The determinants of venture creation time: a cross-country perspective

The purpose of this paper is to examine the impact of macro-institutional and macro-non-institutional factors on the new venture creation time across emerging as well as developed economies in Europe using panel data from 2003 to 2006 in 15 emerging and developed countries. This paper finds significant relationships between the venture start-up time and institutional factors that include lending interest rates, start-up procedures, and taxation and one non-institutional factor, GDP per capita. Additionally, we found differences in the factors between emerging and developed countries. Institutional factors, such as start-up procedures and trade opportunities, are important determinants of new venture creation time in emerging countries, consistent with the findings of recent studies. To encourage business formation, policy makers may need to revise policies concerning these factors which can facilitate or restrict new venture formation. Implications for further research and practice are discussed.     

Distressed exchange,bargaining power,and prior capital structure

Financially troubled companies often make Distressed Exchange (DE) offers to its creditors, to postpone costly bankruptcy reorganization. We derive the optimal terms and timing of a DE offer consisting of debt reduction and an equity stake in the restructured firm. The DE terms and timing are affected by shareholder bargaining power, with greater shareholder bargaining power resulting in earlier DE offer, smaller debt reduction and smaller equity stake. The impact of shareholder bargaining power is greater when bankruptcy cost is larger and tax rate is higher. We also show that renegotiability of debt increases ex-ante firm value and results in a higher optimal leverage ratio. Both firm value and optimal leverage ratio are decreasing functions of shareholder bargaining power.     

Optimal fishery harvesting rules under uncertainty

This paper derives the optimal fishery harvest policy in a real-option model with a stochastic logistic growth process, harvest-sensitive output price, and both fixed and variable harvesting costs. The policy specifies the harvest trigger and harvest size, while outputs from the model include the value of the fishery and the risk of extinction. The optimal policy is illustrated with data from the Pacific Halibut Fishery. For this particular case, the optimal policy recommends harvesting when the fish stock rises to about three-quarters the environmental carrying capacity, and the amount harvested should be approximately a quarter of the prevailing stock. This harvesting policy maximizes the value of the fishery, and importantly, the resulting risk of extinction is negligible. We also carry out some sensitivity analysis to see how the optimal policy (and the resulting fishery value and risk of extinction) change when the input parameters are varied, particularly the ecological parameters intrinsic growth rate and volatility of the stock, and also the economic parameters that have been ignored in previous papers (price sensitivity and fixed cost). If the optimal policy is followed, the risk of extinction will be negligible, except for very low growth rate and high volatility.     

An exploratory study of factors affecting credit card brand and category selection in India

This article aims to identify various credit card selection factors in the context of an Asian emerging economy – India. Considering the recent emergence of the three-tier banking system in India, the study proposes to investigate whether there exists an association between credit card selection factors and the type of credit card issuing bank (public, private national or private foreign). The article also seeks to find out whether the income level of the individual determines the type of credit card bank category selection, as prior literature suggests that demographic factors are closely related to credit card selection and usage patterns. The analysis was carried out using a mixed method research design involving thematic analysis of focus group data, factor analysis, PERMAP analysis and multiple correspondence analysis in different phases. Five primary credit card selection factors were identified. A strong correspondence between credit card selection factors, personal income levels and choice of credit card issuing bank was found. Accordingly, credit card selection factors and personal income level were together identified as factors affecting the type of bank selected. The phenomenon of bank category-based stereotyping of brands is emphasized based on the analysis. The implications of this phenomenon with respect to brand identity conception, target segmentation, brand positioning and marketing communication are discussed.     

Trends in international business thought and literature: A review of international market entry mode research: Integration and synthesis

Although entry mode strategy has traditionally been a central topic of research in international business, it is only recently that integrated research frameworks have developed. Largely in response to the dynamic reconfiguration of global business, these new insights from channel management, global strategy, alliances, and political economy have infused new perspectives into entry mode research. This article reviews and synthesizes this literature. Within an over-arching classificatory framework, central themes and sub-themes within this body of literature are identified and their inter-linkages investigated. The evolutionary process of entry mode research is examined. The article concludes with directions for future research and the need to integrate entry mode research with partnering strategies.     

Commentary on facility location in the presence of congested regions with the rectilinear distance metric

This paper is a commentary on the work of Butt and Cavalier (Socio-Econ. Plann. Sci. 31(2) (1997) 103), a paper that was published in an earlier issue of this journal. With the aid of an example problem, we demonstrate that the set of gridlines proposed by them to find the rectilinear least cost path between two points in the presence of convex polygonal congested regions is inadequate. We proceed to prove its adequacy for the case of rectangular congested regions in which the edges of the rectangles are parallel to the travel directions. In wake of the difficulties of the general problem, we consider a specific example of a convex quadrilateral congestion region and a pair of external origin and destination points. Finally, we revisit the example shown in Butt and Cavalier's paper and present a mixed integer linear programming formulation that determines the optimal locations of the entry and exit points for this example.     

Innovation and corporate entrepreneurship in service businesses

The strategic entrepreneurship field has established the importance of a generalized entrepreneurial behaviour across the organization. However, extant research has failed to establish how the association with innovation is different in service businesses. This is a relevant gap in the literature addressed by the paper, given the role of services in the world economy and the importance of employee–client interactions for the competitiveness of most service businesses. An empirical analysis from 127 service and non-service firms, using hierarchical multiple regression, confirms there are relevant differences, with important theoretical and managerial takeaways.     

Statistical Causality and Strategic Behavior in Industrial Markets

This paper proposes a simple test of the leader-follower model of strategic behavior. This test relates the temporal notions of leadership central to such models to the empirical methods of statistical causality. This test is performed using data from the US softwood plywood industry of the last three decades. Others have productively explored the spatial pricing practices of this industry by applying a leader-follower model. Similarly, we find that a leader-follower model explains well the temporal relations between key strategic variables (prices) in the industry. We conclude that the leader-follower model imposes meaningful restrictions on observable time-series data and that statistical causality is a useful method for testing these restrictions.     

Schooling, Informal Experience, and Formal Sector Earnings: A Study of Indian Workers

This paper estimates an earnings function for male workers belonging to the Indian corporate sector. The model allows for differential rates of return to schooling and distinguishes tenure from total labor market experience. The rate of return to schooling is found to be low up to the junior level, increases significantly at the secondary and undergraduate levels, but sharply declines at the masters level. Seniority and firm-specific factors are found to be important determinants of earnings. When years of unemployment and informal experience are incorporated, earnings of low-education workers appear to be driven entirely by formal-sector experience.