Enterprise logic: explaining corporate attention to stakeholders from the ‘inside‐out’

Why are some firms more effective than others at addressing stakeholder concerns? Conventional stakeholder theories focus on variables in the external environment and cannot adequately explain variance across firms operating in the same context. Our matched‐pair study of eight global corporations goes inside the firm and investigates the role of managerial cognition on corporate attention to stakeholders. We find that top management's conceptualization of the firm's relationship with society—which we name enterprise logic—prompts distinct foci of attention and potentially constrains how well a single firm can simultaneously attend to multiple stakeholders. These findings highlight the value of an ‘inside‐out’ perspective, centered on managerial cognition, in explaining why some firms address stakeholder concerns more effectively than their peers. Copyright © 2012 John Wiley & Sons, Ltd.     

Recasting Enterprise Strategy: Towards Stakeholder Research That Matters to General Managers

As well as specifying functional, business unit, and corporate levels of strategy, early strategy scholars delineated enterprise level strategy as the uppermost level of strategy. Enterprise strategy articulates how the firm engages with actors in its economic, social, and political environment to ensure long‐term corporate performance. As a growing body of evidence shows, heterogeneity in how firms identify, and engage with, their stakeholders can explain why some firms outperform their peers. However, my literature survey of more than three decades of published research reveals that enterprise strategy has stayed firmly in the shadows behind business and corporate strategy. Furthermore, many theories of firm–stakeholder relationships are normative (i.e. explain how firms should act) and do not inform strategy effectively. In this paper, I argue why enterprise strategy research is required as a cohesive body of work that connects with research in business and corporate strategy. I finish by proposing three research domains – strategic goals, organization design, and organization boundaries – that hold the potential to link stakeholder issues with mainstream concerns in strategy research and, thus, to revive a coherent research programme in enterprise level strategy.     

High-Technology Intangibles and Analysts' Forecasts

This study examines the association between firms' intangible assets and properties of the information contained in analysts' earnings forecasts. We hypothesize that analysts will supplement firms' financial information by placing greater relative emphasis on their own private (or idiosyncratic) information when deriving their earnings forecasts for firms with significant intangible assets. Our evidence is consistent with this hypothesis. We find that the consensus in analysts' forecasts, measured as the correlation in analysts' forecast errors, is negatively associated with a firm's level of intangible assets. This result is robust to controlling for analyst uncertainty about a firm's future earnings, which we also find to be higher for firms with high levels of internally generated (and expensed) intangibles. Given that analyst uncertainty increases and analyst consensus decreases with the level of a firm's intangible assets, we also expect and find that the degree to which the mean forecast aggregates private information and is more accurate than an individual analyst's forecast increases with a firm's intangible assets. Finally, additional analysis reveals that lower levels of analyst consensus are associated with high-technology manufacturing companies, and that this association is explained by the relatively high R&D expenditures made by these firms. Overall, our results are consistent with financial analysts augmenting the financial reporting systems of firms with higher levels of intangible assets (in terms of contributing to more accurate earnings expectations), particularly R&D-driven high-tech manufacturers.     

>Conversion Ratios in Charities in England and Wales: An Investigation of Economies of Scale

This study examines ways in which the scale economies of charities can be measured and investigates the use of conversion ratios as indicators of scale efficiency. Problems and difficulties inherent in the use of these ratios are detailed. The analysis then employs nonparametric tests (Mann-Whitney and Kruskal-Wallis tests), based on the identified conversion ratios, to examine for the existence of scale economies in the operation of the 500 largest fundraising charities in England and Wales. The statistical analysis provides evidence of scale economies and suggests that scale efficiency gains have not as yet been exhausted. The charity sector therefore appears to be characterised by increasing returns to scale with further growth necessary before optimal size, as indicated by constant returns to scale, is achieved.     

Rationalizing Northern Ireland Hospital Services Towards Larger Providers: Best-Practice Efficiency Studies and Current Policy

This article explores the relative efficiency of Northern Ireland hospitals, and in particular the efficiency of small hospitals relative to their large counterparts, employing a technique called data envelopment analysis. The empirical analysis revealed that larger hospitals displayed higher cost efficiency, higher allocative efficiency and higher technical efficiency than their smaller counterparts. These results support Northern Ireland's recent strategy of concentrating hospital services in six large hospitals, supported by medium sized hospitals, and closing or restructuring smaller hospitals.     

An Examination of Borrower Orientation and Scale Effects in UK Credit Unions

At present there are 597 credit unions operating within the UK with their growth, be it defined in term of new credit union establishment, asset growth or membership growth, placing them as the fasting growing financial grouping in the UK over this last decade.
The fundamental motivation of a credit union is to provide financial services to its membership, in particular a depository for savings and an access to consumer credit. As a practical problem there are, however, a number of reasons why credit unions may achieve a less than perfect balance in the treatment of borrowers and savers. For example, maintaining low loan rates may reduce the credit union's ability to offer high dividend rates while the maintenance of high dividend rates may require higher loan rates. Consequently, the competing pull of these two objectives may result in the emergence of conflict between those credit union members who on the one hand are net savers and those that are net borrowers. If such conflict does emerge it is then likely to place in jeopardy other aspects of a credit union's function most notably their role as financial counsellors and promoters of thrift within low income communities.
The approach taken in this study is to derive an index of member group imbalance and then to employ this index to determine whether member group imbalance has an adverse impact upon the generation of total benefits by individual credit unions. The analysis demonstrates that there is a strong pro-borrower bias in the operation of UK credit unions with this pro-borrower bias driven by the regulatory environment within which they operate.     

The Law of Proportionate Effect: The Growth of the UK Credit Union Movement at National and Regional Level

Abstract:   This study examines credit union size‐growth relationships within the context of Gibrat's law of proportionate effect. This relates to the hypothesis that the growth of each firm in each period is random. The analysis covers the period 1994 to 2000 and is undertaken separately for the United Kingdom (UK) and its regions, Northern Ireland, England & Wales and Scotland. Sample attrition is a characteristic of the data and to avoid the problem of survivorship bias the inverse of the Mill's ratio, obtained from a probit regression for surviving credit unions, is introduced into the estimating relationship. In terms of the empirical results, little evidence emerged to support the law of proportionate effect as a theoretical paradigm. Although not universal, three broad findings emerged. First, small credit unions on average grow faster than their larger counterparts, although there was also some evidence of non‐linearity in this relationship. Secondly, growth persistence pertained with credit unions which experienced above average growth (below average growth) in one period, experiencing above average growth (below average growth) in the next. Thirdly, variability of growth was not independent of size with the cross‐sectional variance of the error term inversely related to size suggesting that small credit unions have greater growth variability than larger ones.     

Productivity Growth in UK Accountancy Departments 1989–96

The study investigates productivity change in UK accountancy departments over the period 1989–1996, with this change being decomposed into 'change in efficiency' and 'technical change'. Efficiency change is also decomposed into changes in scale efficiency, output congestion and purely technical efficiency. To empirically assess the relative efficiency of each department, in transforming its monetary budget into teaching and research outputs, DEA techniques are utilized so as to enable comparison with a 'best practice' frontier. In doing this, the results of the 1989, 1992 and 1996 Research Assessment Exercises are incorporated so as to take account of the quality of research output.     

Paired difference analysis of size economies in UK credit unions

This study utilizes a paired difference approach to investigate for the existence of scale economies in UK credit unions. The analysis is conducted for both credit unions in aggregate as well as a number of sub-groups with the latter defined in terms of the trade organization to which credit unions are affiliated. This decomposition was viewed as particularly important in that the respective umbrella organizations have different growth strategies. The analysis revealed that significant efficiency gains are available through credit unions adopting a policy of asset growth. This finding held good irrespective of the umbrella organization to which credit unions belong although the analysis also revealed that the opportunity for efficiency gains was not so pronounced for the members of one of the trade organizations - the National Federation of Credit Unions. This finding was due to the NFCU's much more overt emphasis on self-help and community development, particularly in areas of economic disadvantage.