Re-Evaluating the Offshoring Decision: A Behavioural Approach to the Role of Performance Discrepancy

Firms are in a continuous process of critically re-evaluating their offshoring strategies due to performance discrepancies. While prior research has focused on the implementation of organizational responses to performance shortfalls, we examine the offline search process, a key antecedent of organizational change, during which firms simultaneously explore alternative solutions when facing either a positive or a negative discrepancy between performance and aspirations. We adopt the Behavioural Theory of the Firm (BTOF) to investigate how the search process is affected by the size and nature (as being positive or negative) of the discrepancy as well as how it is moderated by cognitive biases. By examining 441 offshoring initiatives, we study firms' search processes in a novel context that refers either to ‘local’ solutions that are close to the current activity (i.e., expansion in the same host country) or ‘distant’ solutions that are far from the current one (i.e., relocation to a third country or to the home country). Our results provide new insights into organizational search, namely that performance shortfalls lead to distant search unless this choice is moderated by a location-specific anchor bias relating to the strategic importance of host location, while positive discrepancies trigger local search with decision-makers more inclined to consider expansion in the current host country.     

Impact of sustainable management policies on tourism companies' performance: the case of the metropolitan region of Madrid

The adoption of sustainable management practices is booming among service companies, whether due to pressure exerted by external agents or the internal perception that not being aligned with sustainability distances companies from clients and puts companies' long-term prospects at risk. However, few studies have examined the combined effect of implementing environmental management practices and corporate social responsibility practices in the tourism sector. By analysing two surveys conducted with the managers of 370 hotels and 176 restaurants and using structural equations, this study concludes that sustainability practices have a direct and significant impact on the company's competitiveness and on the companies' financial results. However, a separate study of the two surveys shows significant differences between the two analysed groups. This article suggests that despite operating in the same sector, hotels and restaurants behave differently regarding sustainability practices, and they achieve significantly different results in their implementation. In addition, by focusing on the tourism industry, a highly competitive sector, this analysis sheds light on whether investing in sustainability is a good strategy for companies to differentiate themselves and survive in complex sectors.     

Public investment and budgetary consolidation in Portugal

In this paper we find that public investment in durable goods has a positive effect on long-term economic performance in Portugal. We also find that these positive effects are not strong enough for public investment to pay for itself in the form of future tax revenues. Therefore, cuts in public investment in durable goods, although costly in terms of long-term economic performance seem to be an effective way of alleviating pressure on the public budget. It is important to note, however, that this general result contrasts sharply with the evidence found in this paper for public investment in equipment, a small component of public investment in durable goods, as well as with evidence elsewhere for public investment in transportation infrastructures. For these, the effects on output are strong enough for public investment to pay for itself. Therefore, cuts in these two types of public investment, would have negative long-term economic effects as well as negative long-term budgetary effects. Clearly, not all public investment is created equal. We would like to thank the editor as well as two anonymous referees for unusually useful comments and suggestions. The usual disclaimers apply.     

The mexican financial crisis of December 1994 and lessons to be learned

When the Mexican financial crisis occurred in December, 1994, there was little information with which to analyze the prospects, but there were many similarities between the adjustment that Mexico went through in connection with the debt crisis of 1982–83. The time paths of crucial variables in the two situations, 1994–95 and 1982–83, has been studied in order to gain some insight, allowing, of course, for special circumstances that were important on each occasion.We estimated export and import equations from monthly data, 1982–83, and used these equations, together with the rest of the CIEMEX model, to make extrapolations for the period after December 1994.A main finding is that the earlier crisis required a two-year adjustment, but current circumstances lead the full model to extrapolate a milder contraction and faster (one year) recovery. These calculations have been useful in interpreting some of the noneconometric aspects of Mexico's adjustment after 1994, as well as some of the circumstances that precipitated the crisis in the first place.     

A note on one-shot public mediated talk

Lehrer and Sorin (1997, Games Econ. Behav. 20, 131–148) use a one-shot public mediated talk model to show that, given any probability distribution on the outcomes of a finite normal-form game, there exists a public mediated talk mechanism that simulates that distribution, provided the probabilities on outcomes are rational numbers. It is shown here that a minor amendment of the very same model allows a much stronger conclusion: any distribution on the outcomes, whether the probabilities are rational numbers or not, can be obtained as the outcome of a one-shot public mediated talk mechanism.