Toward a Phylogenetic Reconstruction of Organizational Life

Synopsis Classification is an important activity that facilitates theory development in many academic disciplines. Scholars in fields such as organizational science, management science and economics and have long recognized that classification offers an approach for ordering and understanding the diversity of organizational taxa (groups of one or more similar organizational entities). However, even the most prominent organizational classifications have limited utility, as they tend to be shaped by a specific research bias, inadequate units of analysis and a standard neoclassical economic view that does not naturally accommodate the disequilibrium dynamics of modern competition. The result is a relatively large number of individual and unconnected organizational classifications, which tend to ignore the processes of change responsible for organizational diversity. Collectively they fail to provide any sort of universal system for ordering, compiling and presenting knowledge on organizational diversity. This paper has two purposes. First, it reviews the general status of the major theoretical approaches to biological and organizational classification and compares the methods and resulting classifications derived from each approach. Definitions of key terms and a discussion on the three principal schools of biological classification (evolutionary systematics, phenetics and cladistics) are included in this review. Second, this paper aims to encourage critical thinking and debate about the use of the cladistic classification approach for inferring and representing the historical relationships underpinning organizational diversity. This involves examining the feasibility of applying the logic of common ancestry to populations of organizations. Consequently, this paper is exploratory and preparatory in style, with illustrations and assertions concerning the study and classification of organizational diversity.     

Some results about averaging in stochastic approximation

The paper presents some results concerning the averaging approach in a general linear regression model in one dimension under suitable conditions about the martingale structure of errors. At first asymptotics of the primary and averaged estimators are discussed. Then it is shown that variances of estimators can be consistently estimated by appropriate integrated squared deviations functionals. Finally applications to the construction of confidence regions are considered.     

What's wrong with strategy?

Why is it that successful strategies are rarely developed as a result of formal planning processes? What is wrong with the way most companies go about developing strategy? Andrew Campbell and Marcus Alexander take a common sense look at why the planning frameworks managers use so often yield disappointing results. Companies often fail to distinguish between purpose (what an organization exists to do) and constraints (what an organization must do in order to survive), the authors say. Many executives mistakenly believe, for example, that satisfying stakeholders is an objective that drives thinking about strategy. In fact, it's a constraint, not an objective. Companies that don't win the loyalty of stakeholders will go out of business. Strategy is not about plans but about insights, the authors add. Strategy development is the process of discovering and understanding insights and should not be confused with planning, which is about turning insights into action. Furthermore, because executives develop most of their insights while actually doing the real work of running a business, it is important for companies not to separate strategy development from implementation. Is there a better way? The answer is not new planning processes or more effort. Instead, managers must understand two fundamental points: the benefit of having a well-articulated, stable purpose and the importance of discovering, understanding, documenting, and exploiting insights about how to create value.     

Realizing the Potential of Real Options: Does Theory Meet Practice?

The idea of viewing corporate investment opportunities as “real options” has been around for over 25 years. Real options concepts and techniques now routinely appear in academic research in finance and economics, and have begun to influence scholarly work in virtually every business discipline, including strategy, organizations, management science, operations management, information systems, accounting, and marketing. Real options concepts have also made considerable headway in practice. Corporate managers are more likely to recognize options in their strategic planning process, and have become more proactive in designing flexibility into projects and contracts, frequently using real options vocabulary in their discussions. Thanks in part to the spread of real options thinking, today's strategic planners are more likely than their predecessors to recognize the “option” value of actions like the following: ? dividing up large projects into a number of stages; ? investing in the acquisition or production of information; ? introducing “modularity” in manufacturing and design; ? developing competing prototypes for new products; and ? investing in overseas markets. But if real options has clearly succeeded as a way of thinking, the application of real options valuation methods has been limited to companies in relatively few industries and has thus failed to live up to expectations created in the mid‐ to late‐1990s. Increased corporate acceptance and implementations of real options valuation techniques will require several changes coming together. On the theory side, we need more realistic models that better reflect differences between financial and real options, simple heuristic methods that can be more easily implemented (but that have been carefully benchmarked against more precise models), and better guidance on implementation issues such as the estimation of discount rates for the “optionless” underlying projects. On the practitioner side, we need user‐friendly real options software, more senior‐level buy‐in, more deliberate diffusion of real options knowledge throughout organizations, better alignment of managerial incentives with long‐term shareholder value, and better‐designed contracts to correct the misalignment of incentives across the value chain. If these challenges can be met, there will continue to be a steady if gradual diffusion of real options analysis throughout organizations over the next few decades, with real options eventually becoming not only a standard part of corporate strategic planning, but also the primary valuation tool for assessing the expected shareholder effect of large capital investment projects.     

Liquidity, Transaction Costs, and Reintermediation in Electronic Markets

Relationships between trading cost, technology, and the nature of intermediation in the trading services industry are discussed. Electronic markets are linked to reductions in trading costs. Lower explicit costs are related to system development and operating costs. Electronic order book information is identified as a means of realizing implicit cost savings. The concept of liquidity management in electronic environments is introduced, and its potential is empirically illustrated. The empirical results suggest new roles for brokerage and exchange operations, and competition between the two. Competitive advantage with respect to the provision of liquidity management services is compared across types of intermediaries.     

Eurobond underwriter spreads

We examine the determinants of underwriter spreads on straight/fixed rate Eurobonds issued by US firms between 1990 and 1998. We find that underwriter spreads are influenced by: (i) the governing law as it influences the timely and orderly renegotiation of contract terms, with bonds governed by English law having significantly lower spreads; (ii) the distribution mechanism, with spreads higher on public issues than private placements; (iii) underwriter reputation, with more reputable underwriters charging higher spreads; and (iv) the choice of currency, with spreads higher in the less frequently used currencies and/or in currencies where underwriting activities are more concentrated.     

Does the Basle Capital Accord reduce bank fragility? An assessment of the value-at-risk approach

We examine the economic implications arising from a bank using a VaR-constrained mean-variance model for the selection of its trading portfolio as a consequence of the Basle Capital Accord. Surprisingly, we show that when a VaR constraint is imposed, it is plausible that certain banks will end up selecting ‘riskier’ portfolios than they would have chosen in the absence of the constraint. Accordingly, regulators such as the Basle Committee on Banking Supervision should be aware that allowing a bank to use VaR to determine its minimum regulatory capital may increase its fragility. Alternatives to VaR-based bank capital regulation that mitigate or even preclude its perverse implications are presented.     

Have labour practices and human rights disclosures enhanced corporate accountability? The case of the GRI framework

This paper critically evaluates Transnational Corporations’ (TNCs) claimed adherence to the Global Reporting Initiative (GRI)’s ‘labour’ and ‘human rights’ reporting guidelines and examines how successful the GRI has been in enhancing comparability and transparency. We found limited evidence of TNCs discharging their accountability to their workforce and, rather, we found evidence to suggest that disclosure was motivated more by enhancing their legitimacy. TNCs failed to adhere to the guidelines, which meant that material information items were often missing, rendering comparability of information meaningless. Instead, TNCs reported large volumes of generic/anecdotal information without acknowledging the impediments they faced in practice.     

Stakeholder Engagement: Defining Strategic Advantage for Sustainable Construction

Although sustainable development is increasingly becoming a part of business plans, it is unclear what makes the economic, social and environmental dynamics strategically compatible. This research examines which of the following in sustainable development – government policy, managerial attitude and stakeholder engagement – is the most influential on the profitability of companies in the UK construction sector. Quantitative and qualitative analyses were rendered through a survey and semi‐structured interviews. Patterns of ambiguity in legislation were discovered as an obstacle for changing the sector's mind‐set. Stakeholder engagement was identified as the defining factor increasing managers' awareness, helping legislation to be effectively implemented and making sustainability highly appealing to clients. These findings indicate that to gain competitive advantage, companies should embark on long‐term strategic alliances which adopt the proposals of environmental non‐governmental organisations and closely follow public opinion. This, strengthens brand equity, allows for premium pricing, increases market share and maximizes profit. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.