Surviving organizational disasters

Man-made and natural disasters are becoming increasingly common in today's world. Among other entities, companies should be concerned because these impact organizational survival, disrupting the lives and functioning of employees, suppliers, customers, and organizational infrastructure. If the present trend continues, the Federal Emergency Management Agency is on track to declare 30% more disasters in 2010 than in 2009. Organizational disasters are crises in the extreme. While the crisis management literature provides a useful foundation for planning for internal organizational threats, it does not adequately address larger external threats brought about by disasters. With this gap in mind, we herein present a framework for planning for man-made or natural disasters: continuity of operations planning (COOP). Continuity of operations planning is a tool that aids organizations in staying in business under extreme circumstances. Although continuity of operations planning is not an entirely new practice, many small and medium-sized firms are reluctant to engage in this type of planning. To highlight the value of the process, this article provides examples of organizational disasters, alongside a simplified method for developing an effective continuity of operations plan.     

Cartel detection — Is market share volatility a significant indicator?

In this short paper, cartel behaviour is analysed with respect to the market shares of cartel members. There is some evidence in previous theoretical and empirical research that market shares under collusion are more stable than in phases of competition. It is shown that this can be an artifact and that market share volatility may not be used by antitrust authorities as an exclusive indicator of tacit collusion. Using the Kolmogorov-Smirnov test, the distribution of market share changes during both the competitive and the collusive phases of ten recently discovered conspiracies is compared. Only in 3 of the 10 cartels were the distributions of market share changes significantly different.     

Unpacking the uncertainty construct: Implications for entrepreneurial action

Uncertainty is central to entrepreneurship; however robust and generalizable findings that explain the conditions in which uncertainty may impede [or promote] entrepreneurial action remain elusive. We operationalize uncertainty as a multi-dimensional construct composed of state, effect, and response types of uncertainty (Milliken, 1987) to investigate the relationship between uncertainty and entrepreneurial action. We decompose more than 2800 exploitation decision policies nested within a sample of new product decision-makers working in entrepreneurial software firms. We focus on the primary decision-maker's willingness to exploit a given opportunity in the face of varying combinations and manifestations of uncertainty and find that the type of uncertainty experienced influences the willingness to engage in entrepreneurial action differently. Further, we find that differences in how each type of uncertainty is manifested in the environment, the scale of exploitation (i.e. large vs. small), and the entrepreneur's expertise serve to moderate the relationship between uncertainty and action in counter-intuitive ways. We discuss the implications for both theory and practice.     

Herausforderungen der Managementkultur des 21. Jahrhunderts

PRAXIS | Magazin

Herausforderungen der Managementkultur des 21. Jahrhunderts Konferenz-Review     

Does access to external finance improve productivity? Evidence from a natural experiment

We study the relation between access to finance and productivity. Our contribution to the literature is a clean identification of a causal effect of access to finance on productivity. Specifically, we exploit an exogenous shift in demand for a product to expose how producers adapt their productivity in the presence of varying levels of access to finance. We use a triple differences testing approach and find that production increases the most over the sample period in areas with relatively strong access to finance, even in comparison with a control group. This result is statistically significant and robust to a variety of controls, alternative variables, and tests. The causal effect of access to finance on productivity that we find speaks to the larger role of finance in economic growth.     

Reserve risk estimation in a linear model

This paper presents the linear model, a framework for stochastic modeling of known methods as well as for the development of new methods of loss reserving. The linear model allows the determination of optimal predictors of non-observable cumulated and incremental losses and thus the derivation of optimal reserves by minimization of the expected squared prediction error.     

Capital rationing, competition, and misrepresentation in budget forecasts

In this study, we ask: how does the intensity of internal competition for resources affect the communication of private information in an organization? Although competition between different divisions or units for resources is pervasive in many organizations, much of the accounting literature examines non-competitive resource allocation and thus does not provide guidance on this point. To address this question, we conduct an experiment in which a principal allocates capital among three agents, who can each propose a single project. In the high (medium, low) competition condition, principals have sufficient funds to accept only one (only two, all three) projects. We test three competing predictions based on prior literature: (1) Agents will make maximum credible misrepresentations under both medium and high competition, in order to maximize their chance of receiving capital. (2) Agents will weigh the disutility of misrepresentation against the expected utility of receiving project funding, resulting in more misrepresentation at medium than at high levels of competition, because the probability of receiving funding is lower in high competition. (3) Misrepresentation will be highest in high competition, because agents will interpret the high-competition setting as one in which misrepresentation is most necessary to win funding and most socially appropriate. Consistent with the second prediction, misrepresentation is highest in medium competition. These results suggest that a medium level of competition is a less favorable setting for voluntary information-sharing than either uncompetitive or high competition settings, and therefore costly formal enforcement mechanisms such as post-audits are likely to be more valuable in medium-competition settings.     

Vorschau 5 | 2011

VORSCHAU

Vorschau 5 | 2011