When excessive cost savings measurement drowns the objectives

This paper presents the dynamics and complexity of implementing a cost savings measurement system in purchasing. It focuses on the technical and strategic aspects of the evolution of such a system in a renowned organisation. Few articles dealing with cost savings in purchasing use an empirical approach. Therefore, this research sheds light on significant issues, often neglected in the literature. Contributions to managers include lessons about the importance of overcoming the complexity of measurements, and recognising that it is easier to begin by measuring hard savings, followed by soft savings when the system is running well. Contributions to the scientific literature include the opportunity to follow the progression of a cost savings measurement system within an organisation, and a discussion about the limitations of such systems.     

Integrated analysis of content and construct validity of psychometric instruments

Establishing adequacy of psychometric properties of an instrument involves acquisition and evaluation of evidence based on item content and internal structure. Content validity evidence consists of subject matter experts providing quantitative ratings of the extent to which items are a representative sample of targeted domain. Evidence of internal structure includes factor analytic studies and examination of item interrelationships based on item responses from participants. Although subject matter expert ratings and participant response data are traditionally analyzed separately, each serves to inform the other in important ways. We propose integrating subject matter experts’ and participants’ data seamlessly to establish a unified model of validity evidence. The approach is applied to an instrument designed to measure nursing home culture change (i.e., resident-centered care). The proposed method has been demonstrated to be useful with a posterior distribution resulting in stable estimates of psychometric parameters superior to traditional analytic approaches. To illustrate the efficacy of the methodology, we present a simulation study and discuss its place in psychometric methods.     

The Impact of Industrial Design Effectiveness on Corporate Financial Performance*

Despite the growing recognition of industrial design's value in creating sustainable competitive advantage, few studies have attempted to quantify the contribution that design makes to company financial performance. This article examines the relationship between industrial design and company financial performance in order to assess industrial design's contribution to this performance. Effective industrial design was evaluated by asking a panel of 138 industrial design experts to rank the industrial design effectiveness of publicly traded firms within nine selected manufacturing industries; the ranking process yielded 93 firms. Based on the rankings, firms within each industry were divided into two groups: those judged as exhibiting high design effectiveness versus those judged as low in design effectiveness. Audited financial data reported to the SEC across a seven‐year period from 1995 to 2001 were used to evaluate financial performance. Using traditional financial ratios senior managers consider essential performance measures, those firms with high design effectiveness were hypothesized to have higher returns on sales, returns on assets, and growth rates of sales, net income, and cash flow than firms with low design effectiveness. High design effectiveness firms further were hypothesized to have higher stock market returns. These comprehensive, corporate financial measures incorporate expenditures made on industrial design (industrial designers' salaries, design consultants' fees, computer‐aided industrial design equipment) and expenditures that designers influence through their design choices (material costs, manufacturing equipment). This analysis reveals that firms rated as having “good” design were stronger on all measures except growth rate measures. These results provide strong evidence that good industrial design is related to corporate financial performance and stock market performance even after considering expenditures on industrial design. Further, the patterns of financial performance over the seven‐year horizon suggest that these effects are persistent.     

Customer Relationship Management: A Comparative Analysis of Family and Nonfamily Business Practices*

It has been reported that family businesses perceive excellent customer service as critical to the future of their businesses. However, little research into the customer relationship management (CRM) practices of family businesses has been performed. In this study, we examine CRM implementation among 82 family and 370 nonfamily firms. Family and nonfamily businesses report similar attitudes toward the importance of CRM, their knowledge of CRM, and their success when they do implement it. However, using a logit regression model, we find that the actual implementation strategies of family businesses are significantly different from those of nonfamily businesses. These results remain constant when controlling for size and industry sector.     

Postgraduate research students: You are the future of the Academy

This paper explores the changing role of the university developed and changed over time, and how this is likely to change further in the next 25 years. By drawing on scenarios for the future of the HE sector in the UK in 2035, the article argues that postgraduate research students will be the key factor that sustains the future of the Academy as universities focus more and more attention on the teaching of ever increasing numbers of undergraduate students. The paper highlights the danger of a divide occurring between the idea of the university and the notion of the Academy in the future, and the essential role that research students will play in ensuring this divide remains bridged. The article argues that it is imperative for universities to expand their postgraduate research degree provision if the Academy is to continue in the future as the foundation to knowledge creation.     

A Bayesian Approach to Understanding Time Series Data

This paper explores the use of Bayesian models to analyze time series data. The Bayesian approach produces output that can be readily understood by actuaries and included in their own experience studies. We illustrate this Bayesian approach by analyzing U.S. unemployment rates, a macroeconomic time series. Understanding time series of macroeconomic variables can help actuaries in pricing and reserving their products. For example, a change in the level and/or variance of the unemployment series is of interest to actuaries, because its movement can explain a changing pattern of lapse rates of incidence rates. Our Bayesian analysis, based on models developed by McCulloch and Tsay (1993, 1994), allows for shifts in the level and in the error variance of a process. We develop a measure of model fit, based on the Akaike Information Criterion, that can be used in choosing between alternative models. Posterior prediction intervals for the fitted values are also created to pictorially show the range of paths that could result from the choice of a particular model.     

Tests of the money-output relation using disaggregated data

Either anticipated or unanticipated money affects output in fourteen of twenty U.S. manufacturing industries. In most of these instances, however, Akaike's final prediction error criterion indicates that money enters an industry's output equation with lags of three months or less. For just two industries, tobacco manufacturing and textile mill products, are there clear indications that money is not neutral at extended lags. Each of these industries is concentrated in one or two states suggesting that monetary policy may affect output through a regional credit channel.