Corporate venturing: Insights from actual performance

Corporate innovation and the entrepreneurial strategies on which it is based are key challenges at the forefront of executive concerns. In order to establish some factual foundations amid the popular folklore which surrounds corporate innovation today, this study examines the actual factors that influence internal corporate venturing within the realm of a corporate entrepreneurship strategy. Data were collected from 145 internal corporate ventures (early-stage, middle-stage, and established-stage) operating in 72 firms headquartered in the midwestern United States. The results of this study are summarized herein and offer insights regarding some of the key correlates of corporate venturing performance.     

Uncertain tax rules and futures hedging

This paper considers the optimal futures hedging decision under uncertain tax treatment. If the Corn Products (CP) rule applies, gains or losses from futures trading can offset business gains or losses. However, under the Arkansas Best (AB) doctrine, offsetting is not allowed. We show that the risk neutral firm will not trade futures contracts if the probability the CP rule prevails is small. When the probability is sufficiently large, the firm will assume an underhedge. A risk averse firm is likely to trade, even if the AB rule prevails. As long as the CP ruling is not a sure thing, the firm will engage in underhedge. The effects of average business profits, the volatility of business profits, and risk aversion on the optimal futures position are provided. Copyright © 1999 John Wiley & Sons, Ltd.     

Disaggregating entrepreneurial orientation: the non-linear impact of innovativeness, proactiveness and risk-taking on SME performance

Previous studies have generally established a positive relationship between aggregated measures of entrepreneurial orientation (EO) and firm performance. However, there are theoretical reasons suggesting that three dimensions of EO (innovativeness, proactiveness, and risk-taking) may possess differential relationships with performance in smaller firms. This study utilizes a sample consisting of 1,668 small-to-medium sized enterprises (SMEs) in nine countries across 13 different industries to provide a finer-grained analysis of the EO-performance relationship. Specifically, we theorize and test a non-monotonic influence of innovativeness, proactiveness, and risk-taking on SME performance. Innovativeness and proactiveness displayed predominantly positive U-shaped relationships with SME performance. Risk-taking, however, displayed a predominantly negative U-shaped relationship with SME performance. Further, individualism was found to positively moderate the relationships between innovativeness-performance and proactiveness-performance. Taken together, these results suggest that differential relationships exist between three dimensions of EO and SME performance, with important theoretical implications for future EO research.     

Relationship banking and escalating commitments to bad loans

The relationship banking literature suggests that business relationships play an important role in the loan decisions of small banks. We test one aspect of this hypothesis using a cross-sectional panel dataset of small banks located in Texas from 1994 to 2002. Our results suggest that small banks located in smaller counties escalate their commitment to bad loans when compared with those located in larger counties, even after controlling for psychological and social factors that influence escalation tendencies. These results highlight the need for small banks to trade-off the positive benefits of adopting a relationship banking strategy against its unintended negative consequence. We provide some suggestions on how small banks may lessen their escalation tendencies despite adopting a relationship banking strategy. The results of this study also suggest that small and medium-sized enterprises (SMEs) that develop strong relational bonds with small banks may benefit from continued access to credit facilities, especially during periods when they experience financial distress.     

Federal Reserve Independence in the Aftermath of the Financial Crisis: Should We Be Worried?

The extraordinary circumstances of the past few years have led to extraordinary responses by the Federal Reserve and other central banks. These ventures into uncharted waters have heightened political scrutiny to the point of raising concern about future independence. In discussing independence of the Federal Reserve, it is important to separate its regulatory and supervisory functions from its monetary policy function. It is the latter in which the question of independence is most important. History indicates that independent monetary policy has been a powerful deterrent to inflation. This paper outlines the threats to Federal Reserve independence, particularly as it exists from the unconventional policies that it pursued to mitigate the financial crisis. Economists have an important role in making the case that monetary policy remains independent.     

Alcohol Advertising: Orientations and Influence

The paper presents an analysis of the effects of televised alcohol beverage advertising on the consumption of alcohol among a sample of US teenagers. While no effects of exposure on total consumption are demonstrated for the total sample, consistent with other research on alcohol advertising effects, the present analysis reveals the importance of ‘orientations towards advertising’ as linkages between exposure and consumption behaviour. Specifically, a social utility orientation, involving learning of normative expectations about drinking, and a vicarious utility orientation, involving identification with models in alcohol beverage commercials, are shown to be mediating factors which condition the effects of advertising exposure.

‘Alcohol Advertising: Content and Controversy’, by the same author, appeared in the last issue of this journal.     

THE POLITICAL ECONOMY OF CONTINGENT PROTECTION

In recent years, several empirical studies have attempted to investigate the key influences, or determinants, of the anti-dumping and countervailing duty (AD/CVD) decision-making process. As a consequence, several different empirical modelling approaches have been developed using alternative, and in some cases, competing theoretical frameworks. Each approach tests empirically aspects of the AD/CVD decision-making process for evidence of particular forms of pressure that contribute to protectionist outcomes. However, the results of these studies have been somewhat inconsistent and inconclusive, possibly because the analytical scope of these studies appears to be too narrow. Hence, the current article sets for itself the important objective of developing a more general framework for modelling contingent protection empirically. A taxonomy is introduced that suggests that the types of bias affecting AD/CVD decision-makers may be separated into three broad categories: political supply pressure, industry demand pressure, and regulatory process pressure. This approach is then used to analyse recent Australian anti-dumping outcomes. The empirical results generated from the Australian data, using the taxonomy, suggest that from the supply side, the Australian government appears to be biased against the provision of AD/CVD protection. On the other hand, the results suggest that a demand-side bias appears to be present. That is, the Australian AD/CVD process appears to be weighted towards a demand, rather than supply, orientation contrary to political economy suggestions that AD/CVD policy is used as a politically driven trade policy device.     

Marketing Metrics Use in a Transition Economy: The Case of Vietnam

ABSTRACT

This article explores the use of marketing metrics by a sample of Vietnamese firms, providing an example of the use of marketing metrics in a “transition” economy as it grows and becomes more market and marketing driven. The analysis reports usage frequency and then develops a set of “correlation chains” linking firm characteristics, metric use, and various indicators of performance. Vietnamese managers generally report that several types of metrics are used. Ownership structure and industry also impact which metrics are utilized. An initial assessment of chains relating metric use to firm performance indicates that the impact is complex and indirect.     

Bribery in international business: Whose problem is it?

Bribery is a frequently discussed problem in international business. This article looks at the problem from the North American and from the developing country perspective. It describes and analyses specific cases and highlights recurring patterns of behavior.The article is based on the experiences of the authors who have been promoting business in the developing world. In addition to ethical considerations involved with bribery there are some very practical reasons for not engaging in the practice. There are also real barriers to establishing the relationships necessary to avoid the practice yet continue doing business. Henry W. Lane is Associate Professor of Organizational Behavior at the School of Business Administration, The University of Western Ontario, London, Ontario. He is at present Director of the Centre for International Business Studies. His most important publication is: Managing Large Research and Development Programs (with Rodney Beddows and Paul R. Lawrence), (State University of New York Press, Albany, 1981).Donald G. Simpson is Associate Professor at the University of Western Ontario. He is at present Associate of the Centre for International Business Studies. He was formerly Associate Director of Social Sciences Division at the International Development Research Centre, Ottawa, Canada and Executive Director of the Office of International Programs, University of Western Ontario.