The control dynamics of outsourcing involving an early-stage firm

Firms in the early stage of their organisational lifecycle experience challenges that shape the adoption of management controls. They are also recognised for their use of outsourcing. However, the accounting research has provided limited insight on how these control challenges and inter-organisational control concerns interact to influence the adoption of specific controls within an outsourcing relationship involving an early-stage firm. Exploration of this gap provides a key motivation for this paper. Contrary to existing management control and organisational science literature, we find a strong preference for new or enhanced action controls. Conversely, we find low levels of interest in result controls by managers within the buyer but not the supplier firm. These preferences influence inter-organisational control adoption within the frame of an incomplete outsourcing contract that emphasises flexibility in terms of relationship exit. Within the limits of a case study methodology, we argue that adoption of inter-organisational controls is shaped by tensions between the control challenges of early-stage firms, the control preferences of managers within these firms and inter-organisational control concerns. These findings have theoretical implications, expanding the Davila et al. [2009. Reasons for management control systems adoption: insights from product development systems choice by early-stage entrepreneurial companies. Accounting, Organizations and Society, 34 (3–4), 322–347] framework and the Merchant [1985. Control in Business Organizations. Boston, MA: Pitman] control typology into an ESF inter-organisational control context.     

A Structural VAR (SVAR) analysis of fiscal shocks on current accounts in India

The stimulus packages announced to deal with the economic slowdown has increased the fiscal deficit of many countries and it spurred the debate on the possible effect of these fiscal shocks on other economic variable especially the current account. In this study, we examine the effect of fiscal deficit on current account of India using the VAR as well as the Structural VAR (SVAR) analysis. Our analysis indicates that the fiscal deficit is positively affecting the current account deficit in India, as predicted by the twin deficit hypothesis. Therefore, the historical data indicates the presence of the twin deficits phenomenon in Indian context.     

Strategy and environment as determinants of performance: Evidence from the Japanese machine tool industry

This study examines the roles played by the environment and realized strategies on firm-level performance in the Japanese machine tool industry. We examine the effect of environment and strategy on performance using longitudinal data on a sample of 25 Japanese machine tool firms over the period 1979-92. Our results indicate that both firm strategies and the environment play significant roles in influencing profitability and growth. More specifically, whereas both strategy and environmental variables are significantly related to firm profitability, only environmental variables are associated with firm growth. Additionally, in contrast to U.S. based studies, we find that capital expenditures and technological change are not negatively associated with profitability. Rather technological change has a positive impact on firm growth. We discuss the implications of these results for strategic management and provide suggestions for future research.     

Market liberalization and integration of maize markets in Malawi

The paper studies the extent of market integration of maize markets in Malawi in order to understand how it has been affected by market liberalization. Several measures of integration are introduced to analyze both the comovement of prices and the price adjustment process over time. Monthly retail prices of maize at eight main locations over the period January 1984 to December 1991 are considered. The main conclusion is that liberalization has increased market integration.     

The theory of corporate takeover bids: A subgame perfect approach

In this paper I re-examine Grossman & Hart's (1980a) earlier work on corporate takeovers and address three main shortcomings of their theory. First, their theory implies that in the ‘Nash equilibrium’ either all shareholders will decide to tender their shares or all will refuse the raider's tender offer. Hence, they look only at the pure strategy equilibria. Second, there does not exist any free-rider problem in the extreme cases of pure strategy equilbria because everyone sells his or her share and the raider does not have to deal with any minority shareholder in the equilibrium. On the other hand, if the raid fails and no one sells, then there is no question of dilution either. I show some mixed-strategy equilibria using assumptions of Grossman and Hart. Third, Grossman and Hart claim that their theory rules out the possibilities of takeovers by the inefficient raider in which the shareholders who tender their shares are worse off than they would have been otherwise with the incumbent management. It appears from the model that their argument is based on rather arbitrary assumptions.     

Rethinking the impact of GDP on financial development: Evidence from heterogeneous panels

This paper examines the nonlinear impact of real GDP per capita on financial development in a panel of 125 countries. It also determines the moderating effect of inflation on the impact of GDP on financial development. It employs the dynamic panel system generalized method of moments (GMM) and the dynamic common correlated effects (CCE) to do both panel and country‐specific analysis, as well as control for cross‐sectional dependence, heterogeneity and endogeneity. This study shows that GDP has a positive impact on financial development in the entire panel. However, when we split the panel into different income groups, we find a positive impact in the high‐ and middle‐income groups while the impact is insignificant in the low income group. Although we find no evidence of a nonlinear impact of GDP on financial development in the panel, the country‐specific analysis reveals a significant nonlinear relationship between GDP and financial development in 73 countries. We also show that inflation adversely moderates the positive impact of GDP on financial development in middle‐income countries. This study implies that the relationship between GDP and financial development depends on the levels of GDP and inflation rate. We recommend some policy options based on the findings.     

Does group membership matter? Evidence from the Japanese steel industry

In this study we address criticism that performance differences among strategic groups found in past research may be spurious and attributable to firm effects. The Japanese steel industry provides the setting for the study. Our analysis is based on data from the carbon steel sector of the Japanese steel industry for the periods 1980–87 and 1988–93. A one-way ANOVA indicated that the average performance of firms in the two technology-based groups in this industry—the integrated mills and the minimills—were significantly different during the two periods. Subsequently, we performed a regression analysis to examine the residual group effect after controlling for both environment and firm-specific effects. We found that even after controlling for both environment and firm-specific effects group membership was significantly associated with firm performance. Copyright © 2001 John Wiley & Sons, Ltd.     

When does the share price equal the present value of future dividends?

Summary This paper discusses an explicit necessary and sufficient condition on the dividend stream of a publicly traded company, under which the price of the company's share is equal to the present value of the future dividends that will accrue to it. When it is not, the share price equals the present value of the future per share dividend plus the limiting per share value of the company at infinity. It uses a well-accepted generalization of the Miller-Modigliani framework, and assumes that the firm is an infinite horizon firm which may engage in repurchasing its own shares. It develops a proper dividend approach that can value such a firm for any dividend stream. The paper concludes by clarifying some remarks in the Miller-Modigliani paper.For helpful discussions and comments, I thank Laurence Booth. Mike Gordon, Robert Jarrow, Raymond Kan, Rajnish Mehra, David Quirin, and Rishin Roy. Support from Social Sciences and Humanities Research Council of Canada is greatly appreciated.