Foreign Ownership and Productivity: New Evidence from the Service Sector and the R&D Lab

This paper examines the relationship between foreign ownershipand productivity, paying particular attention to two issuesneglected in the existing literature—the role of multinationalsin service sectors and the importance of R&D activity conductedby foreign multinationals. We review existing theoretical andempirical work, which largely focuses on manufacturing, beforepresenting new evidence using establishment-level data on production,service, and R&D activity for Great Britain. We find thatmultinationals play an important role in service sectors andthat entry of foreign multinationals by takeover is more prevalentthan greenfield investment. We find that British multinationalshave lower levels of labour productivity than foreign multinationals,but the difference is less stark in the service sector thanin the production sector, and that British multinationals havelower levels of investment and intermediate use per employee.We also find that foreign-owned multinationals conduct a substantialamount of British R&D. We discuss the implications of theseand other findings for the policy debate on incentives to influencemultinational firms' location choices.     

The price of competitiveness in competitive pricing

This study examines how pricing decisions might be improved. We test the hypothesis that managers have a tendency to overcompete by comparing the performance of managers with the performance of computerized strategies in a Prisoner’s Dilemma pricing experiment. We find that the subjects in our study obtain lower profits than matched computer strategies. The subjects appear to value relative performance against competitors, even when they are explicitly instructed to maximize profits and are compensated based on profits. The implication for managers is that pricing to maximize profits may require tolerating the strong performance of competitors, even to the point of accepting a lower profit than some or all the competitors. If competitiveness means an adversarial, “zero-sum game” view of one’s competitors, then the price of competitiveness in competitive markets such as those in our experiment may be lower profits. Being less competitive may be more profitable. His major areas of research are pricing competition and channels of distribution. His research has been published inMarketing Letters andJournal of Marketing Channels. He has also cowritten a chapter on wholesaler liability for the bookWholesale Distribution Channels: New Insights and Perspectives, edited by Bert Rosenblum. where he directs Vanderbilt’s Center for Services Marketing. His 1995 article “Return on Quality (ROQ): Making Service Quality Financially Accountable” (written with Anthony Zohorik and Timothy Keiningham) won theJournal of Marketing’s Alpha Kappa Psi award for the article that had the greatest impact on the practice of marketing. He has also won best article awards from theJournal of Advertising and theJournal of Retailing. He serves on the editorial boards of seven journals, includingMarketing Science and theJournal of Marketing Research. His books includeService Marketing, Return on Quality, Advertising Media Models, Service Quality, andReadings in Service Marketing.     

Integrating ethics into international marketing strategy: An extension of Robin and Reidenbach's framework

This study proposes and tests an extension of Robin and Reidenbach's (1987) model of integrating ethics into the strategic marketing development process. The model extension may help marketing managers to identify the publics that might be negatively impacted by a given strategic option and the duties marketers may assume to safeguard public welfare in these instances. A sample of 155 marketing practitioners was used to examine how marketers apply ethical values upon entering new markets. This study suggests that, contrary to public sentiment, marketers are sensitive to potential consumer harm and act to minimize this risk.     

PROFITABILITY OF INCREMENTAL EXPENDITURE ON FIBRE PROMOTION

In this paper the impact of changes in wool promotion expenditure and changes in expenditure on the promotion of competing fibres are examined using an equilibrium displacement model. The emphasis is on examining impacts on producer profits net of promotion expenditure and on benefit-cost ratios measuring changes in producer surplus relative to changes in promotion expenditure. It was found, for example, that incremental expenditure on apparel wool promotion on the domestic market is unprofitable but incremental expenditure on promotion of apparel wool on the export market is generally profitable. Further, it was found that increased promotion of cotton and man-made fibres on the export market, with promotion of apparel wool unchanged, would reduce profits to apparel wool producers. Finally, a case is made for improved data availability in order to allow more comprehensive ex-ante and ex-post evaluations of promotion programs, thereby increasing the intensity of scrutiny of promotion programs to a level more in line with that for investment in rural research and development.     

COMPARATIVE FORECAST ACCURACY IN THE NEW SOUTH WALES PRIME LAMB MARKET

The market for Australian prime lamb is characterised by high production seasonality and a highly competitive retail demand. Because these factors often translate into substantial market variability, regular forecasts of supply and demand are important requirements of lamb market participants. There has been some forecasting activity in the state and national lamb markets but it has been a somewhat controversial activity. This paper assesses the comparative forecast accuracy of a range of methods in the New South Wales lamb market. The results indicate that no single method is clearly superior in all situations and the greatest scope for improving forecast accuracy in the New South Wales lamb market is through the use of combined econometric and naive approaches.     

Do buyer cooperative actions matter under relational stress? Evidence from Japanese and U.S. assemblers in the U.S. automotive industry

Buyers can create relational stress even as they work cooperatively with suppliers. This study investigates the moderating effects of relational stress on the ability of buyer-initiated cooperative actions to influence a supplier's willingness to invest in technology that will be of benefit to the buyer. Data on 2012 buying situations were collected from Tier 1 suppliers to three U.S. domestic automotive assemblers (Chrysler, Ford, and General Motors) and three Japanese transplant automotive assemblers (Honda, Nissan, and Toyota) over three consecutive years (2003–2005). The results indicate that (1) buyer-initiated cooperative actions of communication, assistance, and supplier involvement increase a supplier's willingness to invest in technology, (2) the relationship-enhancing effect of buyer assistance increases under high relational stress, while the effectiveness of buyer communication decreases, and (3) that the effect of supplier involvement is not significantly influenced by relational stress levels. Furthermore, we found that supplier relations with Japanese transplant assemblers are characterized by higher levels of cooperative actions, lower levels of relational stress, and higher levels of supplier willingness to invest in technology when compared to those of U.S. domestic assemblers.     

Modelling urban population density in a multi-centered city

Modelling the geographic distribution of urban population densities has been attempted in several ways. Recently a controversy emerged in the Journal of Urban Economics regarding whether or not calibrations of these models render unbiased parameter estimates. Three sources of bias were dealt with in these discussions, namely (1) model specification error, (2) the estimation procedure employed, and (3) the definition of areal unit observation size. Additional sources of bias overlooked in this controversy include the presence of multiple centers in a city, and the existence of externalities. This paper explores these additional sources, from both a conceptual and an empirical point of view.     

Audits of Complex Estimates as Verification of Management Numbers: How Institutional Pressures Shape Practice

Auditors and regulators have invested heavily in improving audits of estimates in recent years, but problems in this area persist. We examine the causes of these problems and why they persist. To do so, we interview 24 very experienced auditors about how they audit complex accounting estimates such as fair values and impairments and what problems they experience in the process. We find that auditors overwhelmingly choose to audit the details of management's estimate rather than use other allowable approaches. The steps auditors describe and the language they use to describe those steps indicate that they follow a process of verifying individual elements of management's assertions on a piecemeal basis, resulting in overreliance on management's process, rather than engaging in a critical analysis of the overall estimate. The problems that auditors identify are consistent with this view, and include failures to notice inconsistencies among the estimate and other internal data or external conditions and overreliance on specialists to identify, evaluate, and challenge critical assumptions. We interpret these processes and problems using institutional theory and identify two root causes: standards' and firm policies' emphasis on verifying management's model, and audit firms' division of knowledge between auditors and specialists. Institutional theory proposes these conventions arise from firms extending use of procedures that are legitimate in one area (i.e., auditing accounts without significant uncertainty) to a new area (i.e., auditing complex estimates), even though they are likely less effective in the new area. These conventions are reinforced by regulators' method of inspection and by firms' reluctance to change methods without a prompt to change to a clearly better method. We argue that these institutionalized conventions thwart auditors' good‐faith attempts to engage in skeptical analysis of estimates. Thus, audit quality problems are likely to persist.     

Governance decisions for the offshore outsourcing of new product development in technology intensive markets

This study addresses how buyers organize their offshore outsourcing new product development relationships. Building on transaction cost economics and resource dependence theories, we propose a model of the influence of key new product development offshore outsourcing factors on two important buyers’ governance decisions (i.e., supply concentration and degree of supplier involvement). The antecedents, drawn from the marketing, management, and international business literatures, include: three sources of asset specificity (degree of modularity, strategic value of the project, and technology specificity) and two sources of uncertainty (cultural distance and technological discontinuity). The results, derived from an analysis of 200 offshore outsourcing new product development relationships, provide new insights for academics and practitioners.     

WHEN ELECTIONS FAIL TO RESOLVE UNCERTAINTY: THE CASE OF THE 2016 U.S. PRESIDENTIAL ELECTION

In this article, we examine whether certain political election outcomes create, rather than resolve, uncertainty in financial markets. We posit that the market uncertainty associated with unanticipated election outcomes is not resolved before or on the election dates. To test this claim, we use the surprise outcome of the 2016 U.S. presidential election and two previous U.S. presidential elections as benchmarks. In contrast to prior elections, we find that the 2016 U.S. presidential election outcome did not resolve market uncertainty. Specifically, we show significant increases in transactions costs, adverse selection costs, and volatility in the days following the election date. We contribute to the literature by suggesting that unexpected elections can engender, rather than resolve, market uncertainty.