Risk assessment of option performance for new product and process development projects in the chemical industry: a case study

This paper presents as a case study, empirical research forming part of a large EPSRC‐funded project to decrease new product and process development times within the UK fine chemicals industry. The work aimed to design a decision support system to evaluate competing options in such development projects. Theoretical and practical contributions from academic and industrial collaborating groups were integrated using Action Research. High levels of risk when bringing new products to market or new processes on line means that risk assessment features significantly when evaluating different project options. A key research target, and the concern of this paper, is the design and use of a risk assessment tool (RAT) to fit the context of the overall decision support system. Collectively the tools enabled the options within individual projects to be evaluated on risk and other performance dimensions. Industrialists provided a number of comprehensive case studies to test the suite of tools. Theoretical and empirical implications are discussed.     

Informativeness of performance measures and Chinese executive compensation

We provide evidence on the use of accounting versus stock market performance measures as determinants of Chinese top managers’ compensation over 2001–2007. We theorize and find that (1) accounting returns are weighted more heavily in general than stock returns in determining top executive compensation, (2) state-owned enterprises (SOEs) rely significantly less on stock market returns than do non-SOEs, (3) firms located in high marketization regions rely more heavily on stock market returns to reward managers, and (4) firms with better internal governance quality rely more on stock returns to reward executives. We discuss our findings with particular reference to the Chinese context of our research.     

Demand,Supply, and Labor Market Analysis

Our previous research argued that interest payments on consumer debt should be subtracted from household income to measure poverty. We estimated 4 million additional poor Americans in 2007, calling them "debt poor." This paper finds that the debt poor are somewhat like the poor (they are unlikely to own a home or have private health insurance), somewhat like middle-class households (race), and in-between in other ways (education levels). Debt poor households were likely middle class once, having access to considerable consumer credit; but following a loss of income, their large debt burden put their living standard below their poverty threshold.     

The impact of accounting rule and economic differences on the firm’s choice of cash and share-puts

While prior literature has sought to explain why firms issue put options on their own stock (Gibson et al., 2006), no one has focused on examining why some firms choose to structure put contracts in a way that provides them the ability to settle future put obligations with their own common equity rather than cash. FAS 150, which changed the reporting requirements, highlights that under the prior rules firms included share-settlement terms in their put contracts to avoid showing their open put position as a balance sheet obligation. However, some evidence suggests that the choice between including cash or share settlement terms may be economically driven by the potential impact that each settlement-type has on firm solvency and equity holdings. Our results support the economic-based motivation for put-type choice by showing that firms elect to include share-settlement terms in their put contracts to provide themselves payment flexibility in the event internally generated cash flows are not sufficient to meet future contractual put obligations. These results support the FASB’s announcement that it is reconsidering homogeneous liability classification of cash and share-settled puts in its re-examination of FAS 150.     

FIGHTING FINANCIAL CRIME: A UK PERSPECTIVE

Financial crime has a devastating impact on individuals, companies and governments. Traditional methods of control, predominantly investigation and prosecution, have failed to abate the rise of both fraud and money laundering offences. Tackling financial crime is best approached from the perspective of prevention, an activity that requires co-operation between all those affected by this widespread and corrosive social problem.     

Optimal response to a next generation new product introduction: to imitate or to leapfrog?

In this paper, we study the choice of technology levels and timing of the introduction of new technologies in a market in which customer sophistication increases over time. Faced with the introduction of a new generation product, a firm can either imitate or leapfrog it. If the new product is introduced optimally, we show that the optimal response is to imitate it. This is because the technology leader's best strategy is to set a technology level that makes imitation the best response. We also derive decision rules for the timing of introduction of new technologies. Copyright © 2005 John Wiley & Sons, Ltd.     

Congruence between technology and compensation systems: implications for strategy implementation

This paper examines the interactive relationship between the use of integrated manufacturing and compensation practices in predicting several aspects of plant performance in the concrete pipe industry. We predicted that compensation practices reinforcing collective effort, teamwork, and flexibility (team incentives and skill-based pay) enhance the effectiveness of integrated manufacturing systems (total quality management and advanced manufacturing technology), while practices inhibiting cooperation and teamwork among employees (individual incentives and seniority-based pay) impede it. Results provide moderate support for the congruence model across several measures of plant effectiveness (labor hours per ton, lost-time accidents, perceptual performance, and customer satisfaction). Implications of the research are addressed. Copyright © 2001 John Wiley & Sons, Ltd.     

Why do firms switch underwriters?

In the mid-1990s, 30% of firms completing an SEO within three years of their IPO switched lead underwriter. This article provides evidence on why they switched. Contrary to predictions of prior research, there is little evidence that firms switch due to dissatisfaction with underwriter performance at the time of the IPO. A surprising result is that switchers’ IPOs were significantly less underpriced than non-switchers’ IPOs. However, switchers raised fewer proceeds than expected, compared to the mid-point of the filing range, while non-switchers raised significantly more proceeds. There are two main reasons for switching. Firms graduate to higher reputation underwriters, and they strategically buy additional and influential analyst coverage from the new lead underwriter. Survey results support these conclusions.     

To agree or not to agree? A meta-analytical review of strategic consensus and organizational performance

The premise underlying most of the research on strategic consensus is that a higher degree of consensus has a positive impact on organizational performance. Empirical studies, however, have produced inconsistent results for the strength and direction of this relationship, as well as for the role of potential moderators. With this meta-analysis, we provide empirical support for a positive effect of strategic consensus on organizational performance, and offer evidence for the existence of several moderators of the aforementioned relationship, which we then discuss as fruitful avenues for future research. This study enhances our understanding of this important strategy process construct and benefits managerial practice by discussing means for improving the realization and implementation of strategies.