Competitive dynamics,strategic consistency,and organizational survival

This study investigates strategic consistency in competitive behavior. We construct a logically consistent evolutionary model, providing a causal argument to link a level of strategic consistency to long‐term organizational survival. According to our results, strategic consistency seems to be related to both organizational survival and the most efficient change over time concerning the key elements of a firm's strategy. One of the benefits of the model is that some of the components and processes may be manipulated through experimental or simulation interventions. This means that the model can be formally tested in future studies and managers can use it to fine‐tune patterns of competitive behavior. Copyright © 2008 John Wiley & Sons, Ltd.     

Payments for Ecosystem Services Programs: Predicting Landowner Enrollment and Opportunity Cost Using a Beta-Binomial Model

This paper concerns predicting enrollment in payment for ecosystem services (PES) programs to promote habitat preservation on private lands. We develop a beta-binomial model to address both program participation and the amount of land enrolled by each potential enrollee. We apply the estimation approach to stated preference data from non-industrial private forest owners in Finland. As an alternative econometric model, we also develop a multivariate censored regression model of enrollments. Using cross-validation, we find that the beta-binomial model predicts at least as well as the multivariate censored model yet has fewer parameters. Using our estimation results, we demonstrate policy predictions regarding program enrollment and landowner opportunity cost.     

The Effect of Information Sources on the Success of the Organizational Buying Process

The objective of this empirical study was to investigate how the use of internal and external information sources influence the success of an organization’s buying process, and how the characteristics of the buying task influence the employment of these information sources during the buying process. Quantitative data were collected by structured interviews among Finnish business organizations early in 2008. The results suggest that the employment by an organization of information provided by a supplier during the buying process has a significant but contradictory influence on the success of the buying process. Furthermore, the complexity, newness, and importance of the buying situation were found to have a significant influence on the employment of different sources of information during the various stages of buying process. Perceived risk of the buying task was found to have no significant effect on the use of different information sources.     

Ownership Structure and Accounting Method Choice: A Study of European Real Estate Companies

Companies can under IAS 40 Investment Properties choose between the fair value and the cost models. The fair value model arguably results in more relevant information but is also more costly to use. Based on studies suggesting that financial reports are a more important medium for communication with investors if ownership is dispersed, we hypothesize that the use of the fair value model is positively associated with ownership dispersion. We study European Real Estate firms and find support for this prediction. We also find a positive association between trade of shares and ownership dispersion, supporting the view that financial statements are less important if ownership concentration is high. Finally, we examine whether the choice depends on the identity of large owners. Companies with a financial company as the largest owner are somewhat more likely to choose the fair value model. Overall, the results indicate that accounting rules facilitating optional accounting policies have benefits.     

A note on the valuation of asset management firms

Market capitalization relative to assets under management is often used to value asset management firms. Huberman’s (2004) dividend discount model implies that cross-sectional variations in this metric are explained by cross-sectional differences in operating margins, and yet we find no evidence of this in our data set. We show that a superior model—inspired by the work of Berk and Green (2004)—includes also the level of fees as an explanatory variable. This approach dramatically increases the fit of our valuation model and casts doubt on the relevance of the so-called Huberman puzzle.