Evolving Purchasing and Supply Organizations: A contingency model for structural alternatives

Purchasing and Supply Management (PSM) is under significant pressure to find levers to further increase its contribution to corporate goals. In order to improve performance in line with expectations, Purchasing and Supply Organizations (PSOs) have to evolve continuously. To help address this challenge, a comprehensive contingency framework of PSO structures is presented. The framework is based on existing literature on PSO contingency factors as well as analysis of two case companies. The findings highlight the importance of taking a contingency perspective for understanding the PSO and combining a detailed view of macro-level structural dimensions with micro-level characteristics. These macro-level dimensions comprise category, business unit, geography and activity. The micro-level characteristics comprise centralization, formalization, specialization, participation and standardization. From a theoretical perspective, the contingency framework opens up insights that can be leveraged in future studies in the fields of hybrid PSOs, global sourcing organizations, and International Purchasing Offices (IPOs). From a practical standpoint, an assessment of external and internal contingencies and their relation to specific structural dimensions and characteristics provides the opportunity for more consciously evolving the PSO to continue to improve PSM's contribution.     

Goodwill impairment as a reflection of investment opportunities

We exploit a unique opportunity to examine whether goodwill impairment write‐offs reflect firms’ investment opportunities during the first years of the US goodwill impairment accounting regime. We find that impairment write‐offs are negatively associated with firms’ underlying investment opportunities. We also find associations between goodwill impairment write‐offs and traditionally applied leverage, firm size and return on assets variables, although the leverage and firm size results are less robust. The results support the International Accounting Standards Board and Financial Accounting Standards Board contention that an impairment test regime can reflect firms’ underlying economic attributes, while simultaneously indicating that managers use discretion to reduce contracting costs.     

The role of technical expertise in firm governance structure: evidence from chief financial officer contractual incentives

We provide evidence that the presence of technical expertise in firm governance structure reduces reliance on contractual incentives to control the potential agency problem for executives whose responsibilities require specialized knowledge. Specifically, we find that firms with financial expertise in the form of a board finance committee, or a chief executive officer with a financial background, tend to use lower levels of incentive‐based compensation for their chief financial officers. Our findings suggest financial experts provide stronger oversight and/or direction with regard to firm financial policies and strategies, thereby allowing firms to reduce reliance on incentive compensation. Our study provides insight into the role of technical expertise and board committees in firm governance, and into the benefits of common functional expertise within top management teams. Copyright © 2010 John Wiley & Sons, Ltd.     

Hotel Selection Criteria Used by Mainland Chinese and Foreign Individual Travelers to Hong Kong

Given the growing number of outbound tourists from Mainland China to other parts of the world, it is important that hoteliers are aware of the different needs of this group of travelers. This study examines differences in the importance ratings of hotel selection criteria between Mainland Chinese and foreign individual travelers to Hong Kong. The results indicate that Mainland Chinese travelers placed different levels of importance on the various attributes examined than did their non-Chinese counterparts. They are generally more demanding than foreign respondents, despite the fact that the budgets they allocate for accommodation are smaller both in percentage and in absolute dollars.     

Forecasting US Air Travelers to Europe,Caribbean and Asia

Travel and tourism are among the most important economic contributors to most, if not all, countries. According to the World Tourism Organization (WTO), the number of international arrivals showed remarkable growth, from 25 million international arrivals in 1950 to 699 million in 2000. This indicates an average annual growth rate of 7%. In the same period, tourism receipts recorded an average annual growth rate of 11%. In 2002, international tourism generated worldwide receipts of US$474 billion, corresponding to US$1.3 billion a day or US$675 per tourist arrival. In view of the important role that international tourism plays in the global economy, this research applied four time-series forecasting techniques to project the trend of US air travelers, a major source market, to Europe, Caribbean and Asia, the three leading outbound markets (second to Canada and Mexico) from the US in the period 2003–2005. Experimental outcomes reveal declining trends. This paper discusses the underlying factors for such trends. Lastly, this paper ends with a detailed discussion on policy implications.     

The effect of own-firm and other-firm experience on foreign direct investment survival in the United States, 1987–92

We argue that foreign firms operating in a host country generate information spillovers that have potential value for later foreign direct investment. We test two predictions. First, we expect foreign direct investments by firms with experience in a host country to be more likely to survive than investments made by first-time entrants. Second, foreign direct investments will be more likely to survive the greater the foreign presence in the target industry at the time of investment, subject to two contingencies. The first contingency is that the relationship will be weak or nonexistent among firms with no experience in the host country, because these firms have difficulty evaluating and taking advantage of the information spillovers. The second contingency is that the presence of other foreign firms will not affect investment survival among firms that already have a presence in the target industry and undertake expansion. These firms already possess general information about the target industries and are unlikely to gain additional benefit from information spillovers. We find supportive evidence based on the survival to 1992 among 354 U.S. investments undertaken by foreign firms in manufacturing industries during 1987. © 1997 John Wiley & Sons, Ltd.     

The right speed and its value

Slow investments cause substantial revenue losses, yet acceleration increases costs. This tradeoff implies that an optimal investment speed usually exists; it is faster the higher a firm's intrinsic speed capability. We hypothesize that it is a firm's intrinsic speed capability, rather than its speed relative to industry competitors per se, that boosts firm value. Using data on oil and gas facilities (1996–2005), we find that intrinsic speed capabilities augment firm value in a varied way: their value is larger with better corporate governance, lower cost of capital, and higher ability to draw value from R&D investment. Our work elevates the discussion of speed from a project‐level consideration to a firm‐level competitive advantage issue and raises the need to further explore its strategic value. Copyright © 2013 John Wiley & Sons, Ltd.     

Competitive actions and firm performance of hotels in Hong Kong

Drawn on the recent action–reaction perspective in competitive dynamics studies, this paper suggests that not only the number of competitive actions, but also the extent of differences of action portfolios within and between firms are relevant in determining a firm's performance. A distinction of these differences of competitive action portfolios among firms and the corresponding measures to capture these effects are proposed. This study of Hong Kong high tariff hotels confirmed that diversifying a hotel's portfolio of actions, but not too much different from the competitors, would help hotels to achieve higher financial performance in a competitive market.