Growth, Prosperity and the Generation of Inequality

Books reviewed in this article:
Lawrence Mishel, Jared Bernstein, and John Schmitt, The State of Working America, 1998–99
Paul Gregg and Jonathan Wadsworth (eds.), The State of Working Britain     

Process versus product: which determines consumer demand for genetically modified apples?*

One debate in the literature regarding consumers' reactions to genetically modified food (GMF) centres on whether consumers react to the process of gene technology or to the specific GMF products. Results from a choice experiment survey in New Zealand indicate that consumers are heterogeneous with regard to GMF and that some modifications are viewed more positively than others. These findings suggest that for some consumers the process of gene technology is the decisive factor in evaluating GMF, while for others the different potential GMF products are valued according to their enhanced attributes.     

The Socio-Cultural Embeddedness of Individuals' Ethical Reasoning in Organizations (Cross-cultural Ethics)

While models of business ethics increasingly recognize that ethical behavior varies cross-culturally, scant attention has been given to understanding how culture affects the ethical reasoning process that predicates individuals' ethical actions. To address this gap, this paper illustrates how culture may affect the various components of individuals' ethical reasoning by integrating findings from the cross-cultural management literature with cognitive-developmental perspective. Implications for future research and transnational organizations are discussed.     

Attitudes,structure and behaviour in a successful company

Marketing and innovation represent the key to the future success of any company. This paper considers what these dual concepts mean to the attitudes, structure and behaviour of a company, and takes a pragmatic look at the ways in which management can stifle or suppress innovation in a company. The author concludes by stating that a successful company should have a positive attitude toward innovation and meeting the needs of its customers. Its organisational structure should be one which promotes customer contact and the process of innovation.     

Bank Debt and Corporate Governance

In this paper, we investigate the disciplining role of banksand bank debt in the market for corporate control. We find thatrelationship bank lending intensity and bank client networkhave positive effects on the probability of a borrowing firmbecoming a target. This effect is enhanced in cases where thetarget and acquirer have a relationship with the same bank.Moreover, we utilize an experiment to show that the effectsof relationship bank lending intensity on takeover probabilityare not driven by endogeneity. Finally, we also investigatereasons motivating a bank's informational role in the marketfor corporate control.     

Multiple dimensions of power influencing knowledge integration in supply chains

This study investigates how multiple dimensions of power each facilitate knowledge integration within innovation projects in supply chains and their interrelationships. Adopting a process perspective of knowledge, we offer an alternative to much of the existing debate, which has focussed on the possession of resources. We collected data from four case-study Original Equipment Manufacturers and six associated suppliers and analysed these using Template Analysis and cross-case analysis. Our findings reveal how the power of the system, operationalized through relative performance measures, performance measurement mechanisms and the individuals in-charge of them, provides a facilitative context within which other dimensions of power operate. Here, the power of resources (expert and legitimate power), processes (associated with raising issues, cross-functional teams, early supplier involvement and reviews) and meaning (creating legitimacy through reviews) interact to support knowledge integration within innovation projects in supply chains. This, we argue, emphasises the plurality of power dimensions deployed and importance of their interrelationships in facilitating knowledge integration within hierarchical supply chain networks.     

Bank equity stakes in borrowing firms and financial distress

We derive the optimal financial claim for a bank when the borrowingfirm's uninformed stakeholders depend on the bank to establishwhether the firm is distressed and whether concessions by stakeholdersare necessary. The bank's financial claim is designed to ensurethat it cannot collude with a healthy firm's owners to seekunnecessary concessions or to collude with a distressed firm'sowners to claim that the firm is healthy. To prove that a requestfor concessions has not come from a healthy firm/bank coalition,the bank must hold either a very small or a very large equitystake when the firm enters distress. To prove that a distressedfirm and the bank have not colluded to claim that the firm ishealthy, the bank may need to hold equity under routine financialconditions.     

Financial Distress and Bank Lending Relationships

We use a unique data set of bank loans to examine the wealth effects on lead lending banks when their borrowers suffer financial distress. We find a significant negative announcement return for the lead lending bank when a major corporate borrower announces default or bankruptcy. Banks with higher exposure to the distressed firm have larger negative announcement-period returns. The existence of a past lending relationship with the distressed firm results in larger wealth declines for the bank shareholders. Finally, financial distress also has a significant negative effect on borrower's returns.