Untangling Goal Tensions in Family Firms: A Sensemaking Approach

While economic and non-economic goals may converge in the long term, they often lead to tensions for organizational decision-makers in the short term, especially in family firms that place much emphasis on family-related goals. We draw on a sensemaking approach to investigate such potential tensions in the decision-making of family firms. Based on a qualitative analysis of 59 interviews, 501 items of archival data and 39 observations from eight private Irish firms, we explore the perceived goal tensions of family firm decision-makers as they seek to balance economic and non-economic goals. We identify three sensemaking mechanisms – ensuring continuity in the family firm, preserving family cohesion, and delegating responsibilities to trusted advisors – that assist family firm decision-makers in managing these goal tensions. Moreover, we identify that sensegiving based on three different values – sense of commitment, community embeddedness, and family firm identity – helps family firm decision-makers to justify and communicate their decisions. Our model contributes to a more granular understanding of the management of goal tensions and of decision-making in family firms by going beyond the question of whether family firms prioritize economic or non-economic; instead, it reveals concrete processes showing how firms balance and aim to incorporate both goals. Furthermore, we advance knowledge on sensemaking in family firms by revealing how sensemaking can explain idiosyncratic family firm behaviour and by showing how family firm decision-makers use specific values when ‘giving sense’ to justify their decisions.     

Ecosystems for smart cities: tracing the evolution of governance structures in a dutch smart city initiative

International Entrepreneurship and Management Journal - Smart cities use integrated information and communication technology in order to help their citizens and organizations deal with the...     

A note on Musgrave asymmetrical trend-cycle filters

In this paper, we derive the implicit forecasts in the asymmetrical trend-cycle averages used in the X-11 seasonal adjustment method. We give an algorithm to calculate them, and we study their statistical properties. We express the forecasts as Stein estimators. We derive expressions for their bias, variance, covariances and prediction mean squared errors. We show that the prediction mean squared errors of the implied predictors are always smaller or equal to those obtained using the least squares predictors. Finally, we derive the prior distributions under which the implied predictors are Bayes estimators.     

Teaching business ethics

Business ethics should be taught in business schools as an integrated part of core curricula in MBA programs with a dual focus on both analytical frameworks and their applications to the business disciplines. To overcome the reluctance of many faculty to handle ethical issues, a critical mass of faculty must develop suitable materials, educate their peers in its use, and take the lead by introducing it in their own courses and on senior management programs.Jeffrey Gandz is an Associate Professor in the School of Business Administration, The University of Western Ontario. Following ten years of management experience in Europe and North America, Professor Gandz completed his Ph.D. at York University. He is active as a mediator and arbitrator in labour disputes, teaches Organizational Behavior, Human Resource Management, and Labour Relations at Western, and has published widely in those fields.Nadine Hayes is a Ph.D. candidate at The University of Western Ontario and a graduate of Western's Honors Business Administration Program. She has written several case studies in the field of Business Ethics and has worked with Jeffrey Gandz in developing the School's approach to the teaching of business ethics.     

Understanding the Death Benefit Switch Option in Universal Life Policies

Universal life policies are the most popular insurance contract design in the United States. They provide either a level death benefit paying a fixed face amount or an increasing death benefit paying a fixed benefit plus the available cash value, and both types include the option to switch from one type to the other. In this article, we investigate the fact that—unlike a switch from level to increasing—a switch from an increasing death benefit to a level death benefit requires neither fees nor evidence of insurability. To assess the impact of the death benefit switch option, we develop a model framework of an increasing universal life insurance policy embedding this option. Consideration of heterogeneity with respect to mortality via a stochastic differential mortality factor enables an investigation of adverse exercise behavior. In a comprehensive simulation analysis, we quantify the net present value of the option from the insurer's perspective using risk‐neutral valuation under stochastic interest rates assuming empirical exercise probabilities. Based on our results, we provide policy recommendations for life insurers.     

The cyclical impact of EU cohesion policy in fast growing EU countries

Most of the newly acceded central and east European EU countries are among the main beneficiaries of EU Cohesion Policy. The main objective of this policy is to improve the long-term growth and employment prospects of the supported regions, and thereby to support convergence towards higher levels of per capita income. In the short run, however, EU Cohesion Policy may at times amplify macroeconomic challenges for supported countries. In periods of a downturn of the economy it can have a stabilising impact. During periods of unsustainably fast economic growth, however, its short-term demand effects may contribute to internal and/or external macroeconomic imbalances. Economic policymakers should thus ensure that EU Cohesion Policy enhances long-term productivity, while avoiding, in times of overheating, an increased risk of unsustainable developments as a result of the additional demand stimulus from EU Cohesion Policy. The opinions expressed in this article are those of the authors and do not necessarily reflect those of the European Central Bank. The authors are grateful to Martin Bijsterbosch, Gesa Miehe-Nordmeyer, Ad van Riet, Philipp Rother and Desom Weller for their helpful comments.     

Cross-border tax effects on affiliate investment—Evidence from European multinationals

Recent studies suggest that multinational firm activities at home and abroad are positively correlated which may be due to the use of common inputs (like marketing, patents, etc.). Then, a cost shock at one location may lead to reduced activity in all other locations within the firm. In this paper, we theoretically and empirically analyze national corporate tax policy in such a setting. Our main hypothesis is that corporate taxation at the parent location not only reduces the parent's capital stock but also lowers capital stocks at affiliates abroad. Using micro data on European multinational firms, we confirm the hypothesis showing that a 10 percentage point increase in corporate tax rates is associated with a 5.6% decrease in the affiliate's capital stock. From a welfare point of view, this cross-border tax effect on the capital stock gives rise to a negative fiscal externality of corporate taxation which is empirically shown to compensate a substantial fraction of the well-known positive externality due to profit shifting.     

The endoscopy scheduling problem: A case study with two specialised operating rooms

This research aims to build a feasible and efficient operating program for an endoscopy centre composed of two specialised operating rooms for one week, with the objective of both maximising the utilisation of the operating room and minimising the cost of overtime. First, a tactical planning model was built and solved by a column-generation-based heuristic (CGBH) procedure. Then, a daily scheduling problem is solved by the Gonzalez-Sahni algorithm in order to schedule the surgical cases assigned at the planning stage. Experimental data are randomly generated according to parameters derived from the Croix–Rousse tertiary hospital centre in Lyon, France.     

Exploring the impact of open innovation on national systems of innovation — A theoretical analysis

This paper investigates the impact of open innovation on national systems of innovation. The open innovation concept has become widely established among scholars and practitioners. However, an overview of its impact on national innovation systems is still lacking. Given that the innovating firm is at the core of national innovation systems, a better understanding of shifting innovation strategies at the firm level is of fundamental importance to the actions of policy-makers within the national innovation systems framework. Based on the main analytical approaches of national innovation systems and the current state of open innovation research, we argue that open innovation practices have at least three critical effects on national systems of innovation: (a) they reinforce its importance; (b) they improve its effectiveness; and (c) they diversify its networks.     

The influence of the CEO's value perception towards auditing on audit demand in private firms

Audit demand is generally considered to be a direct reflection of the level of agency conflicts. This study examines the CEO's value perception towards auditing as additional driver for both auditor reputation demand (appointing a Big 4 auditor or not) and audit effort demand in private firms. Examining the CEO's value perception in a multidimensional way, the regression results indicate that the CEO's functional value perception towards auditing positively affects the demand for audit effort, while the CEO's social value perception towards auditing negatively affects the demand for audit effort but positively affects the demand for auditor reputation.