A theory of global strategic alliances: The case of the global auto industry

The theory articulated in this paper suggests that the desire to reduce demand and competitive uncertainty are two separate, important motives for alliance formation. Taking this as a starting point, we predict the configuration of horizontal alliances that we might expect to observe within an industry when firms experience these uncertainties to different degrees. An empirical test of this theory using data from the global auto industry yields results consistent with the view (1) that alliances are a device for reducing both the uncertainties that arise from unpredictable demand conditions and those that arise from competitive interdependence, and (2) that variation of demand uncertainty and competitive uncertainty across firms explains differentials in both the intensity and structure of their horizontal alliance activity.     

WORLD OUTLOOK

Events in the Gulf have finally brought an end to the world economic boom of the last eight years. The oil price shock itself is only partly responsible for the downturn. The previous tightening of monetary policy in the face of inflationary pressures and the end of a rapid period of credit and asset price expansion had severely weakened the ability of some economies to respond to the shock. This is reflected in the diversity of response, most obviously in the United States where Fed fine tuning and the credit crunch have already weakened the economy. The rise in oil prices has led to a sudden collapse in consumer confidence and a swift cutback in output. Although we do not expect the recession to be deep, the financial problems will delay recovery. The Japanese economy was already in financial difficulties before the shock, although the real economy was stronger and here we expect a sharp deceleration from almost 6 per cent growth last year to around 3.5 per cent. In contrast the German economy, partly shielded by the substantial appreciation of the DM over the last year, has been affected less by the oil price shock and we expect the consumer and investment boom to continue this year as the economies merge. This provides a welcome boost to other European economies.     

Game theoretic derivations of competitive strategies in conjoint analysis

While conjoint analysis has been applied in a wide variety of different contexts in Marketing, most applications fail to explicitly consider retaliatory reactions from competitors. In this paper, a methodological extension is developed for conjoint analysis by explicitly modeling competition in a game theoretic context. The Nash equilibrium concept is employed to model competitive reactions to produce design, and its implications for reactive product strategies are discussed. The optimal product design problem for each firm is formulated as a nonlinear integer programming problem, which is solved via a specialized branch and bound method combined with a heuristic. In order to compute a Nash equilibrium, a sequential iterative procedure is proposed. The proposed procedure is illustrated under several scenarios of competition using previously published conjoint data.This research has been supported by the Henry Rutgers Research Fellowship, Rutgers University.     

Price-volume relation in stocks: A multiple time series analysis on the Singapore market

We examine the price-volume relation in stocks using the multiple time series approach due to Tiao and Box (1981). This approach has the advantage of treating price and volume jointly and symmetrically (without enforcing the roles of input and output). It is free of the simultaneity bias in regression analysis and the unidirectional dynamics imposed by transfer function models. Empirical results show that there is implicit positive correlation between price and volume through their residuals. However, the results for the explicit lead and lag relations are mixed. The technical analysts' adage that volume often leads the trend of price is not supported. Nonetheless, the implicit relationship between price and volume confirms the usefulness of incorporating volume data to forecast future return. Our analysis shows that the multiple time series models outperform the univariate models in post-sample forecasts.     

Hard Times or Great Expectations? Dividend Omissions and Dividend Cuts by UK Firms*

This paper uncovers an increasing proportion of quoted UK companies omitting cash dividends. Using a large panel of quoted UK firms, we estimate panel data probit models for the incidence of dividend omissions and cuts as functions of financial characteristics including cash flow, leverage, investment opportunities, investment and company size. These variables account for most of the increase in omission since 1995. There is relatively little evidence to link this to the major tax reform of 1997 that abolished tax refunds on dividend income payable to tax‐exempt institutions. Significant persistence effects indicate companies are slow to adjust their balance sheets through their dividend.     

Talk as Technique – A Critique of the Words and Deeds Distinction in the Diffusion of Customer Service Cultures in Call Centres

ABSTRACT   This paper critically explores the common distinction made between words and deeds (or ideas and techniques) in the diffusion of management knowledge literature. The concern with whether management ideas are really being implemented in an organizational context intuitively points to the possibility of a contrast between simply talking about a practice or 'hype' and practical implementation. Drawing on empirical research on the diffusion of customer service culture in two call centres where 'verbal labour' predominates, it is argued that this distinction is important, but overdrawn. Eschewing discursive reductionism, the concepts of 'talk in work' and 'talk about work' are developed to illustrate how talk can be a technique of implementation in its own right.     

passive drinking

The threat to health from passive smoking is now well understood. Andrew Wilson, a freelance healthcare journalist, reveals the alarming results of recent research into ‘passive drinking’. Without wishing to cause alarm Economic Affairs wonders how seriously we should treat these new findings?     

Pre-Harvest Price Expectations for Corn: The Information Content of USDA Reports and New Crop Futures

This article examines the puzzle of why futures prices continue to react to USDA crop reports despite the fact that reports appear to be no longer "newsworthy," that is, provide no better production estimates than private forecasts. The information value of reports is measured in terms of their influence on rational agents' harvest-time corn price expectations, which are uncovered using a Hamilton-type modeling approach. Results show that reports are still "newsworthy," as they would contribute to agents' price expectations if released a day early. Thus futures price reactions, which closely reflect price expectations, are rational and consistent with efficient markets hypothesis.     

Long-Term Performance Following Rights Issues and Open Offers in the UK

Abstract:  This study finds evidence of significant long-term underperformance following rights issues made during 1986-95 in the UK. The findings are resilient to a number of methodological controls. In contrast, our results for a smaller sample of open offers made during 1991-95 show strong positive performance over a 5-year post-issue period, implying that firms making open offers had better growth prospects than firms making rights issues. During 1986-90, a period when open offers were rarely used, firms appeared to be making rights issues to exploit overvaluation. However, this was not evident for rights issues made during 1991-95, a period when open offers were more commonly used.