I know something you don't know!: The role of linking pin directors in monitoring and incentive alignment

Increasing regulatory pressures have created specialization within boards, with more requirements and responsibilities being refocused to the committee level. Using data from S&P 1,500 firms, we find that board committee overlap associated with linking pin directors (i.e., those serving simultaneously on the audit and compensation committees) is an important conduit for knowledge transfer between boards' monitoring and incentive alignment functions. These directors are associated with lower executive compensation and influence pay mix. In studying the dynamics behind this process, we find that newly created linking pins improve monitoring effectiveness whereas recently dissolved linking pins decrease it. We also find that linking pins are all the more important when managers make less conservative accounting choices. Copyright © 2014 John Wiley & Sons, Ltd.     

Determinants of a lasting purchase: The case of the tattoo patron

Evidence suggests that both cognitive and emotive factors elucidate consumer decision processes; yet, research exploring such factors jointly (i.e., a dual-process approach) as antecedents of high-involvement, lasting purchases is lacking. To address this paucity, we developed two studies, each with a unique dual-process model for explaining consumers’ intention to get a tattoo. Study 1 explores anticipated regret about getting a tattoo, emotional response before and now regarding a tattoo purchase, and self-expression via tattoo acquisition. Study 2 examines perceived trust in the tattoo artist, self-esteem, attitude toward art paintings, and age as determinants of intention to get a tattoo. Data collected for testing these models support dual-process theory in the tattoo context. Implications and future research directions are offered.     

Monitoring process quality in off-shore outsourcing: A model and findings from multi-country survey

We investigate how recent advances in information technology and telecommunications have led to real-time monitoring of processes at the site of the provider by a buyer located across the globe. We construct a game-theoretic model of the dynamics of the buyer–supplier interaction in the presence of moral hazard and incomplete contracting. We derive the Minimum Quality Threshold (MQT) below which the provider's output will certainly be inspected. Our findings show that the buyer can pick a level of monitoring and thereby force the provider to exceed the quality level of the MQT in output quality and avoid costly and wasteful inspection. Finally, our model explains why the production of processes that are complex and more prone to errors are actually monitored less by the buyers. We furnish the results of a comprehensive, multi-year, multi-country survey of the efficacy of monitoring in off-shore outsourcing projects and demonstrate strong empirical support for the findings of the model.     

Rivalry between emerging-market MNEs and developed-country MNEs: Capability holes and the race to the future

The rise of emerging-market MNEs (EMNEs) often is characterized as a process by which they catch up with the superior resources and capabilities of incumbent, developed-country MNEs (DMNEs). We argue that this characterization needs to be rethought as the requirements for competitive success in global markets are changing. Emerging markets are becoming more important, the value-for-money segment in developed countries is expanding, global retailers are gaining leverage, and the flexibility to deal with economic and political volatility is becoming a key organizational capability. Typically, EMNEs are stronger in these areas than DMNEs. This leads us to frame the competition between EMNEs and DMNEs as a race to the future in which each type of firm has capability holes that it needs to fill in order to thrive in the global economy of the future. We then discuss the strategies that EMNEs and DMNEs have been using to plug their respective capability holes. We hope future studies can apply this framework to analyze rivalry between EMNEs and DMNE in specific industries.     

Competitive priorities and managerial performance: a taxonomy of small manufacturers

Much of the research in manufacturing strategy has focused on specific relationships between a few constructs, with relatively little emphasis on typologies and taxonomies [Bozarth, C., McDermott, C., 1998. Configurations in manufacturing strategy: a review and directions for future research. Journal of Operations Management 16 (4) 427–439]. Using data from 196 respondents in 98 manufacturing units, this study develops a taxonomy of small manufacturers based on their emphasis on several competitive priorities. The annual sales for 64% of the participating units in this study are below US$50 million, which is on the lower side as compared to other studies in this area [cf., Miller, J.G., Roth, A.V., 1994. A taxonomy of manufacturing strategies. Management Science 40 (3) 285–304]. The study findings indicate that different groups of manufacturers — Do All, Speedy Conformers, Efficient Conformers, and Starters — emphasize different sets of competitive priorities, even within the same industry. Further, the Do All types, who emphasize all four competitive priorities, seem to perform better on customer satisfaction than their counterparts in the Starters group. The above findings lend support to the sandcone model but contradict the traditional trade-off model.     

Outsourcing and the Heckscher–Ohlin Model

The purpose of this paper is to incorporate the currently mushrooming phenomenon of outsourcing into the standard two‐sector, two‐factor Heckscher–Ohlin model of international trade. We first show how outsourcing modifies a firm's production function, and then demonstrate that outsourcing generally raises the return to capital and lowers the real wage, although the nation's GDP rises in proportion to the value‐added in the outsourcing industry. Furthermore, the output of the outsourcing sector may actually fall even though its unit cost goes down; the output of the other sector then rises. By contrast, employment in the outsourcing sector may actually rise.     

An empirical investigation of environmental performance and the market value of the firm

This paper analyzes the shareholder value effects of environmental performance by measuring the stock market reaction associated with announcements of environmental performance. We examine the market reaction to two categories of environmental performance. The first category includes 417 announcements of Corporate Environmental Initiatives (CEIs) that provide information about self-reported corporate efforts to avoid, mitigate, or offset the environmental impacts of the firm's products, services, or processes. The second category includes 363 announcements of Environmental Awards and Certifications (EACs) that provide information about recognition granted by third-parties specifically for environmental performance. Although the market does not react significantly to the aggregated CEI and EAC announcements, we find statistically significant market reactions for certain CEI and EAC subcategories. Specifically, announcements of philanthropic gifts for environmental causes are associated with significant positive market reaction, voluntary emission reductions are associated with significant negative market reaction, and ISO 14001 certifications are associated with significant positive market reaction. The difference between the market reactions to the CEI and EAC categories is statistically insignificant. Overall, the market is selective in reacting to announcements of environmental performance with certain types of announcements even valued negatively.     

Corporate sponsorship as an image platform: understanding the roles of relationship fit and sponsor–sponsee similarity

Studies have shown that the fit between a sponsoring brand and the sport, art, or charity sponsored influences outcomes such as brand awareness and image. This research adds the role of sponsor–sponsee similarity to the discussion of fit. The authors argue that similarity interacts with fit when conditions evoke suspicion or disrupt typical inferences regarding sponsorship relationships. Interaction is particularly important when the sponsor seeks to develop its image by association with a cause, and is also of consequence for the cause in terms of its branding. Three studies test sponsorship effects with respect to blood donation and cancer prevention organizations. Results support the predicted moderated mediation model, showing that similarity between a corporate sponsor and a sponsored cause can interact with fit, influencing sponsorship evaluations directly and shaping attitudes and behavioral intentions toward constituents indirectly. This work reveals a counterintuitive effect of similarity for some sponsorship relationships.