Task‐based structures in open source software: revisiting the onion model

Studies on Open Source Software (OSS) developer communities have long stated that there is a relationship between community structure and tasks carried out by project members. This relationship has been exemplified by the onion model, which has been instrumental in understanding self‐coordination in OSS projects. Despite its ubiquity, there is a lack of empirical evidence to validate the relative position of each task cluster within the onion model. In this study, we map out the community structure of a large open source project and observe its bug‐fixing patterns to explore the relationship between tasks and structure. Our study makes three significant contributions. First, we find no empirical evidence to support the structural location of bug‐fixing tasks in the onion structure. Second, we find empirical evidence to support the core‐periphery continuum model linking an actor’s coreness to problem‐solving ability. Third, our results suggest that the importance and location of each task within the core‐periphery structure evolve over time. These findings add clarity to the community structure and their implications for the management and coordination of collaborative innovation projects.     

Orchestrating corporate social responsibility in the multinational enterprise

Research Summary: Multinational enterprises (MNEs) invest significant resources in corporate social responsibility (CSR), but their attempts to build a global “social brand” may clash with the execution of operational strategies at a subsidiary level. Using a game-theoretic model, this research addresses the complex interplay of different contingencies that shape the coordination and control challenges facing MNEs when they implement global CSR strategies, including brand spillovers, the risk of public scandals caused by irresponsible behavior, the size of the MNE network, as well as the roles played by nongovernmental organizations and altruistic managers. Challenging the view of CSR as insurance against lapses of responsible conduct, our model shows that investment in social brands helps avoid irresponsible practices across the MNE network, thereby inducing subsidiaries to “walk the talk.” Managerial Summary: Global social brands are increasingly valuable to multinational enterprises (MNEs), which makes the control and coordination of responsible behavior across their network of foreign subsidiaries a relevant managerial challenge. Indeed, lapses of responsible conduct at the subsidiary level often generate reputational damage at the multinational level. This research explores several mechanisms that help MNEs manage this coordination and control challenge. First, it shows under what conditions MNEs can leverage their investments in social brands to induce responsible practices across their global network. Second, it illustrates how MNEs can exploit collaborations with nongovernmental organizations to reduce the costs of coordinating and controlling their subsidiaries. Finally, it identifies conditions under which MNEs benefit from hiring altruistic managers to run their subsidiaries.     

Steering the Sales Force for New Product Selling: Why Is it Different,and How Can Firms Motivate Different Sales Reps?

This study investigates how to direct and assemble the sales force for new product selling. In a first step, the authors draw on self‐determination theory to explore and empirically test a threefold conceptualization of motivation. Results provide insights into why sales force steering works differently in the new product selling context. Specifically, results show that for new products’ financial performance, internalized new product selling motivation is more important than intrinsic and controlled motivation. In a second step, the authors show how firms can motivate different sales reps to achieve higher financial performance of new products. In doing so, they examine the interaction effects of sales reps’ predispositions and widespread firm‐steering instruments on new products’ financial performance. Results reveal that the new product sales orientation of the bonus strengthens the positive relationship between sales reps’ performance predisposition and new product financial performance but weakens the relationship between sales reps’ learning predisposition and financial new product performance. Moreover, results reveal that the new product sales orientation of the periodic review strengthens the positive relationship between sales reps’ learning predisposition and financial new product performance. A post hoc analysis shows that a differentiated steering approach that matches appropriate steering instruments with sales reps’ varying predispositions substantially enhances reps’ financial new product performance.     

Business model innovation and decision making: uncovering mechanisms for coping with uncertainty

As a research subject, business model innovation spans the strategy, innovation, and entrepreneurship fields. Yet, despite the importance of the concept, prior work has paid little attention to how decision-makers cope with uncertainty and gain understanding about interdependencies in new business model configurations. To address this gap, we combine top-down theorising and evidence-based exploration and seek to unpack some of the coping mechanisms that operate in the evolutionary view of business model innovation. Using in-depth interviewing to collect data, our study reveals five strategies – customer centricity, value co-creation, capability evolution, ecosystem growth, and adaptive pricing – that decision-makers apply to cope with uncertainty in business model innovation. We find that coping mechanisms support decision making during the development of new business models. Furthermore, we find that the five coping strategies delineate decision making for value proposition, value creation, and value capture configurations in more detail than existing literature has described. Our findings have important implications for decision making in business model innovation.     

The Impact of Family Ownership,Management, and Governance on Innovation

Previous research suggests that the distinctive nature of family firms, including both specific advantages and disadvantages related to their particular agency situation, influences innovation activities. Most studies, however, view family firms as homogeneous entities and thus neglect the heterogeneity of family firms when comparing them with nonfamily firms. One important factor of this firm heterogeneity is family influence in terms of ownership, management, and governance. A data set of large German publicly traded firms between 2000 and 2009 is used to test how these three dimensions of family influence predict innovation input and output. The results show that family participation in management and governance has a negative impact on innovation input and a positive influence on innovation output. This suggests that family members are risk averse and reluctant to invest in innovation, but at the same time do so more effectively.     

The systematic risk of corporate bonds: default risk,term risk,and index choice

In this paper, we empirically examine the systematic risk of corporate bonds in the Euro area. Based on a unique sample of 784 bonds from 1999 to 2010, we show that the systematic risk of constructed bond portfolios and individual bonds—measured against three different market indices—depends on credit quality, term risk, and index choice. A significant increase in systematic risk for lower-rated bonds is observed following the start of the financial crisis. In multi-factor models, bond portfolios load significantly on default and term risk, which are included as additional factors. Conducting Fama and MacBeth cross-sectional tests, we find that default and term risk are priced with economically relevant premiums that range from 0.35 to 0.62 % per month. Our results are robust to the inclusion of characteristics such as rating and time to maturity.     

On the distribution of government bond returns: evidence from the EMU

This paper assesses the statistical distribution of daily EMU bond returns for the period 1999–2012. The normality assumption is tested and clearly rejected for all European countries and maturities. Although skewness plays a minor role in this departure from normality, it is mainly due to the excess kurtosis of bond returns. Therefore, we test the Student’s t, skewed Student’s t, and stable distribution that exhibit this feature. The financial crisis leads to a structural break in the time series. We account for this and retest the alternative distributions. A value-at-risk application underlines the importance of our findings for investors. In sum, excess kurtosis in bond returns is essential for risk management, and the stable distribution captures this feature best.     

Optimal constrained investment in the Cramer-Lundberg model

We consider an insurance company whose surplus is represented by the classical Cramer-Lundberg process. The company can invest its surplus in a risk-free asset and in a risky asset, governed by the Black-Scholes equation. There is a constraint that the insurance company can only invest in the risky asset at a limited leveraging level; more precisely, when purchasing, the ratio of the investment amount in the risky asset to the surplus level is no more than a; and when short-selling, the proportion of the proceeds from the short-selling to the surplus level is no more than b. The objective is to find an optimal investment policy that minimizes the probability of ruin. The minimal ruin probability as a function of the initial surplus is characterized by a classical solution to the corresponding Hamilton-Jacobi-Bellman (HJB) equation. We study the optimal control policy and its properties. The interrelation between the parameters of the model plays a crucial role in the qualitative behavior of the optimal policy. For example, for some ratios between a and b, quite unusual and at first ostensibly counterintuitive policies may appear, like short-selling a stock with a higher rate of return to earn lower interest, or borrowing at a higher rate to invest in a stock with lower rate of return. This is in sharp contrast with the unrestricted case, first studied in Hipp and Plum, or with the case of no short-selling and no borrowing studied in Azcue and Muler.     

A simple correction of the WACC discount rate for default risk and bankruptcy costs

Standard discounted cash flow approaches suffer from a rudimental modeling of the possibility of a default, as the main characteristics such as the default probability and potential bankruptcy costs are commonly disregarded. This paper aims at providing a tractable extension of the well-known WACC approach for both default risk and bankruptcy costs. The corrected WACC discount rate reveals that default risk results in a systematically higher WACC because the tax component is scaled by the survivorship probability and an aditional component for bankruptcy costs must be added. This difference between the classical WACC discount rate and the simple modified WACC rate can be remarkable especially for firms from businesses with high bankruptcy costs and a relevant default probability.