost poem

Despite all the talk about decision making, uncertainty remains a factor, and no one tells executives how to deal with it. Scientific management stops at the point where nature is not rational. If help is to be found, it must come from poets and preachers, men whose business begins at the limits of rational certainty. For a “case study,” the author uses Frost's famous poem, “The Road Not Taken”—an inside view of a moment of decision. The poet confronts uncertainty by taking the leap o f judgment, beyond facts and logic. We are reminded that such leaps are possible and necessary, and that courage stands next to intelligence as an irreducible ingredient in the decision-making process.     

Franchisor strategy and firm performance: Making the most of strategic resource investments

A key decision for entrepreneurs in many retail and service firms is whether, and how much, to use franchising. If the decision is made to franchise, the actor may assume one of two “identities” or tactics: (1) the “chain builder,” who uses a blend of company and franchised outlets, and (2) the “turnkey,” who sells business opportunities but does not own any outlets. To benefit from their chosen strategy, franchisors must put resources in place to support it. We argue that franchisors use the chain building strategy to strike a balance between standardization and innovation by building resources that foster trust and encourage knowledge sharing with franchisees. In contrast, for turnkeys, a valuable set of operational routines is the critical strategic resource. To better appreciate how franchisors choose between the chain builder and turnkey strategies, we gathered survey information from 263 franchisors. Via this data, and as described herein, we learned that franchisors perform better when they invest in resources that best support their selected strategy.     

Abbreviated Scenario Thinking

Scenario development is a time- and resource-intensive process, one that not all companies are positioned to undertake at any given point in time. As such, this article will propose an Abbreviated Scenario Thinking process that uses published scenarios from government and industry sources to allow companies to make strategic decisions based on the results. Scenarios are narratives that describe the possible futures in which one must compete 5, 10, or 20 years from now. They allow people to test possible actions by playing them out in three or four different ways. Scenarios are based on plausible consequences of events, environmental forces, and players as they occur in time, and create patterns of the future that can have substantively different effects on strategic decisions. Thus, scenarios are important to executives and managers in the 21^st century as they develop competitive strategies. By employing Abbreviated Scenario Thinking, executives utilize published global scenarios to analyze the driving forces that affect their organizations, asking “What If?” as an entry point to scenario planning. This can produce benefits even before any formal scenarios are written.     

A global market advantage framework: the role of global market knowledge competencies

The globalization forces engender companies to develop a new set of competencies that would enable the generation of abnormal returns in the global marketplace. This article reviews the extant literature regarding the effect of globalization on organizations and develops a conceptual framework that underlines the importance of knowledge management competencies in creating global market advantage. The knowledge management competencies consist of global customer, competitor and supplier knowledge development, inter-functional coordination and value chain coordination. The relationship between global market knowledge competencies and global market advantage is partially mediated by company's responsiveness. Global market advantage is positively associated with company's strategic and financial performance.