Influence of Corporate Image on Brand Extensions: A Model Applied to the Service Sector

The paper presented here provides a new perspective in the study of service brand extensions, which has become a popular strategy for launching new services. Specifically, the paper proposes and estimates a model that shows how potential consumers evaluate service extensions. The findings show that the corporate image affects both the perceived service quality and the perceived fit between the new service and the parent brand, which in turn affects attitudes towards the extension. In consequence, the service extension is more likely to be successful when the corporate image is reinforced by effective marketing communications. The perception of service quality will be better and consumers will think that the company is more able to offer the new services.     

REGULATORY INSTITUTIONS AND GOVERNANCE TRANSFORMATIONS IN LIBERALISING ELECTRICITY INDUSTRIES

ABSTRACT ** :  The European liberalising electricity industries are still heavily regulated. A prominent form of regulation is directed at the energy companies' forms of governance. European and national regulations prohibit the vertically integrated structures that characterised these companies for almost a century. Detailed rules on unbundling, independence of the transmission and distribution system operators, and network access influence to a large extent the type of new governance structures that are adopted. This paper takes the institutional organisation of regulation into account to explain the regulatory influence on governance changes at the level of the firm. Examples of the Dutch and French electricity industries illustrate that the new forms of governance are heavily influenced by the institutional organisation of regulation.     

Factors affecting corporate environmental strategy in Spanish industrial firms

During the last 30 years, environmental issues have become very important for governments, consumers and companies. Firms, aware of their environmental responsibilities, have started to show an important commitment to society and the natural environment, developing environmentally friendly strategies. However, the factors that determine the choice of environmental strategies are still unclear. They range from ethical motivations to social, legislative and competitive factors. This study analyses the main antecedents that influence firms' ecological behaviour, distinguishing between environmental orientation and environmental strategies. The hypotheses proposed in this study are analysed by means of a structural equation model on a sample of 235 industrial firms. The results reveal that competitive motivations and management commitment are the most important factors explaining why firms incorporate environmental issues into their strategic planning process. Moreover, management commitment is a critical factor for firms because managers' perception about customers' ecological concern directly influences firms' environmental behaviour. Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment.     

Einzelbesprechungen

Ohne ZusammenfassungAus dem Russischen übersetzt von Dr. Alexander Gerschenkron.     

A true and fair view of the principles/rules debate

The nature of 'reality' in the context of financial reporting is, at best, a generally agreed, inter-subjective human construction. This article considers the nature, and alternative perceptions, of the notions of principles and rules, exploring the idea of true and fair view presentation as a meaningful requirement in its own right, and as an override. An overview of the standard setting process in the United States from the historical perspective identifies factors fostering the rules-based accounting system. We then analyse recent developments in the United States regarding the adoption of a principles-based accounting system, and in the U.K. arising from the introduction of IAS in Europe. Both support the conclusions that: The purpose of financial reporting is to give an understanding, which is not misleading, of the underlying economics of an enterprise; the 'underlying economics' represents an inherently subjective construct; rules, by themselves, are inadequate, whether or not they are based on principles; major and fundamental differences exist between various players on the world regulatory scene; much of the debate at the regulatory and policy level is at best vague and confused, more likely disingenuous, possibly intellectually dishonest; interested parties will interpret words, concepts and agreements differently; significant limitations for international standardization are implied by the above points. Further, no one player, construct or culture can impose its will at a global level.
In 1942 the U.S. SEC aptly captured the appropriate sentiment: 'The basic question [is] whether the financial statements performed the function of enlightenment, which is their only reason for existence'.     

Decision support system to design feasible high-frequency Motorways of the Sea: A new perspective for public commitment

ABSTRACT

The implementation of Motorways of the Sea (MoS) within the framework of European Union aid programs experiences a period of relative stagnation. This article analyzes the suitability of current short-term nonrepayable subsidy policy and develops a decision support system (DSS) that allows a medium- and long-term feasibility analysis of MoS proposals. One significant conclusion drawn from the application of the proposed DSS to a prototypical high-frequency MoS provides that the period of initial losses prior to achievement of both modal shift and accounting profits might last 10 years. Moreover, the entire duration of the period that includes prior objectives as well as the recovering of initial losses might reach 25 years. Therefore, existing schemes of public–private collaboration should be redefined. To this end, the proposed DSS also contributes to envisioning a spectrum of possibilities for private–public collaborations schemes, as opposed to public–private dichotomy of partnerships.     

A semiparametric estimation of liquidity effects on option pricing

Abstract. This paper proposes a semiparametric option pricing model with liquidity, as proxied by the relative bid-ask spread. A nonparametric volatility function with liquidity costs as an explanatory variable is estimated using the Symmetrized Nearest Neighbors (SNN) estimator rather than the traditional kernel estimator. The SNN estimator is particularly suitable for the characteristics of option data in financial markets. Moreover, we propose a natural extension of the univariate bandwidth parameter optimal estimation to the multivariate case. A statistical design to test competing option pricing models which takes into account the lack of independence between them is also presented. The in-sample performance of the model turns out to be statistically favorable relative to the competing model without liquidity. Also, an additional experiment is performed within sample, but with just a subsample of options not employed in the nonparametric estimation of the implied volatility function being priced. The results are also favorable to our semiparametic theoretical option pricing model with liquidity. However, the out-of-sample performance is quite disappointing regardless of what option pricing model is employed in the estimation. Eva Ferreira and Gonzalo Rubio acknowledge the financial support provided by Dirección Interministerial Científica y Técnica (DGICYT) grants PB98-0149 and PB97-0621 respectively. All three authors aknowledge the financial support provided by Universidad del País Vasco (UPV/EHU) grant UPV 038.321-HA129/99, and the BSI Gamma Foundation. We appreciate the helpful comments of two anonymous referees, ángel León, José M. Campa, Fernando Tusell and Javier Fernández Navas, seminar participants at the Bank of Spain and the European Financial Management Association (Athens), and the computational assistance of Gregorio Serna. We thank Juan Ayuso and MEFF for providing the data used in this article. The contents of this paper are the sole responsability of the authors.     

Authenticity: is it real or is it marketing?

Marty Echt, the new head of marketing at Hunsk Engines, is determined to bring the motorcycle maker back to its roots. He says it's not enough to project authenticity to customers--employees must personally subscribe to the brand's values. Should the company's CEO support Marty's "real deal" vision? Five experts comment on this fictional case study. Bruce Weindruch, the founder and CEO of the History Factory, says that an authenticity-based campaign can be effective--but only if it's truly drawn from history. Marketers like Marty often remember their organization's past in a golden haze. Weindruch recommends exploring old engineering drawings, ads, and product photos in order to understand what customers and employees really valued back in the day. Gillian Arnold, a consultant to luxury fashion and fine jewelry brands, thinks Marty's approach is right: People in key marketing posts must be passionate about their products and know them inside and out. She argues that the CEO needs to commit more fully to the new campaign and address the significant gap between the staff and the brand. James H. Gilmore and B. Joseph Pine II, the cofounders of Strategic Horizons, point out that Hunsk needs to manage customers' perceptions rather than trying to be a "real company" or forming a management team whose personal interests match the brand. People purchase a product if it conforms to their self-image; that alone determines the brand's authenticity. Glenn Brackett of Sweetgrass Rods, a maker of bamboo fly-fishing rods, says Marty seems to be one of the few people who understand Hunsk motorcycles. If employees bring blood, sweat, heart, and soul to a product, it will manifest that spirit, and customers will line up for it.     

Barycentric algorithm for computing D-optimal size- and cost-constrained designs of experiments

In this paper, we study the problem of D-optimal experimental design under two linear constraints, which can be interpreted as simultaneous restrictions on the size and on the cost of the experiment. For computing a size- and cost-constrained approximate D-optimal design, we propose a specification of the “barycentric” multiplicative algorithm with sequential removal of redundant design points. We analytically prove convergence results for the proposed algorithm and numerically demonstrate its favorable properties compared to competing methods.