How to leverage the impact of R&D on product innovation? The moderating effect of management innovation

Although research and development (R&D) is a key indicator of (technological) innovation, scholars have found mixed results regarding its effect on product innovation and firm performance. In this paper, we claim that variations in R&D effectiveness can be explained by changes in a firm’s social system, in particular in its management innovation. It is still unclear how management innovation influences R&D effectiveness in terms of product innovation. In this study, we address this theoretical and empirical gap in the innovation literature. Our theoretical arguments and findings from a large-scale survey among Dutch firms show that R&D has a decreasingly positive relationship with product innovation, particularly for firms with low levels of management innovation. However, in firms with high levels of management innovation, this relationship becomes more J-shaped, especially in small and medium-sized firms. Our findings also appear to indicate that management innovation may be more important for competitive advantage than just R&D. Overall, our insights reveal that management innovation is a key moderator in explaining firms’ effectiveness in transforming R&D into successful product innovation.     

Improving corporate governance where the State is the controlling block holder: evidence from China

This paper examines changes in values and returns for Chinese firms around announcements of block-share transfers among government agencies, State-owned enterprises and private investors. We find that transfers to all three types of investors result in positive abnormal returns around transfer announcements, even when the transfers do not create a new controlling block holder and when transfers are between State entities. We also find that transfers from State entities to private entities result in larger increases in value and returns than transfers between State-controlled entities – consistent with the superior incentives and expertise of private investors. We conclude that corporate governance can be improved at State-controlled firms by improving incentives and expertise of controlling block holders.     

Market microstructure: A review from down under

The early automation of the Australian and New Zealand financial markets provided researchers with access to high‐frequency data to undertake extensive empirical market microstructure research. We use this anniversary edition of Accounting and Finance to review some of this research and to discuss the development of the Australian and New Zealand markets since their automation. We identify issues currently facing the markets and highlight potential areas for future research. The paper also provides a review of market microstructure theory on inventory control models and asymmetric information models.     

Management Innovation and Leadership: The Moderating Role of Organizational Size

Recent research on management innovation, i.e. new managerial processes, practices, or structures that change the nature of managerial work, suggests it can be an important source of competitive advantage. In this study, we focus on management innovation at the organization level and investigate the role of leadership behaviour as a key antecedent. Due to its prominent role within organizations, top management has the ability to greatly influence management innovation. In particular, we focus on leadership behaviour and examine transformational and transactional leadership. Additionally, as contextual variables like organizational size may influence the impact of leadership, we investigate its moderating role. Findings show that both leadership behaviours contribute to management innovation. Interestingly, our study indicates that smaller, less complex, organizations benefit more from transactional leadership in realizing management innovation. On the other hand, larger organizations need to draw on transformational leaders to compensate for their complexity and allow management innovation to flourish.     

Large option trades, market makers, and limit orders

This article focuses on the difference between market makersand limit orders in their role as suppliers of liquidity. Forboth sources of liquidity I analyze the price behavior of stocksand options around large option trades and I estimate the premiumpaid by the initiator of the large trade. My findings suggestthat limit orders for options are 'picked off' after adversechanges in the underlying stock price. Furthermore, I find thatfor these transactions there is a permanent change in quotationsin the direction of the transaction. After transactions wheremarket makers supply liquidity, quotes tend to return to theirpretrade level.     

Business Ethics in Western and Northern Europe: A Search for Effective Alliances

Business ethics in Westenr and Northern Europe has acquired a certain momentum during the last fifteen years, both as an academic discipline and as a point of reference in business policies. The article reports about developments in academia in various countries, and the founding of national and Europe-wide networks and organizations bringing together representatives from business as well as from universities. It presents sources of information on the state of affairs, and proposes some parameters by which the national varieties of posssible alliances between ethical thinking and business policies can be depicted more adequately. The thesis of the report is that, in order to be operational, business ethics in Western and Northern Europe has to become part of the total configuration of economic, historical and ideological components that shape the social fabric on a national level.     

Teaching management accounting in a competencies-based fashion

Traditionally, management accounting has been regarded as a monodisciplinary field of study that mainly focuses on calculating costs and prices. Today, it is seen that the field encompasses an ever-increasing number of knowledge domains including, for example, economics, sociology, psychology, and ethics. Modern-day management accountants have to be able to apply elements from all of these domains when solving concrete, real-life problems. The Open University of the Netherlands has therefore tried to construct a competencies-based management accounting curriculum that uses the well-known case method and integrates issues from various knowledge domains. In the curriculum, a unique problem-solving strategy is introduced that helps students to tackle as management accountants problems they may encounter during their studies, as well as the decision-making in their daily practice. This paper aims to give an overview of one of the courses in this curriculum, highlighting the use of the aforementioned problem-solving strategy.     

The association between qualitative management earnings forecasts and discretionary accounting in the Netherlands

This paper examines whether there is an association between discretionary accounting and the accuracy of long-run forecasts of annual earnings disclosed voluntarily by Dutch companies in the directors’ report. In particular, investigations were made of the consistency in the sign and direction of discretionary accounting techniques and qualitative earnings forecasts. Long-run forecasts are defined, for the purposes of this paper, as forecasts made at least seven months before the year-end. Although not mandatory, qualitative forecasts are released by well over 60% of the listed companies in the Netherlands. Empirical results indicate that there is consistency in the sign and direction of qualitative earnings forecasts and discretionary accounting. After adopting discretionary accounting, the forecast errors are reduced if the company can reach the management earnings forecast (target). In the event that reserves are insufficient to accomplish this goal, managers choose their next best option and take an earnings bath in order to maximize reserves available for future use. By partitioning the sample in various sub-sets it is shown that earnings management and forecast errors occur most in the extreme ranges of financial performance. Overall, the study shows that management engages in discretionary accounting to present results in line with the disclosed qualitative earnings forecasts in their directors’ reports. Whilst discretionary accounting may clearly improve the consistency of companies’ earnings forecasts released via the directors’ reports and the actual earnings, managers’ earnings forecasts are sometimes disclosed in anticipation of planned discretionary accounting actions.     

Informal Spaces: The Geography of Informal Economic Activities in Brussels

This paper unravels the relations between different categories of the informal economy and their spatial distribution in the geographical setting of Brussels. Micro perspectives (households as economic agents) and macro perspectives (the informal economy related to economic recession) are combined in order to deal with categories of informal activities which are homogenous in terms of their spatial logic. In the first part we review several classifications of informal economic activities and assess them in terms of their congruence with the distinctions of economic actors and spatial logic. The second part elaborates on the raisons d’être of three large categories of informal economic activities in relation to urban development and on the production environments of these activities in Brussels: the domestic sector and suburban development; economic recession and survival strategies in the inner city; and, finally, flexibility and informalization in urban light industry. Polanyi’s concept of modes of economic integration (market, redistribution and reciprocity) offers a powerful tool to understand informal economic activities as a set of interrelations between households and other economic actors in order to gain access to their living resources — Ce texte analyse les relations entre différentes catégories d’activités économiques informelles et leur répartition spatiale à Bruxelles. Les perspectives micro (les ménages en tant qu’agents économiques) et macro (l’économie informelle liée à la récession économique) sont combinées pour aboutir à des catégories d’activit’és’économiques informelles homogènes en termes de logique spatiale. Dans une première partie nous considérons plusieurs classifications des activités économiques informelles pour évaluer au niveau théorique leur congruence avec les types d’acteurs et les logiques spatiales. La seconde partie décrit les raisons d’? tre de trois grandes catégories d’activités économiques informelles et les met en relation avec le développement urbain et leurs milieux de production à Bruxelles. On distingue ainsi le secteur domestique liéà la péri-urbanisation, les stratégies de survie liées à la récession dans le centre-ville et la flexibilité et l’informalisation de l’industrie urbaine. Le concept de modes d’intégration économique de Polanyi (échange marchand, redistribution et réciprocité) constitue un outil d’analyse efficace pour comprendre ces activités économiques informelles en tant que combinaisons précises d’interrelations entre ménages et autres acteurs économiques permettant aux premiers d’accéder à leurs moyens d’existence.     

Agenda for the Housing Market

The housing market is the theme of the Reports to the 2008 Annual Meeting of the Royal Netherlands Economic Association. Current housing market policies in the Netherlands generate substantial welfare losses. The direct and indirect subsidies on housing distort the housing market, house moving behaviour, the labour market and the asset portfolio of households. The welfare loss is estimated at more than 6 billion euro per year. In addition, physical planning restrictions cost at least 3 billion euro per year, a price which is paid for the conservation of open space and nature, especially in the Green Heart of the Randstad. Developments on the housing market over the last fifteen years and the sizeable welfare losses from current policies are sufficient reason to develop an agenda for reform. The Reports suggest several elements for such an agenda, including a gradual reduction of housing subsidies in the owner–occupier sector as well as in the rental sector, an easier land policy to better meet the qualitative housing needs of the population, and an extension of the social tasks for the housing societies.