Internet resources and capabilities: Japanese SME risk-taking,industry and performance

This study investigates how Internet-related resources and capabilities are influencing performance in Japanese small- and medium-sized enterprises (SMEs). We use a structural equation modelling approach to test these relationships between Internet readiness, Internet capability, risk-taking perceptions and performance within Japanese SMEs (350 SMEs). Unlike other counterpart countries, such as South Korea, Japanese SMEs have been relatively slow in implementing Internet technologies into business practice. However, the results indicate that if Japanese SMEs allocate appropriate resources and deploy Internet capabilities these firms will benefit with performance gains. Further, we find that both the perception of risk-taking and the industry in which the firm operates are key factors in either inhibiting or enhancing the firm’s ability to leverage Internet-related capabilities for firm performance.     

Factors affecting the nature and effectiveness of subjective revision in sales forecasting: An empirical study

Recent empirical results have indicated that sales forecasts obtained from a quantitative model can be improved through subjective revision undertaken by management. This study seeks to determine the extent to which the improvement in forecast performance is dependent upon the individual revising the forecast rather than the specific product under consideration. As any improvement in the forecast is a direct consequence of the adjustment effected, differences in the nature of revision among the individuals concerned and between different types of product are also examined. The results reveal no statistically significant differences between the managers involved in revision activity in terms of their ability to improve the forecast; on the other hand, significant differences in the number of forecasts improved were found between different types of product. As far as the nature of subjective revision is concerned, the results show a significant variation both between different types of product and between managers. Further, the improvement in forecast performance obtained through revision was found to be positively related to the relative size of the adjustment applied.     

Dragon multinationals: New players in 21st century globalization

This review article starts from the question: how does the global business system appear to a challenger firm, and how have challenger Multinational Enterprises (MNEs) from formerly peripheral areas such as the Asia Pacific established themselves successfully, against the sometimes fierce resistance of incumbents? To answer this question, the review develops an argument concerning the pluralistic character of the process of globalization, as contrasted with the conventional account that sees global processes creating uniformity and convergence. This alternative account is based on a review of the experiences of latecomer and newcomer MNEs, particularly those from the Asia Pacific—such as Acer, Ispat International, Li &; Fung and the Hong Leong Group—that are dubbed “Dragon Multinationals.” I argue that the innovative features that these MNEs share, such as their accelerated internationalization, strategic innovation and organizational innovation, fit particularly well with the characteristics of the emergent global economy as one of complex inter-firm linkages. The core proposition of the review is that this complementarity between the characteristics of the emergent global economy and latecomer and newcomer strategic and organizational innovations is what drives the remarkable success of these Asia Pacific firms in establishing themselves as serious international players. Such a proposition carries implications for the process of globalization as well as for the dominant frameworks utilized in International Business. The review argues that Dragon Multinationals adopt a different perspective to the resources accessed through internationalization, and that this requires a rethink of the criteria normally utilized in resource-based accounts of strategy. The challenger firm internationalizing in order to access resources also poses a challenge to the dominant OLI (ownership, locational, internalization) account of multinational advantage. Thus it is argued that the question posed at the outset goes to the core of the IB frameworks, and thereby counts as one of the ‘big questions’ that should guide research in IB in the 21^st century.     

Career concerns and mandated disclosure

This paper examines the effects of mandated disclosure on the design of contracts and induced behavior in the presence of career concerns. We analyze the impact of two key properties of a mandated performance measure that is publicly disclosed: its sensitivity to the agent’s effort and its informativeness about the agent’s ability. We show conditions under which the agent’s effort (and the firm’s output) and the pay-for-performance weight critically depend on these two properties. In particular, when the mandated measure is sufficiently noisy, the pay-for-performance weight always decreases relative to a setting with no mandated measure. But when the mandated measure’s noise is close to that of the existing performance measure, the effect of a mandated measure on the pay-for-performance weight depends on the effort-sensitivity and informativeness of the measure. We also characterize settings where a mandated disclosure would be desirable or not; variations arise because mandated disclosures can increase both effort and risk. Our results imply that mandating the public disclosure of performance measures, particularly measures that are relatively informative about ability but are difficult to influence through managerial effort, may have the unintended consequence of generating inefficiencies in firms’ employment contracts.     

Accelerated internationalization by emerging markets’ multinationals: The case of the white goods sector

The emergence of a “second wave” of developing country multinational enterprises (MNEs) in a variety of industries is one of the characterizing features of globalization. This paper documents how emerging markets’ MNEs (EM-MNEs) may follow quite different patterns to reach, or at least approach, global competitiveness. In particular, it investigates how three EM-MNEs pursued global growth through accelerated internationalization combined with strategic and organizational innovation. Haier (China), Mabe (Mexico) and Arçelik (Turkey) emerged as multinationals in the large home appliances (so-called “white goods”) industry. The recipe for the success of these firms seems to lie in their ability to treat global competition as an opportunity to build capabilities, move into more profitable industry segments, and adopt strategies that turn latecomer status into a source of competitive advantage. At the same time, their experiences show that there are many strategies and trajectories for going global, consistent with a pluralistic conceptualization of globalization.     

Leverage and Taxes: Evidence from the Real Estate Industry

Finance theory has long viewed corporate income taxes as a potentially important determinant of corporate financing decisions and capital structures. But finance academics have been unable to provide convincing empirical evidence of a material effect of taxes on corporate leverage, in part because of difficulties in constructing an effective proxy for marginal corporate tax rates, and hence for the tax benefits of debt, for large samples of individual companies. The authors address this by analyzing leverage decisions in an industry whose publicly traded entities are organized either as taxable corporations, or as real estate investment trusts (REITs) that effectively avoid entity level taxation. This enables them to measure the relative tax benefits of debt with greater precision while controlling for important nontax characteristics that affect debt usage. The tax hypothesis predicts that for real estate firms with similar asset portfolios, taxable firms should have more debt than their nontaxable counterparts. Both the nontaxable and the taxable real estate firms in our sample routinely have more than twice the leverage of industrial firms, which suggests that factors other than taxes are contributing to their use of debt. But among real estate firms, tax status appears to play a much weaker role. Taxable firms have significantly more leverage only after 2000, when restrictions on REITs were removed through new regulations that made their operations much more like those of taxable real estate firms. Our findings also depend on real estate characteristics—most notably, only residential real estate firms demonstrated differences that are consistent with the tax hypothesis. Taken together, the authors’ findings suggest that although taxes do seem to matter, their role is clearly secondary relative to factors such as the nature of the firm’s assets. A generous interpretation of our evidence puts the effect of taxes between one‐third and one‐half of that implied by prior research.     

Managerial Incentives and Corporate Fraud: The Sources of Incentives Matter

Operating performance and stock return results imply that managerswho commit fraud anticipate large stock price declines if theywere to report truthfully, which would cause greater lossesfor managerial stockholdings than for options because of differencesin convexity. Fraud firms have significantly greater incentivesfrom unrestricted stockholdings than control firms do, and unrestrictedstockholdings are their largest incentive source. Our resultsemphasize the importance of the shape and vesting status ofincentive payoffs in providing incentives to commit fraud. Fraudfirms also have characteristics that suggest a lower likelihoodof fraud detection, which implies lower expected costs of fraud.     

The reference wars: Encyclopædia Britannica's decline and Encarta's emergence

Research summary: The experience of Encyclopædia Britannica provides the canonical example of the decline of an established firm at the outset of the digital age. Competition from Microsoft's Encarta in 1993 led to sharp declines in the sales of books, which led to the distressed sale of the firm in 1996. This article offers new source material about the actions at both Encarta and Britannica, and it offers a novel interpretation of events. Britannica's management did not misperceive the opportunities and threats, and Britannica did not lack technical prowess. This narrative stresses that Britannica's management faced organizational diseconomies of scope between supporting lines of business in the old and new markets, which generated internal conflicts. These conflicts hindered the commercialization of new technology and hastened its decline . Managerial summary: An established and leading firm, such as Encyclopædia Britannica, would seem to have enormous advantages over its competitors in a new market. Why would a successful firm come to have severe difficulties organizing for a new market? Of particular importance for explaining Britannica's decline are theories that stress its inherited capabilities, especially inherited technological (in)abilities and inherited (mis)perceptions about the potential for new market opportunities. This article argues that Britannica's management did not misperceive the opportunities and threats, and Britannica did not lack technical prowess. This narrative stresses that Britannica's management faced organizational diseconomies of scope between supporting lines of business in the old and new markets, which generated internal conflicts. The narrative directs attention at managing commercialization activity around new products using new technologies . Copyright © 2016 John Wiley & Sons, Ltd.