Governance, organizational capabilities, and restructuring in transition economies

This paper focuses on the links between governance, firm capabilities and restructuring following the large-scale privatization process in Central and Eastern European transition economies using an integrative approach. Restructuring in these countries has been motivated by political and institutional changes and less so by market forces. Accordingly, political processes have produced political solutions such as “give-away” privatizations to insiders. These privatizations, in contrast to divestitures to outside owners, have realized less substantive restructuring because non-market incentives, such as too much managerial equity ownership, have created managerial entrenchment. In addition, we propose a connection between governance and organizational learning suggesting that learning is inhibited by excessive managerial ownership and lack of board knowledge regarding its oversight function. Furthermore, this entrenchment and poor board functioning may be perpetuated in financial-industrial groups, which have emerged as substitutes for market intermediaries in emerging economies. Thus, we propose that outside ownership involvement and the development of organizational capabilities may facilitate restructuring in the Central and Eastern European context. Our theoretical arguments are supported by case study evidence from transition economies.     

Strategic investment flexibility for MNE success in Russia: Evolving beyond entry modes

Many American multinational enterprises (MNEs) are currently active in Russia despite the turbulence encountered in that transitional economy. Most seem to have entered as an extension of their global strategies with a long-term horizon. While some entered with considerable involvement and substantial investment, others followed a more cautious or incremental path. This article focuses on how MNE strategies have evolved after entry and describes six strategic approaches. Strategic investment flexibility is found to depend upon a company 's original entry strategy and tolerance for risk, as well as its assessment of the legal and political environment, industry conditions, market readiness for its products or services, competition, and the investment required to establish a sustainable competitive position. Keys to successful strategy development are drawn from the experiences of US MNEs which have established growing businesses in the vast Russian market. The strategies of such successful MNEs, however initiated upon entry, usually evolved to a relatively heavy investment position.     

The dietary and health behaviour of young people aged 18–25 years living independently or in the family home in Liverpool,UK

An individual's dietary habits are largely developed during childhood and adolescence, and are likely to be determined by both nature (the development of sensory perceptions) and nurture (parental influence, and later on the influence of peers). However, diet is likely to evolve throughout the life cycle as circumstances change and new influences are introduced to an individual's lifestyle. An example of this is the changes in diet that occur as a result of the transition young people make away from the family home into independent living. Leaving behind the meals provided and cooked by parents/guardians and learning how to shop on a budget and prepare and cook for themselves may result in the adoption of poor eating habits, which is likely to have a detrimental effect on health. Leaving behind the restrictions of parental control may also result in the adoption of unhealthy lifestyle practices such as smoking and excessive alcohol consumption. This study therefore seeks to investigate the effect of leaving home on a young person's diet and lifestyle. Health behaviour and food intake was assessed by questionnaire. Findings suggest that a young person's diet may change after leaving home, but these changes are not necessarily negative. More negative health behaviour was observed in young people living independently.     

BUYERS,SELLERS, AND MIDDLEMEN: VARIATIONS ON SEARCH‐THEORETIC THEMES

We study exchange that is bilateral but indirect—it involves chains of intermediaries, or middlemen—in markets with frictions. These frictions include search and bargaining problems. We show how, and how many, intermediaries might get involved in a chain, and how bargaining with one depends on upcoming negotiations with those downstream. The roles of buyers, sellers, money, and prices are discussed, allowing us to clarify some neglected connections between different branches of search theory. Pursuing one such connection, with monetary economics, we show how bubbles can emerge in intermediation, even with fully rational agents and perfect foresight.     

Analysts' Forecasts Following Forced CEO Changes

This paper examines analysts' earnings forecasts during the period of uncertainty following a change of chief executive officer (CEO). It distinguishes between forced and non‐forced CEO changes, and examines whether analysts utilize their information advantage to reduce the heightened uncertainty of a forced change of CEO. Examining a sample of Australian companies followed by analysts between 1999 and 2009, we find that forecasting accuracy is lower and earnings forecasts are more optimistic for firms experiencing forced CEO turnover compared to firms not undergoing such a change. However, dispersion is not statistically different. The results suggest that forced CEO turnover events provide a challenge to the forecasting environment for analysts. During CEO changes, investors should be aware that forecasts are less accurate and have an optimistic bias.     

Has Adoption of IFRS Increased Non–North American Institutional Investment in the Canadian Stock Markets?

We investigate whether non–North American (non‐NA) institutional investment in firms listed on the Canadian stock markets increased between the pre‐ and post‐IFRS adoption periods relative to such investment in firms listed on the U.S. stock markets. Prior to IFRS adoption, Canada had high‐quality financial reporting standards that were similar to the U.S. standards. As consequences of IFRS adoption, Canadian financial statements became more comparable with European and other IFRS country financial statements and less comparable with neighboring U.S. financial statements. Thus, a question of interest is whether the enhanced comparability with non‐NA companies was beneficial in terms of attracting non‐NA investment to Canadian companies versus U.S. companies. We find that there was no significant change in non‐NA institutional investment in Canadian firms relative to U.S. firms for the very largest (fifth quintile) and for smaller (first, second, and third quintiles) Canadian companies. However, intermediate‐sized Canadian companies in the fourth size quintile lost non‐NA institutional investment relative to their U.S. peer companies, suggesting that non‐NA investors cared more about comparability with U.S. peer companies than non‐NA peer companies for companies in this size quintile.     

Predicting future purchases with the Poisson log-normal model

The negative binomial distribution (NBD) has been widely used in marketing for modeling purchase frequency counts, particularly in packaged goods contexts. A key managerially relevant use of this model is Conditional Trend Analysis (CTA)—a method of benchmarking future sales utilizing the NBD conditional expectation. CTA allows brand managers to identify whether the sales change in a second period is accounted for by previous non-, light, or heavy buyers of the brand. Although a useful tool, the conditional prediction of the NBD suffers from a bias: it under predicts what the period-one non-buyer class will do in period two and over predicts the sales contribution of existing buyers. In addition, the NBD's assumption of a gamma-distributed mean purchase rate lacks theoretical support—it is not possible to explain why a gamma distribution should hold. This paper therefore proposes an alternative model using a log-normal distribution in place of the gamma distribution, hence creating a Poisson log-normal (PLN) distribution. The PLN distribution has a stronger theoretical grounding than the NBD as it has a natural interpretation relying on the central limit theorem. Empirical analysis of brands in multiple categories shows that the PLN distribution gives better predictions than the NBD.     

Organic Food at the Point of Purchase: Understanding Inconsistency in Consumer Choice Patterns

The organic food category, while still small in terms of world food production, has continued to grow in many markets in the developed world. This article focuses on understanding the barriers and facilitators to purchasing organic food at the final hurdle: the point of purchase (POP). A qualitative study has identified seven factors that influence buyer behavior at the POP, and these are consumer intention to purchase organic food when entering the retail outlet; habit; availability; false assumptions; visibility and access of organic food; visual and olfactory cues; and price. These can often be the final hurdle to consumers choosing (or not) organic food at the POP.