Managing the risk of loan prepayments and the optimal structure of short term lending rates

Loan pricing is an extremely important aspect of bank operations because loans are typically over two-thirds of bank assets. Many researchers have analyzed the theoretical and empirical impact of how different factors should and do affect fixed rate loan rates and loan prepayments. However, a theoretical decision making model for maximizing expected profit in a declining rate environment has not been developed. After describing the conditions for the optimal loan rate, we develop numerical solutions for it under varying conditions. The varying conditions include the trend in interest rates, volatility of interest rates, and loan maturity. We thank Yen Low and Hamed Bagherpour for their assistance.     

Research opportunities in supply chain management

Since its introduction as a concept in the 1980s, supply chain management (SCM) has undergone significant modification and expansion. A qualitative analysis of 166 unique definitions of SCM published in the literature identified three major themes associated with the supply chain and SCM: (1) activities; (2) benefits; and (3) constituents/components. Utilizing these themes, key research questions and issues within the supply chain and SCM are identified that could be examined by marketing scholars.     

Credit line takedown and endogenous bank capital

This paper investigates the implications of the uncertain timing and usage of loan commitments for the optimal level of bank capital. We use trended Brownian motion to proxy the stochastic takedown of credit lines. Relying on “time to first passage” mathematics, we derive a probability density function for the time to depletion of the bank credit line as well as the likelihood for the time to exhausting the sources of liquidity that fund the loan takedown. Armed with these analytical results, we solve for the optimal level of bank capital within a simultaneous equation framework in order to capture the interrelationships of the endogenous variables. The optimality conditions produce a system of integral differential equations which refuse to yield reduced form solutions and provide no immediate intuition. Therefore, the maximizing values of the bank’s decision variables were simulated over a host of realistic scenarios. We document the comparative static behavior of the bank’s decision variables when equity is unencumbered by capital requirements and, also, examine the impact of the same parametric changes on bank behavior when equity is a fixed proportion of lending. Further simulations produce the expected time to liquidity depletion under different capital requirement schemes.     

Linking multiple layers of innovation-oriented corporate culture, product program innovativeness, and business performance: a contingency approach

In recent years, firms have invested considerably in programs to raise their innovativeness by inspiring employees with an innovation-oriented corporate culture. However, extant literature is inconclusive on how an innovation-oriented culture leads to increases in product program innovativeness (PPI). This study investigates this question by analyzing a multilayer model of innovation-oriented corporate culture, using data from three different informants: marketing managers, R&D managers, and customers. The effects of innovation-oriented values and norms on PPI are fully mediated by cultural artifacts. Therefore, values and norms must be transformed into specific artifacts to exert an influence on innovativeness. Furthermore, market dynamism and technological turbulence have opposite moderating effects on the relationship between innovation-oriented artifacts and PPI. Market dynamism weakens this relationship, whereas technological turbulence strengthens it.     

PRODUCT RETURNS PROCESSING: AN EXAMINATION OF PRACTICES OF MANUFACTURERS,WHOLESALERS/DISTRIBUTORS,AND RETAILERS

Few research studies have published specific empirical data regarding the reverse logistics practices of companies. This multi‐stage study employed interviews, site visits, and a mail survey to collect responses from 230 members of the Warehousing Education and Research Council (WERC) regarding their reverse logistics practices. Results suggest that in spite of the growing importance of reverse logistics, few executives have product return processing as their primary responsibility and often undertake this activity along with other job responsibilities. Most firms handle the product returns process themselves and typically within the same facilities that handle forward logistics. Returning items directly to stock, repackaging and returning to stock, and selling as scrap, were the three top disposition options employed by firms. Results indicate that, contrary to general understanding, the majority of retailers and wholesalers reported a recovery rate of over 75% of product cost. Several hypotheses developed from the published literature on reverse logistics were tested. In many instances, these hypotheses were formulated on anecdotal information or single case studies and had not been empirically tested prior to this research being conducted.     

How does product program innovativeness affect customer satisfaction? A comparison of goods and services

This article attempts to provide deeper insights into the link between the innovativeness of a company’s offered goods/services and customer satisfaction. This study proposes an inverted U-shaped relationship between the innovativeness of the offered goods and customer satisfaction. For the innovativeness of services, information economics and services marketing literature indicate an inverted S-shaped relationship. Two separate studies conducted for goods and services confirm the proposed nonmonotonic effects of the investigated relationships. Both studies use dyadic data from marketing managers to assess innovativeness and from customers to indicate customer satisfaction.     

Is Boreout a Threat to Frontline Employees' Innovative Work Behavior?

With the recognition that innovation is the lifeblood of competitive firms, researchers have investigated multiple antecedents of employees' innovative work behaviors. Most studies focus on supportive work conditions, work requirements, or even high work challenges as drivers of innovative work behavior as the extent to which frontline employees (FLEs) generate new problem‐solving ideas and transform these into uses during the service encounter. This study focuses instead on a lack of resources at the service encounter. Specifically, boreout is a negative psychological state of low work‐related arousal, manifested in three main forms: a crisis of meaning at work, job boredom, and crisis of growth. According to the conservation of resources theory, these three dimensions of job boreout as lack of resources draw energy from FLEs and thus, likely affect innovative work behavior. Data from 142 FLEs and their customers confirm that these dimensions of boreout affect FLEs' innovative work behavior, though in varying ways. A crisis of meaning at work and crisis of growth both impede innovative work behavior, but job boredom has no effect. Furthermore, support provided by customers moderates the relationships of these three boreout dimensions with innovative work behavior in unique ways.     

Impacts of Hedonic and Utilitarian User Motives on the Innovativeness of User‐Developed Solutions

When individual consumers develop products for their own use, they in part expect to be rewarded by the use value of what they are creating (utilitarian user motives), and in part expect to be rewarded intrinsically by such things as the fun and learning experience derived from creating it (hedonic user motives). This paper shows a first‐of‐type study to understand the relationship between individual consumers' motives to innovate and the novelty and utility of the solutions they develop. The theoretical framework integrates self‐determination theory and goal‐setting theory. The major findings of this study are that utilitarian user motives positively affect the utility of user‐developed innovations. In contrast, hedonic user motives drive solution novelty; the more an innovator is “in it for fun,” the more novel the solution developed. However, hedonic user motives also have an inverted U‐shaped relationship with solution utility. When the dominant motive for developing an innovation is the joy of the creative process rather than use value, the utility of what is developed is negatively affected. These findings are of research interest, and can be of significant practical interest to producers hoping to benefit from user‐developed innovations. For the first time, it has been possible to show that the adjustment of hedonic rewards, for example by means such as gamification, can affect the nature and utility of solutions individuals create.