Labor Union Effect on Corporate Cash Holdings and Their Marginal Value

By using panel data from Korean listed firms, we find that unionized firms strategically hold less cash to enhance their bargaining power against labor unions. We also find that unionized firms are likely to reduce the marginal value of their cash holdings, thereby decreasing shareholder value from the agency theory perspective. This finding complements the agency theory argument that managers tend to waste corporate resources by hoarding cash, particularly when faced with increased information asymmetry and financial constraints. Overall, our results suggest that information-related financial constraints and agency problems are likely to co-exist in unionized firms.     

The Treatment of Market Power in Korea

Competitive forces have been relatively weak in Korea. Control of the chaebols' diversified expansion and conglomerate power has been a primary object of government policies. Competition law and policy has been expanded to include direct controls on chaebols, but it has been rather ineffective in resolving chaebol-related problems mainly because of insufficient attention having been paid to the problems of market power. Attempts to rein in chaebols by direct controls, without enhancing competitive forces, will be in vain, insofar as chaebol problems are really symptoms of their entrenched market potions in a non-competitive environment.     

The changing pattern of SME's innovativeness through business model globalization

Globalization has forced small and medium enterprises to change business models with new innovative capabilities. However, it is not clear what those old and new business models are let alone capabilities. Challenging this, we suggest a way of identifying principal types of those business models, and of finding evolving paths of SME's business models with the changing pattern of innovativeness. Based on a survey result of 400 Korean SMEs, four principal types of business models are identified and characterized by distinctive innovativeness. Also, through interviews and additional surveys on 30 globalized SMEs, the four evolving paths of SME's BMs are explored. For small and medium enterprises, our research can be used not only as a strategic reference, but also as a policy tool to design government-funded supporting programs.     

OPTIMAL PORTFOLIO, CONSUMPTION-LEISURE AND RETIREMENT CHOICE PROBLEM WITH CES UTILITY

We study optimal portfolio, consumption-leisure and retirement choice of an infinitely lived economic agent whose instantaneous preference is characterized by a constant elasticity of substitution (CES) function of consumption and leisure. We integrate in one model the optimal consumption-leisure-work choice, the optimal portfolio selection, and the optimal stopping problem in which the agent chooses her retirement time. The economic agent derives utility from both consumption and leisure, and is able to adjust her supply of labor flexibly above a certain minimum work-hour, and also has a retirement option. We solve the problem analytically by considering a variational inequality arising from the dual functions of the optimal stopping problem. The optimal retirement time is characterized as the first time when her wealth exceeds a certain critical level. We provide the critical wealth level for retirement and characterize the optimal consumption-leisure and portfolio policies before and after retirement in closed forms. We also derive properties of the optimal policies. In particular, we show that consumption in general jumps around retirement.     

Adoption of Enterprise Application Software and Firm Performance

Due to the rapidly changing business and IT environments, firm-level adoption of IT shifted from in-house development to purchasing EA software. This paper analyzes the effects of EA (Enterprise Application) software – ERP, CRM, SCM, Groupware, KM, EAI – on SMEs’ productivity. The distinct feature of this paper is that I use a formal econometric approach with combined data of SMEs’ accounting and IT usage aspects, while case studies have been mostly used in the previous works. The empirical results show that Groupware and SCM significantly raise the SMEs’ productivity, and the manufacturing sector has stronger effects than the service sector. From these results, the following implications are derived. First, the adoption rate and the real benefits of EA software are not closely related domestically. Second, in SMEs, EA software facilitating the inter-firm relationship is more effective than EA software focusing on the internal efficiency. Third, easy-to-understand, and relatively long-experienced enterprise applications are more effective than hard-to-understand and brand-new applications. Finally, the government IT policy on SMEs should focus on the process coordination and standardization of the manufacturing sector with upstream and downstream firms.     

The past,present, and future of customer management

Marketing Letters - For decades, researchers in customer management have demonstrated the business importance of firm-customer relationships, developed models for understanding customer behavior...