Modeling strategic group dynamics: A hidden Markov approach

With competition playing a critical role in market-based strategic planning and implementation, identifying and understanding competiton and competitive dynamics has become critical. In this vein, the strategic groups perspective has emerged as a powerful means to understand such competitive phenomena. Empirical approaches to model competitive dynamics within the strategic groups framework, however, have been piece meal as researchers typically resort to distinct sequential analysis by time period. To overcome the limitations of these simplistic approaches, we develop a hidden Markov model to study strategic group (competitive) dynamics. In this approach, we explicitly account for competitive dynamics over time by modeling strategic group memberships as latent states that follow a first-order Markov process. Thus, we explictly model the notion that firms adopt their strategy for the next time period based on their current strategy and respective outcomes. We illustrate the model with longitudinal data from COMPUSTAT on 63 public banks from the tri-state region of NY-OH-PA. The results show the proposed model to be superior to a number of viable alternative approaches that have been suggested in the literature. We find the existence of three strategic groups: the leveraged group has low current assets compared to current liabilities, high debt to equity, and high total borrowing to assets. The lending group consists of the largest banks that focus on lending with high ratios of gross loans to securities and gross loans to deposits. The balanced group has the largest number of banks where the values of the financial and product ratios are intermediate compared to the leveraged and lending groups. The asymmetries in the switching probabilites are also evident as there seems to be a higher probability of switching into the balanced group than switching out of this group. The switching probabilites are symmetric between the the leveraged and lending groups.     

Calculating,creating, and claiming value in business markets: Status and research agenda

A key challenge facing business marketers surrounds developing a deeper understanding of customer needs. We conceptualize that challenge as having three dimensions: calculating, creating, and claiming value. We discuss key problems, new developments and research challenges in each of these three domains and note the desirability for a deeper collaboration between academics and practitioners to address the research challenges.     

RETRACTED ARTICLE: Modern Business Ethics Research: Concepts,Theories, and Relationships

The main purpose of this study is to explore and map the intellectual structure of business ethics studies during 1997–2006 by analyzing 85,000 cited references of 3,059 articles from three business ethics related journals in SSCI and SCI databases. In this article, co-citation analysis and social network analysis techniques are used to research intellectual structure of the business ethics literature. We are able to identify the important publications and the influential scholars as well as the correlations among these publications by analyzing citation and co-citation. Three factors emerged in this study are: (1) ethical/unethical decision making, (2) corporate governance and firm performance, and (3) ethical principles and code of conduct.     

Detecting Supply Chain Innovation Potential for Sustainable Development

In a world of limited resources, it could be argued that companies that aspire to be good corporate citizens need to focus on making best use of resources. User value and environmental harm are created in supply chains and it could therefore be argued that company business ethics should be extended from the company to the entire value chain from the first supplier to the last customer. Starting with a delineation of the linkages between business ethics, corporate sustainability, and the stakeholder concept, this article argues that supply chains generally have a great innovation potential for sustainable development. This potential could be highlighted with system thinking and the use of change management knowledge, promoting not only innovations within technology but also within organizational improvement. We propose process models and performance indicators as means of highlighting improvement potential and thus breaking down normative business ethics’ requirements to an opertionalizable corporate level: Good business ethics should focus on maximizing stakeholder value in relation to harm done. Our results indicate that focusing on supply chains reveals previously unknown innovation potential that seems to be related to limited system understanding. The assumption is that increased visibility of opportunities will act as a driver for change. Results also highlight the importance of focusing on sustainability effects of the core business and clearly relating value created to harm done.     

Positive Job Response and Ethical Job Performance

Although many studies have linked job attitudes and intentions to aspects of in-role and extra-role job performance, there has been relatively little attention given to such job responses in the context of employees’ ethical/unethical behavior. The purpose of this study was to investigate a possible relationship between positive job response (conceptualized as job satisfaction and intention to stay) and behavioral ethics. Ninety-two matched manager-employee pairs from a regional branch of a large financial services and banking firm completed survey instruments, with each employee providing information about his or her job attitudes and intentions and each manager assessing the ethical/unethical performance of his/her employees. Respondents also provided additional information required for our analyses. The results indicated that positive job response among subordinates was associated with higher supervisory ratings of the subordinates’ ethical job performance. The managerial implications of the findings for managing ethical behavior are explored.     

Ownership coordination in a channel: Incentives,returns, and negotiations

In many industries firms have to make quantity decisions before knowing the exact state of demand. In such cases, channel members have to decide which firm will own the units until demand uncertainty is resolved. The decision about who should retain ownership depends on the balance of benefit and risk to each member. Ownership, after all, is costly. Whichever member owns the units accepts the risk of loss if more units are produced than can be sold. But ownership also grants firms the flexibility to respond to demand once it becomes known by adjusting price. In this study, we analyze ownership decisions in distribution channels and how those decisions are affected by demand uncertainty. We model demand based on micro-modeling of consumer utility functions and capture demand uncertainty related to market size and price sensitivity. This study shows that as long as the degree of uncertainty about market size is intermediate, the retailer and the manufacturer both benefit when the manufacturer maintains ownership of the units. But when there is substantial uncertainty about market size, the retailer and the channel are better off if the retailer takes ownership but the manufacturer still prefers to maintain ownership. Thus, there is potential for channel conflict regarding ownership under high levels of uncertainty. We show that, using product returns, the manufacturer can achieve the same outcome under retailer ownership as under manufacturer ownership. This provides an additional new rationale for the prevalence of product returns. The first-best outcome (from the perspective of total channel profit), however, is under retailer ownership without product returns when uncertainty is high (i.e., product returns reduce the total channel profit). Negotiations between the manufacturer and the retailer can lead to the first-best outcome but only under quite restrictive constraints that include direct side payments by the retailer to the manufacturer and the retailer being pessimistic about its outside option (when an agreement cannot be reached) during the negotiation.     

Fuzzy Bargaining Games: Conditions of Agreement,Satisfaction, and Equilibrium

Game theory in its several variants is widely recognized as a contribution to social and economic modeling. One relevant development of classical game theory, Generalized Game Theory (GGT), entails its extension and generalization through the formulation of the mathematical theory of rules and rule complexes. Social theory concepts such as norm, value, belief, role, social relationship, and institution as well as game can be defined in a uniform way in terms of rules and rule complexes. Among the applications, one major initiative has been the conceptualization of fuzzy games and equilibria. In this paper a GGT model of 2-person fuzzy bargaining games is outlined. Two key concepts are applied: (1) players’ value (or “utility”) structures consisting of ideal points or expectation levels, on the one hand, and limits of acceptance, on the other; (2) fuzzy judgment functions in which players deal with imprecise information and use approximate reasoning in making decisions and negotiating agreements. Such fuzzy judgment functions can take into account economic, socio-psychological, and cultural and institutional aspects of the bargaining context, which affect the bargaining process in specifiable ways. Several significant results are obtained from the application of this model: the opportunities (or not) for agreement, the participants’ satisfaction levels with an agreement, and the question whether or not the agreed “price” is an equilibrium price.     

Business Reputation and Labor Efficiency,Productivity, and Cost

Assumed benefits from improved reputation are often used as motives to drive corporate social responsibility (CSR) initiatives. Are improved cost efficiencies among these reputation benefits? Cost efficiencies and cost management have become more relevant as revenue streams dry up in these tough economic times. Can a good reputation aid these efforts to develop cost efficiencies specifically when managing labor costs? Prior research hypothesizes that good reputation can create labor productivity and efficiency benefits. The purpose of this study is to empirically investigate reputation’s relationship with labor efficiency, labor productivity, and labor cost. Using a sample of highly reputable firms from Fortune’s America’s Most Admired Companies list and a corresponding matched sample of firms, we find that reputation is associated with improved labor efficiency and labor productivity. However, we do not find a significant association between reputation and reduced labor costs. Our study contributes to current research hypothesizing and finding efficiency benefits associated with good reputation. Documenting these potential reputation benefits has important implications for CSR activities and initiatives. It supports recent work that incorporates reputation into a more developed model of the relationship between CSR and performance (Vilanova et al.: 2009, Journal of Business Ethics 87, 57–69). This work is useful to businesses and supports strategies focused on “doing well by doing good” and maintaining healthy reputations.     

Organizational and Technological Options for Business Process Management from the Perspective of Web 2.0

Corporate operative systems are often highly dynamic, a fact which is only insufficiently taken into account by recent process management approaches. In contrast, the perspective of Web 2.0 opens up new options for action in process management. In this contribution, we figure out new organizational and technological options of process management using a design-oriented research approach. The analysis especially considers the aspects of self-organization and collective intelligence in process management. We conceptually develop options for action and illustrate them based on a prototype platform for process management. The paper is complemented by a presentation of real-world application scenarios in the construction industry and results of an evaluation of the design-oriented research approach.     

Nanomaterials and the Precautionary Principle in the EU

This article focuses on the risks of nanomaterials and nanotechnologies, and the challenges they pose to European consumer law. These risks are exemplary for the sociological phenomenon of modern risk society, living under the condition of uncertainty with regard to the likelihood and the extent of possible negative effects. Generally, in law important functions in risk societies are fulfilled by the precautionary principle. It serves both, as a justification for state measures vis-à-vis other legal interests, especially economic human rights, and as a request for state action in response to possible risks. This paper will argue that the precautionary principle applies at least to health protection as a core part of consumer protection and basically EU law is well equipped to deal with uncertainties. This is established in case law and practice. However, although there is pressure to apply the precautionary principle to nanomaterials and nanotechnologies, the European Commission has adopted a rather modest approach. That has been criticized especially by the European Parliament. For dealing with the gap in basic research and methodology, this article suggests a burden sharing in financing taking into account both, the precautionary principle and the principle of proportionality.