David Fritzsche: Business Ethics: A Global and Managerial Perspective

Teaching Business Ethics -     

Money,inflation and untested common factors

Bairam's (1990) model of world inflation is reconsidered. This model gives the surprising result that increases in the money supply act to decrease inflation rates. I find that this result is due to the imposition of an untested (and invalid) common factor restriction. This restriction is implicit in the generalized least squares (GLS) transformation for autocorrelated regression residuals. Bairam's autocorrelated residuals appear to be caused by mis-specified dynamics. In a more correctly specified model money supply increases have the expected positive influence on inflation rates. The prevalence of the GLS transformation, and the rarity of testing for implied common factor restrictions, suggests that there may be other, equally mis-specified, models existing in the literature.     

Is attack the best form of defence? A competing risks analysis of acquisition activity in the UK

The primary purpose of this paper is to investigate whethercompanies can use acquisition as a strategy to reduce theirlikelihood of take-over. The determinants of making an acquisitionand being taken over are modelled for the first time withina competing risks framework using two large samples of UK manufacturingcompanies which together cover most of the post-World War IIperiod up to 1990. Our results indicate that, ceteris paribus,companies which make acquisitions can significantly reduce theirconditional probability of being taken over by around one-third,largely through the impact that acquisition has on corporatesize. In this sense, attack, through acquisition, is the bestform of defence against take-over.     

Tipping behavior in Canadian restaurants

This study tested several common stereotypes held by restaurant servers about tipping behavior, using detailed, household-level Canadian recall data on over 73,000 restaurant meals during the 2000–2005 period. Most variation (84%) in tip amounts was explained by a meal's price. Regarding tipping rates, however, two-stage least squares and logistic regressions explained only a small portion of variation. Diners’ previous tipping history was the dominant predictor of tipping rates. Statistically significant results supported each tipping stereotype, but the average magnitude of impacts appeared too low to justify basing staffing or service quality decisions on diner-specific tipping expectations.     

The Impact of Investment Constraints on Portfolio Performance Measurement: The Power Utility Function Case

This paper examines the effect of investment constraints on performance measurement of institutionally managed funds. Assuming that these funds have a power utility function and using an optimal portfolio choice model, one can show that the Security Market Line remains a valid benchmark for these constrained funds under the perfect market assumption. Relaxing the perfect market assumption, one can prove that a non-stationary constrained investment policy will bias traditional measures of timing ability differently across managers types. Finally, the magnitude of this bias is illustrated with a numerical example.     

Do feelings of success mediate sales performance-work attitude relationships?

A psychological success model of the relationships between sales performance and job attitudes is developed and tested. The model posits that feelings of success mediate the relationship between work performance and job satisfaction. Previous research based on purely cognitive theoretical models has posited a direct relationship between performance and satisfaction, but typically has found no empirical relationship. The psychological success model posits that the relationships between performance and job attitudes are indirect and mediated by feelings of success. The results generally validate the model. Implications for theory and managerial practice are drawn and directions for future research incorporating affect into models of work behavior are suggested. His research has appeared in theJournal of Marketing Research, Journal of Consumer Research, Journal of Personal Selling and Sales Management, Journal of Advertising Research, and other publications. His research has appeared in theJournal of Marketing Research, Journal of Marketing, Academy of Management Journal, Journal of Personal Selling and Sales Management, and other publications. He is coauthor (with Douglas J. Dalrymple) ofSales Management: Concepts and Cases, 4th ed., published by John Wiley & Sons. He is actively involved as a consultant to the health care industry. His research has appeared in theJournal of Marketing Research, Journal of Marketing, Journal of Consumer Research, Journal of Personal Selling and Sales Management, Journal of Advertising Research, and other publications. He is active in executive education and serves as chapter chairman of the East Georgia Chapter, American Red Cross.     

A method for examining learning in negotiation

The impact of feedback on interpersonal learning in negotiation was examined. An interactive computer program was developed to isolate the effect of individual judgment on performance. Subjects negotiated three times with a computerized opponent whom they were led to believe was another subject. Some subjects received a complete diagnosis of their opponents' interests following each negotiation (full feedback); others only learned about their opponents' payoffs (outcome feedback); some did not receive any information about the opponent (control). The prediction was that subjects who received a complete diagnosis would make more accurate judgments about their opponents' interests and reach more integrative agreements in subsequent negotiation situations. The results provided weak support for the model. Two indices of performance were studied: negotiators' ability to recognize compatible issues and logrolling, or the ability to make mutually beneficial tradeoffs among issues. The pattern of findings was dramatically different for the two performance measures: Whereas logrolling improved as negotiators gained experience, recognition of compatible issues worsened over trials. The degradation of performance for compatible issues was curbed for negotiators who were provided with full feedback. The feedback did not affect logrolling performance.The research reported in this article was supported by a grant from the National Science Foundation #SES89211926.     

Revisiting the research–practice gap in HR: A longitudinal analysis

Over 6300 articles published in 4 HR-focused journals over a 30-year period of time (1976–2005) were content analyzed according to 14 topic areas. The purpose of the study was to examine changes that have taken place over a 30-year time frame. Specifically, what HR issues dominate the field during the past and the present? And to what extent has the HR research–practice gap narrowed or widened over time? The results indicate that HR Development and Staffing were dominant HR issues throughout the past 30 years. In addition, some HR topics demonstrated a stable research–practice gap (Motivation-related issues), and other topics were characterized by an increasing gap (Compensation & rewards), a decreasing gap (Employee/Labor relations), or no significant gap (HR Developments, Staffing). These findings are discussed in the context of key human capital trends.     

Does the World Economy Swing National Elections?*

Do voters reward national leaders who are more competent economic managers, or merely those who happen to be in power when the world economy booms? Using data from 268 democratic elections held between 1978 and 1999, I compare the effect of world growth (luck) and national growth relative to world growth (competence). Both matter, but the effect of luck is larger than the effect of competence. Voters are more likely to reward competence in countries that are richer and better educated; and there is some suggestive evidence that media penetration rates affect the returns to luck and competence.     

Technical analysis compared to mathematical models based methods under parameters mis-specification

In this study, we compare the performance of trading strategies based on possibly mis-specified mathematical models with a trading strategy based on a technical trading rule. In both cases, the trader attempts to predict a change in the drift of the stock return occurring at an unknown time. We explicitly compute the trader’s expected logarithmic utility of wealth for the various trading strategies. We next rely on Monte Carlo numerical experiments to compare their performance. The simulations show that under parameter mis-specification, the technical analysis technique out-performs the optimal allocation strategy but not the Model and Detect strategies. The latter strategies dominance is confirmed under parameter mis-specification as long as the two stock returns’ drifts are high in absolute terms.