Multinationals vs. Cooperatives: The Income and Efficiency Effects of Supply Chain Governance in India

The impact of multinational firms on the domestic agricultural sector in developing countries is controversial, in particular in India. Relying on a unique set of household‐level data from the state of Punjab, we study the biggest dairy company in the world (Nestlé) in India and compare its vertical spillover effects on upstream suppliers to other market channels (informal sector and cooperatives). We find that farmers that supply informal channels are less efficient and earn lower profits per dairy animal than farmers supplying the cooperative and the multinational sector. Furthermore, we find that farmers using the multinational channel are more efficient than farmers in the cooperative channel, but equally profitable. Hence, we do not find that supplying the cooperative channel is more beneficial for local dairy farmers than supplying the multinational channel. Overall, however, dairy productivity and profitability levels are still dramatically low, with substantial scope for dairy development.     

A combination of differentiation and consolidation theory and risk-benefit analysis to examine decisions on mastitis prevention

Abstract

Mastitis infections cause severe pain in dairy cows and are the most costly illness to farmers. This study combined differentiation and consolidation (Diff-Con) theory with risk-benefit analysis to explore how risky decisions are perceived and justified after a decision has been taken. More specifically, using survey data from 428 Swedish dairy farmers, their decisions about adopting preventive measures to control mastitis (mastitis control options, MCO) in dairy herds were examined. The analyses included group comparisons with non-parametric rank tests and use of both ordinary least squared regression and seemingly unrelated regression analysis to examine how prior adoption of MCO affects farmers’ attitudes to the MCO. The results showed that MCOs already adopted were rated higher in perceived riskiness (if not implemented) and in expected benefit (for illness prevention) than non-adopted MCOs. Having made the decision to implement a strategy increased the likelihood of that decision being perceived as more beneficial (reducing mastitis) and risky (in terms of disease increase if not implemented), irrespective of the combination of strategies used on the farm, during the post-consolidation stage. No difference in perceived illness prevalence could explain the farmers’ rating of the MCOs. These findings suggest that there may be a path dependency in farmers’ decision-making with respect to MCO. This implies that novel MCOs may have difficulty in achieving wider implementation. These results have implications for the development of strategies to communicate best practices for use of MCOs and for new research on MCOs and farmers’ decision-making.     

Commitment to Sustainability in Small and Medium‐Sized Enterprises: The Influence of Strategic Orientations and Management Values

Ecosystem degradation and social sustainability have become important issues in the corporate sphere during the last few decades. However, research discussing corporate social responsibility and related concepts has often focused on larger companies, sometimes neglecting the specifics of small and medium‐sized enterprises (SMEs). The main purpose of this study is to examine the relationships between two common strategic orientations, market orientation (MO) and entrepreneurial orientation (EO), in relation to sustainability commitment, sustainability practices and management values in SMEs. Questionnaire responses from 450 Swedish SMEs were analyzed, confirming the influence of MO, EO and sustainability practices on commitment to sustainability, implying that firms committed to sustainability see both market and entrepreneurial advantages of sustainability. The results also show that different parts of MO and EO differ in importance for commitment to sustainability among SMEs. Implications concern the importance for firms and policymakers to work with sustainability issues using both internal and external perspectives. © 2015 The Authors. Business Strategy and the Environment published by ERP Environment and John Wiley & Sons Ltd     

The remuneration of CEOs and corporate financial performance in Norway

Economics and management literatures advocate that senior company executives should be remunerated on the basis of the financial performance of the firms they manage. This helps align the interests of management with those of stockholders. There are, however, problems in implementing pay for performance schemes and these, along with other factors, may lead to there being no empirical relationship between compensation and stockholder returns. This study set out to explore the determinants of chief executive compensation in Norwegian stock exchange listed firms. To date there have been very few studies on this topic using data from Norway; most previous research has employed American data. The results show a positive relationship between CEO pay and corporate size but there was no significant association between remuneration and corporate financial performance as measured by accounting profitability and as measured by stock returns. Estimates of the value added by companies were significantly related to chief executive pay. There was also a positive and significant relationship between a CEO's compensation and the average wage level of the company. This association may be due to the unique characteristics of Norway's social and economic structure.     

Organic and Acquisitive Growth: Re‐examining,Testing and Extending Penrose's Growth Theory

Edith Penrose's theory of firm growth postulates that a firm's current growth rate will be influenced by the adjustment costs of, and changes to a firm's productive opportunity set arising from, previous growth. Although she explicitly considered the effect of previous organic growth on current organic growth, she was largely silent about the effect of previous acquisitive growth. In this paper we extend Penrose's work to examine how previous rates of organic and acquisitive growth influence current organic growth. Employing a panel of Swedish firms over a 10‐year period, our results suggest the following. First, previous organic growth acts as a constraint on current organic growth. Second, previous acquisitive growth has a positive effect on current organic growth. We conclude that organic growth and acquisitive growth constitute two distinct strategic options facing the firm, which have a differential impact on the future organic growth of the firm.     

Liberalisation,competition and ownership in the presence of vertical relations

This contribution analyses a market with an upstream bottleneck monopoly and a downstream activity that may either be vertically integrated or separated. Separation always reduces the consumer surplus, and the total surplus unless there are large cost reductions. Downstream competition from a public or private network monopoly would crowd out other firms, also when public ownership is associated with more modest objectives than welfare-maximisation. A market is therefore less likely to remain a mixed oligopoly than without vertical relations. However, private firms would survive in a moderately welfare-improving mixed oligopoly with cross-subsidisation and access charges equal to marginal costs.

Some notes on the stability of a simple Cournot economy with a leontief technology

The stability analysis of a simple linear Cournot model is extended by including two branches producing inputs to each other and for consumption. Equilibrium turns out as stable under continuous adjustment.