Anticompetitive Financial Contracting: The Design of Financial Claims

This paper presents the first model where entry deterrence takes place through financial rather than product‐market channels. In existing models, a firm's choice of financial instruments deters entry by affecting product market behavior; here entry deterrence occurs by affecting the credit market behavior of investors towards entrant firms. We find that to deter entry, the claims held on incumbent firms should be sufficiently risky, that is, equity. This contrasts with the standard Brander and Lewis (1986) result that debt deters entry. This effect is more marked the less competitive the credit market is—so more credit market competition spurs more product market competition.     

Automotive supplier parks: An imperative for build-to-order?

Build-to-order (BTO) has been hailed as a production strategy that fits the demands of the 21st century where a considerable challenge for the industry is how to achieve flexibility from extended supply chains that span the globe and retain elements of make-to-forecast. A study of 8 European manufacturers examines whether supplier parks are an imperative for BTO using a conceptual framework developed from the literature. The findings question the idea that simply locating suppliers in close proximity to original equipment manufacturer assembly plants reduces delivery lead time and inventory. Hence, not all types of supplier parks are an imperative for BTO, where the cases reveal a wide variety of types ranging in scale and proximity. The originality of the paper is a unique study which redefines both automotive supplier park terminology and the relationships with BTO. It questions received wisdom and offers practical measures for industry.     

Marketing online banking to the indifferent consumer: A longitudinal analysis of banks' actions

US banks have invested heavily in developing online capabilities, with the expectation of migrating customers to the new, cheaper delivery system. Results in the USA thus far have been mixed at best. This paper reports on the second of two studies conducted to investigate the reasons for the mediocre performance. While the first study focused on the consumer perspective, this one examines banks' online marketing efforts to migrate customers. A quantitative, longitudinal study examined banks' actions in March 2002 and again in September 2003. The findings indicate that most banks have not learned much. Both in 2002 and in 2003, most banks have acted as though customers were already convinced about the appeal of online banking services. The marketing activities reported here were inappropriate and insufficient to appeal to the indifferent consumer. Almost no learning or improvement in tactics has been observed during the 18-month period. Most banks simply continue to pursue ineffective strategies. Specific suggestions for future efforts to accelerate the adoption rate by focusing on an experiential-learning approach are discussed.     

Up-grading and performance: the role of design, technology and business strategy in Hong Kong's electronics industry

This study tests the hypothesis that companies who move away from the traditional Hong Kong business model by adopting ‘up-grading’ strategies enjoy superior performance. A set of 14 variables is used to capture the dimensions of strategy, encompassing the business, technology and design domains. The results of both comparative and configurational approaches show that there are indeed performance benefits to be had. The broader implication is that Hong Kong manufacturing firms are beginning to escape the ‘iron fetters’ of a business model originally imposed on them by both material and ideational constraints, and to reap performance benefits as a result.Howard Davies is an Associate Dean in the Faculty of Business at the Hong Kong Polytechnic University. David Ko completed his DBA thesis under Prof. Davies's supervision.     

No news is good news? Evaluating new pay systems

The evaluation of the impact of changes in reward systems is a common recommendation in the personnel practitioner literature, but little has been written about how and to what extent practitioners themselves evaluate. This article therefore focuses on the activities of HR managers who have introduced new pay systems, not on academic studies of reward system change. Face‐to‐face interviews were conducted in 15 large, unionised organisations in England between 2000 and 2002. The study found that little formal evaluation of changes in pay and grading systems had been carried out and that managers expressed considerable scepticism about the evaluation process. They relied heavily on informal or anecdotal feedback, and appeared to have little psychological incentive to evaluate. The article suggests explanations for this lack of formal evaluation, drawing on the management decision‐making literature, and recommends how changes in reward systems should be evaluated.     

The process of assisted negotiations: A network analysis

This article introduces network analysis as a supplement to current research on the process of negotiations. We briefly review the literature on negotiations involving third parties, and argue that to understand fully the dynamics of dispute resolution, it is important to examine processes in addition to outcomes. We propose social network methods as a way to examine systematically the step-by-step process through which self-interested third parties influence negotiated outcomes. To illustrate, we analyze process data from triads in an agent-assisted negotiation. We describe three classes of results. First, we describe the basic properties of the third-party-assisted negotiation process (e.g., we found agents to be the most active players in the negotiation process—they initiate interactions significantly more frequently than buyers or sellers). Second, we study the changes in the process characteristics due to experimental conditions (i.e., we found the interactive patterns to vary depending on the information made available to the third party). Finally, we examine the relationships between the systematic process measures and standard outcome measures. We argue that these measures are complementary, and that the process should be informative with respect to interpreting, predicting, and managing outcomes.This research was supported in part by a grant from the Dispute Resolution Research Center.     

Acquiring Competence at a Distance: Application Service Providers as a Hybrid Organizational Form

Application service providers (ASPs) are an innovative way for firms to outsource business functions by renting software as a service via the Internet. ASPs bring state of the art technology within the reach of firms that have been denied access to such advances in the past. The novelty of the ASP model results from the use of the Internet in the provision of services and the virtual inter-organizational tie that it creates between ASP and customer. The novelty of the ASP model has generated legitimacy concerns among the potential pool of customers, which has slowed the diffusion of this innovation. The recent dot-com fall-out has also had negative effects on the diffusion of the model. Nonetheless, the ASP model has managed to survive by adapting to the trends of the market. Entrepreneurship researchers have two reasons to pay more attention to ASPs. First, the emergence of the ASP business model has opened up opportunities for entrepreneurial activity by those seeking to capitalize on this new business model. Second, the proliferation of ASPs has the potential to affect other new ventures by altering their technology options.