Persistence of Capacity Shortage and the Role of Adjustment Costs

This paper finds that plant capital constraints on output in UK industry tend to persist for surprisingly long periods, reflecting a slow response of capital investment. The paper examines the conventional view that this response pattern may be explained by cost of adjustment. Using UK time‐series data for a small number of industry groups, it is shown that the observed dynamics of capital constraints (capital shortage) are not fully explained by a quadratic adjustment cost model or by alternative forms of adjustment cost.     

Simulation-based inference in dynamic panel probit models: An application to health

This paper considers the determinants of a binary indicator for the existence of functional limitations using seven waves (1991–1997) of the British Household Panel Survey (BHPS). The focal point of our analysis is the contributions of state dependence, heterogeneity and serial correlation in explaining the dynamics of health. To investigate these issues we apply static and dynamic panel probit models with flexible error structures. To estimate the models we use maximum simulated likelihood (MSL) with antithetic acceleration and implement a recently proposed test for the existence of asymptotic bias. The dynamic models show strong positive state dependence. Data from the British Household Panel Survey (BHPS) were supplied by the ESRC Data Archive. Neither the original collectors of the data nor the Archive bear any responsibility for the analysis or interpretations presented here. Funding was provided by the ESRC award no: R000238169-Simulation-based econometric approaches to investigating the interaction of lifestyle and health. The authors would like to thank William Greene for valuable comments on an earlier draft of the paper, Roberto Leon Gonzalez for valuable programming advice, and participants at the iHEA Third International conference, York, 22–25 July 2001 and York Seminars in Health Econometrics (YSHE) for their comments.     

Building brand equity with cause-related marketing: A comparison with sponsorship and sales promotion

Building brand equity is a key objective for a range of communication activities; however, greater understanding is required on how different communication options compare in their impact on consumer response to a brand. In particular, firms are increasingly using cause-related marketing (CRM) to achieve business as well as social objectives, yet there has been limited research comparing the effectiveness of this strategy to other communication methods that may achieve similar brand-related outcomes. Using an experimental design, we examine consumer attitudes toward CRM and CRM's impact on brand attitude compared with two other communication options: sponsorship and sales promotion. Our results show that consumers respond more positively to CRM and that this strategy can be more effective in achieving brand-related objectives. However, consumers must perceive that the partnered cause fits with the brand. In fact, perception of fit plays a more critical role in determining the impact of CRM than in the impact of sponsorship or sales promotion. These findings suggest that when firms are considering their communication mix, CRM can be a more effective way of developing favorable brand associations, but managers must associate with causes that consumers will perceive to fit with the brand. Furthermore, this fit should be communicated.     

The difficulties of supplying new technologies into highly regulated markets: the case of tissue engineering

This study provides an insight into the difficulties companies encounter in transposing basic science into commercially viable healthcare technologies, focusing on the issue of establishing a dominant supply model within a highly regulated market. The core issue is how to scale-up customised scientific processes into products able to supply wider and possibly mass markets. In tracing the development of approaches to scaling-up, the paper highlights the influence regulatory regimes have on high technology regulated products and services. The paper details the implications of two contrasting supply initiatives towards operationalising tissue engineering, based on differences in regulatory regimes between Europe and the USA.     

Management Responses to Social Activism in an Era of Corporate Responsibility: A Case Study

Social activism against companies has evolved in the 50 years since Rachel Carson first put the US chemical industry under pressure to halt the indiscriminate use of the chemical DDT. Many more companies have come under the spotlight of activist attention as the agenda social activists address has expanded, provoked in part by the internationalization of business. During the past fifteen years, companies have begun to formulate corporate responsibility (CR) policies and appointed management teams dedicated to CR, resulting in a change in the way companies interact with social activists. This paper presents findings from a longitudinal case study of managerial responses to social activism targeted at a company with relatively well-advanced CR practices and reputation. The case describes the unfolding of the internal processes over an 8-year period, including the role played by different managers and the tensions in the decision-making processes. The findings emphasize how values and beliefs in the company interact with economic arguments and how those are mediated through functions and relationships in the company and beyond. The paper shows how critical managers’ understanding of the motivations of activists behind the campaign is in shaping their actions. It reveals the paradoxical outcomes that can result from social activism at the level of the firm, the industry, and the field.     

The SMEs’ perspective of trust in a B2B relationship

Despite the diversity in its associated definition and related structures, the role of trust in underpinning long-term business relationships is well established. This article presents an instrument to assess trust from the perspective of Nigerian Small and Medium Enterprises (SMEs) towards their banks, an area with limited research to date. Items borrowed from various scale sets presented in existing studies are combined to assess trust by encompassing both the dimensions of credibility and benevolence. Data were collected from 221 SMEs via a self-administered questionnaire completed either by the SME owner or senior manager with responsibility for relationship with their bank, providing 199 usable records. An Exploratory Factor Analysis was used to determine the underlying data structure, with subsequent deployment of Cronbach’s α as a post-hoc assessment of the internal reliability of the retained factors. The analysis presented suggests that the SMEs’ perspective of the trust they have in their banks primarily encompasses credibility, supported by only a marginal presence of benevolence. In absolute terms, these SMEs declare a strongly positive level of credibility-based trust towards their banks despite the financial crises that have plagued the Nigerian banking industry. The originality of this work lies in the investigation of a business-to-business relationship involving SMEs and banks from the perspective of the former in an under-researched emerging economy setting.     

Analysis of Productivity Differences among Foreign and Domestic Firms: Evidence from Germany

This paper presents differences in firm-level total factor productivity (TFP) across 22 manufacturing and 17 service industries in Germany over the period 1995–2004. It is an attempt to study whether and to what extent foreign multinational enterprises (MNEs) are more productive relative to German firms. As well as distinguishing between foreign and domestic firms, we also distinguish between German MNEs and domestic firms that do not have any foreign presence. Controlling for endogeneity through semi-parametric techniques, our findings indicate considerable heterogeneity in firm performance across types of firms. The foreign/domestic distinction is not as clear cut as has been suggested elsewhere; multinationality is important in explaining productivity differences rather than foreignness. JEL no. D24, F21, F23     

Exploring the potential of SMEs to build individual,organizational, and community resilience through sustainability-oriented business practices

Small- and medium-sized enterprises (SMEs) can have significant resources, capacities, and influence in their communities, suggesting they have the potential to be agents for transformative sustainability. However, SMEs will need to move beyond firm-centered sustainable business practices towards strategic approaches that encompass and contribute to resilience-building processes. Amid the unfolding COVID-19 pandemic, we explored what types of sustainable business practices of SMEs can contribute to individual, organizational, and community resilience. We identified six clusters of practice that are important in this regard. The clusters are not solely technical or “environmental” but rather illustrative of deeper sustainable values shaped by organizational structure, culture, and behavior. This paper suggests that SMEs can pursue transformative approaches to sustainability that are more environmentally, socially, and economically sustainable and better able to withstand shocks like the COVID-19 pandemic and can be significant contributors to community resilience. We conclude with a series of future research priorities critical to examine a largely unexplored nexus in the private sector, the linkages and dynamics between sustainability practice, resilience building, and broader community pathways.