Strategic alliances: a hospitality industry perspective

The article focuses on strategic alliance theory as it applies to the hospitality industry. Citing research as well as real-world examples, the authors integrate a variety of concepts and develop four propositions about the growing use of strategic alliances in the hospitality industry. These propositions include the following: P1: Hospitality alliances will evolve from equity joint ventures to collaborative joint ventures (non-equity) as competitor alliances will emerge. P2: Contractual agreements will evolve from simple franchise and management contracts to more complex resource-sharing, non-equity agreements. P3: Complex resource sharing between allying partners will help incumbent firms build relationships with partner firms that will lead to the development of competitor alliances. P4: Technology will help in the development of competitor alliances, which will also help to increase incumbent firms’ productivity and profitability.     

Deposit Insurance, Capital Adequacy Requirements and Interest Rate Dynamics

This paper examines the long run interaction among deposit insurance, bank deposit rates and capital adequacy requirements. Using analysis similar to the price discrimination model of Lott and Roberts (1991) we find that a competitive environment among banks would link the spread between insured and uninsured deposit rates to the size of the insurance premium. We also find that banks that choose to operate at the regulatory minimum capital level, would increase asset risk with increased capital requirements if (1) the implicit interest paid to insured and uninsured depositors is equally sensitive to changes in risk and capital adequacy and (2) the insurance premium is independent of the level of risk and capital adequacy. Under the present risk-based premium structure, asset risk has the potential to decline when the regulatory agency raises capital requirements. Finally, we examine the time series behavior of insured and uninsured interest rates to see if it is consistent with our theoretical model. We find that insured and uninsured rates, along with deposit insurance premiums, are cointegrated series as suggested by our model.     

Marginal risk aversion and preferences in a betting market

An individual's behavioural attitudes toward variance and non-symmetry in the payoff distributions of pari-mutuel gambles are empirically examined using the von Neumann - Morgenstern expected utility of wealth paradigm. Preferences over payoff distributions for a representative bettor are estimated from observed payoffs at a greyhound racetrack. The results indicate that the representative bettor exhibits increasing absolute risk aversion and, given that the representative bettor is locally non-satiated with regard to wealth, exhibits preference for variance and aversion to positive skewness in the payoff distributions of the gambles examined.     

The Global Disconnect: The Role of Transactional Distance and Scale Economies in Gravity Equations

Recent empirical analyses show that asset flows can be modelled by the same 'gravity' equations that trade economists have used so successfully for the past few decades. This is something of a surprise. Trade economists do not yet have a unified theory of why gravity models should work‐and the situation is worse for asset flows. Reasonable theories would predict that greater distance between countries should generate more asset flows rather than less as the econometric results seem to consistently show. In this paper we discuss how host and source country GDPs, language, and distance the core explanatory variables in the traditional gravity models‐fare in trade and asset flows estimations. While the 'distance puzzle' is not resolved, it is considerably reduced by going beyond consideration of physical distance to concepts of transactional distance and scale economies.     

Modeling Nonlinear Autoregressive Distributed Lag Models: A New Approach

It is a common practice in econometrics that estimation is carried out in terms of the reduced form parameters and the structural form parameters are retrieved using the functional relationship between structural form parameters and the reduced form parameters. The reduced form of many useful economic models is a nonlinear distributed lag model (NLADL) with error structure which may have autocorrelation. In addition, the relationship between the reduced form and the structural parameters is often nonlinear and in a ratio form. In such situations existing sampling theory estimation procedures result in estimators for the structural parameters which do not have finite moments and do not possess optimal sampling properties. As an alternative, we propose a two step Bayesian estimation method. The Bayesian method has great potential and allows us to obtain the posterior probability density functions of all parameters of interest. In particular, its application for the analysis of adaptive expectation partial adjustment models for which the reduced form is a NLADL model, has been found extremely useful. An application to Nerlove’s supply response function supports the proposed methodology.

     

Capital Flight from Russia

This paper documents the scale of capital flight from Russia, compares it with that observed in other countries, and reviews policy options. The evidence from other countries suggests that capital flight can be reversed once reforms take hold. The paper argues that capital flight from Russia can only be curbed through a medium‐term reform strategy aimed at improving governance and macroeconomic performance, and strengthening the banking system. Capital controls result in costly distortions and should gradually be phased out as part of that medium‐term strategy.     

Assessing dimensions of organizational trust across cultures: A comparative analysis of U.S. and Indian full service hotels

This study delves into the organizational trust based similarities and differences across “individualist” and “collectivist” service employees in hotels. Specifically, the three dimensions of organizational trust, i.e., integrity, commitment and dependability are compared across the two samples from the U.S. and India to highlight how employees perceive the level of each of the three dimensions across cultures. Findings suggest that the three dimensions represent the trust construct across different national cultures. However, in comparing the individual dimension of the trust construct, a significant difference exists between the perceptions of employees in the two cultures, suggesting that perception-based differences exist across cultures.     

Imperfect markets: Business ethics as an easy virtue

This paper marks a radical diversion from the large body of prevailing literature in business ethics which primarily views the issue in individual-personal terms, i.e., corporate executive and employee, and suggests that making corporations more ethical would primarily come through changes in executive behavior. While this approach has strong intellectual roots in moral philosophy and religion, it fails in explaining the persistence of unethical and illegal behavior among corporations of all sizes, financial health, competitive market conditions, and, level of individual executive compensation. This paper argues for a fundamentally different approach to understanding ethical behavior, or lack thereof, among corporations and their executives. It is asserted that an overwhelmingly large rationale and/or inducement for proactive ethical business behavior is rooted in competitive aspects of particular markets, and industry structures prevailing in those markets. Furthermore, while highly competitive markets may promote efficiency, they do not guarantee ethical behavior and may indeed provide greater opportunities and incentives for unethical business behavior. Thus, by following the current prognosis, we could be wasting enormous resources in terms of teaching business ethics, and creating and imposing corporate codes of conduct. We assert that these approaches would at best make a marginal improvement in the ethical performance of corporations while at the same time exacerbate the problem by ignoring more fundamental, structural issues. Imperfect markets, with their above-market profits, are a necessary but insufficient condition for corporations to behave ethically. It is only under conditions of imperfect markets that individual executives can play an important role in guiding their corporations toward greater ethical norms. These are undertaken for a variety of reasons, including, protecting a corporation's good name, public expectations, competitive norms, and, corporate culture and individual executive's predilections, to name a few.S. Prakash Sethi is Professor and Acting Director, Center for Management, Baruch College, The City University of New York. He has widely published in the areas of corporate social responsibility, international business, business ethics, and corporate strategy and public policy. His most recent publication isMultinational Corporations and the Impact of Public Advocacy on Corporate Strategy: Nestle and the Infant Formula Controversy (Kluwer, 1994).     

The impact of information technology on hotel operations,service management and transaction costs: A conceptual framework for full-service hotel firms

This paper develops a conceptual framework that describes the impact of information technology (IT) on service management and transaction costs in full service hotel firms. It details how IT would help such firms to lower operations-related transaction costs. Further, the underpinnings of how IT would impact service management in full service hotel firms is discussed more specifically from a customer satisfaction point of view while focusing on two aspects, i.e. managing customer delight and the customer's role as a co-producer. Propositions are developed and a discussion on the impact of IT on firm profitability from a transaction cost perspective ensues while concluding with managerial implications.