Development and validation of a firm-level vertical and horizontal internationalization metric

The lack of valid and reliable measures of firm-level vertical and horizontal internationalization is impeding the development and testing of hypothesized relationships between these respective dimensions of internationalization and a range of important MNE characteristics, actions, and effects. Through a series of qualitative and quantitative studies using data collected from senior MNE executives (total N?=?3,146), we develop and validate a scale to measure both vertical and horizontal firm-level internationalization. Subscales for each type of internationalization prove to be unidimensional, reliable, temporally stable, and to have predictive, cross-cultural, cross-sectoral, and discriminant validity.     

Out of control or right on the money? Funder self-efficacy and crowd bias in equity crowdfunding

Our findings extend the entrepreneurship literature by highlighting the mechanism through which self-efficacy can hinder rather than enhance performance in entrepreneurial settings. Using two complementary experimental studies and a third quasi-experimental field study on equity crowdfunding decisions, we demonstrate that self-efficacy is negatively related to decision-making performance. This relationship is mediated by reduced searching effort. Our research also indicates that high self-efficacy funders tend to exhibit a “crowd bias” whereby they over-weight the opinions of the crowd, increasing the likelihood that they will fund poor quality ventures when such ventures are favored by the crowd. We introduce the term crowd bias and explore its effects, establishing that social indicators in the form of crowd cues can exasperate the negative effects of self-efficacy.     

Sketchy communication: An experiential exercise for learning about communication in business

To be an effective communicator, students need to learn how to select the appropriate means of communication and be aware of potential obstacles. The model of communication process can be an effective framework for students to understand many pitfalls of the communication process. The described activity enables students to experience communication at different levels of richness (e.g., face to face, instant messaging, email) and with varying levels of feedback and noise. After completing the activity, students will understand the importance of precise, rich messages, seeking and providing feedback, and the difficulties that can occur at every step in communication.     

A Simple Econometric Approach for Utility-Based Asset Pricing Models

Utility-based models of asset pricing may be estimated with or without assuming a distribution for security returns; both approaches are developed and compared here. The chief strength of a parametric estimator lies in its computational simplicity and statistical efficiency when the added distributional assumption is true. In contrast, the nonparametric estimator is robust to departures from any particular distribution, and it is more consistent with the spirit underlying utility-based asset pricing models since the distribution of asset returns remains unspecified even in the empirical work. The nonparametric approach turns out to be easy to implement with precision nearly indistinguishable from its parametric counterpart in this particular application. The application shows that log utility is consistent with the data over the period 1926–1981.     

Estimation employing a priori information within mass appraisal and hedonic pricing models

Both statistical appraisal and hedonic pricing models decompose houses into a set of individual characteristics. Regression estimates yield the contribution of each characteristic to total value. Unfortunately, straightforward application of OLS may produce untenable results such as implausible coefficient magnitudes or incorrect signs. Often the suspected cause is multicollinearity. This article examines the effect on estimation efficiency of differing levels of multicollinearity, R², and a priori information in the form of sub-market cost data, by comparing inequality restricted least squares (IRLS) with OLS in a series of Monte Carlo experiments. The IRLS procedure investigated here hybridizes the statistical market approach implemented by OLS, and the more traditional cost approach. The experiments show dramatic gains in estimation efficiency from exploiting a priori information through IRLS.     

Efficiency and Organizational Structure: A Study of Reverse LBOs

This paper is a report on 72 firms which went public since 1983 but previously underwent a full or divisional LBO. Accounting measures of performance reveal significant improvements in profitability which resulted mainly from these firms' ability to reduce costs. Firms experience dramatic increases in leverage at the LBO, but the leverage ratios are gradually reduced. The evidence is consistent with the hypothesis that the change in the governance structure of these firms towards more concentrated residual claims created a new organizational structure which is more efficient than its predecessor.