Interactive strategy formation: Organizational and entrepreneurial factors related to effective customer information systems practices in B2B firms

Interactive marketing requires that a firm learn about its customers and remember what the customer has said to personalize communications and customize product offerings to those customers. This type of marketing requires that customer information be actively managed because information from and about the customer is the core of marketing decision-making. In-depth interviews with 17 managers in five firms identified specific organizational and entrepreneurial factors pertinent to the strategic management of customer information. The research suggests that interactive marketing require a company that can itself be interactive with its internal and external environment to create strategies that can succeed in a changing environment.One exemplary company was compared to four others to uncover organizational issues and processes leading to effective management of customer information. Using the Resource-Based View and the importance of the effective management of intangible assets as its starting point, this research illuminated the processes involved with collecting and disseminating information and highlighted the firms' struggle with issues of inter-functional conflict. Perhaps most importantly, from a strategy-formation point of view, customer-centric strategies related to customer information management were found to be developed interactively, as a dialogue between middle and upper management, using customer data and competitive trends.     

The Value of Contingent Commissions in the Property–Casualty Insurance Industry: Evidence From Stock Market Returns

Insurance producer compensation has incorporated contingent commissions for decades. In 2004, the New York State Attorney General sued insurers and brokers, alleging compensation abuses and calling for elimination of some forms of contingent commissions. Daily stock price return data reveal negative announcement‐period portfolio returns for property–casualty carriers, suggesting expected negative cash flow effects. Firm‐level losses were related to intensity of contingent commission use, suggesting that the effects of such regulatory changes would be felt most by firms that relied on contingent commissions. Investors believed contingent commissions were valuable not only for producers but also for carriers.     

Responsible Management, Incentive Systems, and Productivity

A disconnect remains between theories about responsible management and application in real-life organizations. Part of the reason is due to the complexity and holistic nature of the field, and the fact that many of the benefits of aligning business objectives with changing societal conditions are of an intangible nature. Human resource management is an increasingly important part of the field with benefits including talent retention, higher levels of motivation, and improvements in organizational cohesion. This paper sets out an experiment run at a large Spanish university to try to analyze the impact on worker productivity of a responsible management stance by an employer. Based on the Corporate Social Performance model, the paper examines the issue from the point of view of responsibilities, responsiveness, and outcomes, and considers the cost/benefit effect of incorporating a social responsibility variable into the wage structure to measure the impact on productivity.     

Perceived Parental Control,Restructuring Ability,and Leisure Motivation: A Cross-Cultural Comparison

ABSTRACT

Leisure is viewed worldwide as an important developmental context for adolescents. As leisure research and programs are shared across nations, it is crucial to examine the cultural equivalence of leisure-related constructs and how they are related. Grounded in self-determination theory, this study explored the influence of perceived parental control and leisure restructuring ability on leisure motivation (amotivation and autonomous motivation) using samples of eighth grade adolescents in the United States and South Africa. Results of multiple-group structural equation modeling showed that the measurement model of the constructs was equivalent across the two samples, but the determinants of leisure motivation differed between the two samples. The findings provide implications for future cross-cultural research in leisure and offer insights on design and adaptation of leisure-based intervention and education programs in different cultural contexts.     

A censored stochastic volatility approach to the estimation of price limit moves

A censored stochastic volatility model is developed to reconstruct a return series censored by price limits, one popular form of market stabilization mechanisms. When price limits are reached, the observed prices are truncated and the equilibrium prices are unobservable, which makes further financial analyses difficult. The model offers theoretically sound estimates of censored returns and is demonstrated via simulations to outperform existing approaches with respect to the estimates of model parameters, unconditional means, and standard deviations. The algorithm is applied to model stock and futures returns and results are consistent with the simulation outcomes.     

Is backdating executive stock options always costly to shareholders?

We use a binomial model to investigate the cost to shareholders of backdating employee stock option (ESO) grants to award in‐the‐money rather than at‐the‐money options to a manager. When the expected return of the stock underlying an ESO is sufficiently close to the risk‐free rate, a backdating arrangement can always be structured to simultaneously improve shareholders’ wealth and the manager's utility. The smaller the manager's non‐option wealth, personal income tax rate or risk tolerance, the more likely a backdating arrangement can be welfare improving.     

Coefficient of determination in a simultaneous equation model: A pedagogic note

The simultaneity of the market for securities has been recognized by a number of finance authors. Simkowitz and Jones [10] advocate the use of a simultaneous equation system to capture some of the relationships among the securities in a homogeneous set. Simkowitz and Logue [11], and Jones and Simkowitz [6], have performed studies using a simultaneous equation system in a capital asset pricing framework. Marcis and Smith [9] call for the use of the simultaneous methodology when there is a strong residual correlation between securities. Simultaneous equation systems have been used in other areas of finance by authors such as Barnea [1], Herbst [5], and Logue and Lindvall [8]. This note explores how anomalies concerning the coefficient of determination (R²) mentioned in previous research could have occured. Conditions under which the (R²) does not have its usual properties and an example is given.     

BIVARIATE BINOMIAL OPTIONS PRICING WITH GENERALIZED INTEREST RATE PROCESSES

We extend existing pricing models and develop a bivariate binomial option pricing technique that accommodates correlated state variables. This technique offers the ability to price American-style options, thereby accommodating early exercise, despite the existence of two correlated underlying state variables. Our technique is computationally efficient and can be further generalized for multiple-state variables, albeit with an accompanying rise in computational expense.     

International diversification with frontier markets

We provide an analysis of frontier market equities with respect to world market integration and diversification. Principal component results reveal that frontier markets exhibit low levels of integration. In contrast with developed and emerging markets, frontier markets offer no indication of increasing integration through time. Furthermore, individual frontier market countries do not exhibit consistent rates of changing integration. Structural break tests identify breakpoints in integration, as well as integration dynamics across countries. We show that frontier markets have low integration with the world market and thereby offer significant diversification benefits.     

Rewarding improvements: optimal dynamic contracts with subjective evaluation

We study a T‐period contracting problem where performance evaluations are subjective and private. We find that the principal should punish the agent for performing poorly in the future even when the evaluations were good in the past; at the same time, the agent should be given opportunities to make up for poor evaluations in the past with better performance in the future. Optimal incentives are thus asymmetric. Conditional on the same number of good evaluations, an agent whose performance improves over time should be better rewarded than one whose performance deteriorates.