Covert operations

Few executives have insight into what really goes on in their organizations. CEO Stephen Martin seized a rare opportunity to anonymously discover the nitty gritty of his company. He shares his insights with Julian Birkinshaw and Stuart Crainer.     

Do Information Rents in Loan Spreads Persist over the Business Cycles?

In this paper, we seek empirical evidence for information rents in loan spreads by analyzing a sample of UK syndicated loan contracts for the period from 1996 to 2005. We use various measures for borrower opaqueness and control for bank, borrower and loan characteristics and we find that undercapitalized banks charge approximately 34 bps higher loan spreads for loans to opaque borrowers. We further analyze whether this effect persists throughout the business cycle and find that this effect prevails only during recessions. However, we do not find evidence that banks exploit their information monopolies during expansion phases.     

The Labour Government and the National Health Service

This paper reviews the performance of the National Health Serviceunder the Labour government of Tony Blair. It shows that therehave been some dramatic increases in resources going into theservice, but also that these do not seem to be delivering theimprovements in activities that might have been expected. Thepaper argues that this is partly because of capacity constraints,but also because the mixture of organizational forms introducedby the government has resulted in misdirected and conflictingincentive structures for the key actors.     

Financing agricultural R&D in rich countries: what's happening and why

Governments everywhere are trimming their support for agricultural R&D, giving greater scrutiny to the support that they do provide, and reforming the public agencies that fund, oversee, and carry out the research. This represents a break from previous patterns, which had consisted of expansion in the public funds for agricultural R&D. Private-sector spending on agricultural research has slowed along with the growth of public spending in recent years, but the balance continues to shift towards the private sector. This article presents a quantitative review of these funding trends and the considerable institutional changes that have accompanied them. We discuss new data for 22 OECD countries, providing institutional details for five of these countries, and conclude with an assessment of policy developments.     

Growth paths and survival chances: An application of Gambler's Ruin theory

This paper links new firm survival with growth, with a focus on the patterns in firms' growth paths. We theorise a Gambler's Ruin framework by arguing that new firm performance is best modelled as a random walk process, but that survival is nonrandom and depends primarily on the stock of accumulated resources. A firm's resources are either there when the business begins or are generated by successful periods — ‘wins’. The empirical section tracks, over six years, the sales and survival/non-survival of 6247 UK start-ups which all began trading in the same quarter of 2004. We do not find strong evidence in favour of a taxonomy of growth paths, because we observe that every possible growth path seems to occur with roughly equal probability. However, we observe that growth paths influence subsequent survival. Controlling for lagged size, we observe that longer lags of growth, and even start-up size, have significant effects on survival.     

A meta-analytic review of influence strategies in marketing channel relationships

Influence strategies (ISs) are a dominant topic in channel research. However, the literature lacks a consensus on when noncoercive and coercive strategies are more valuable or damaging to partnership quality, and their judicious applications remain unclear. Mainly based on social exchange perspectives, we review and conceptualize several contingency factors in the IS-partnership quality relationships in this metaanalysis. The moderating results generally suggest that the stronger positive impacts of noncoercive ISs result from a higher appreciation for supportive attempts, whereas the higher negative sensitivity to coercive ISs can be attributed to the low acceptability of forceful influences. We determine degrees of appreciation and acceptability by the perceived significance of benefits/damages, expectations, and tolerance levels for both strategies. Also, we synthesize and meta-analyze the key outcomes and antecedents of both strategies in an integrated framework. The direct-effect results indicate that the choice of effectively applying both strategies necessitates a tradeoff between goals and priorities.     

Behind Migrant and Non-Migrant Worktime Inequality in Europe: Institutional and Cultural Factors Explaining Differences

Migrants often work longer hours than their non-migrant counterparts. In this article, we examine reasons behind this inequality, arguing that institutional working time configurations at the country level have impact on worktime inequality. Our cross-country comparative study uses data from the European Labour Force Survey. We focus on France, Sweden, Austria and the UK as archetypal examples of working time configurations and breadwinner models in Europe. Our findings indicate that institutional and cultural factors play a role in working hour differences between migrants and non-migrants. We conclude that more centralized worktime regulation and bargaining foster equality, and we suggest several avenues for future research.     

Temporary overpessimism: Job loss expectations following a large negative employment shock

Job loss expectations were widespread amongst workers in East Germany following reunification with West Germany. Though experiencing a large negative employment shock, East German workers were nevertheless overpessimistic immediately after reunification with respect to their job loss risk. Over time, job loss expectations fell and converged to West German levels, which was driven by a stabilizing economic environment and by an adaptation of the interpretation of economic signals with workers learning to distinguish individual risk from firm-level risk. In fact, conditional on actual job loss risk, East German workers quickly caught up to West Germans regarding the share of correctly predicted job losses.