CONTROL: GETTING IT AND KEEPING IT IN BUSINESS PROCESS OUTSOURCING

Proposals to outsource corporate functions often meet with resistance because of control issues and concerns about proprietary information. But proponents of outsourcing are quick to note that many of these reservations dwell on perceptions and apprehensions, rather than on the track record of outsourced projects. In fact, veterans of successful arrangements observe that outsourcing frees up valuable management time and thus enables an enhanced form of control.
The key is to supplement direct, supervisory control mechanisms like service control agreements and performance tracking with indirect, enabling controls—senior team affiliation, performance visibility, interface management, and employee allegiance—and then lay the groundwork for these enabling controls early in the outsourcing relationship. Rather than getting locked into static controls, forward-looking managers adopt a broad control framework to go beyond achieving the expected improvements and create the potential to add new value. The result is an outsourcing relationship that can accommodate change, move in a new direction, and seize emerging opportunities.     

WORKERS' COMPENSATION COSTS AND REGIONAL GROWTH DYNAMICS*

This paper attempts to gauge the effect of workplace regulation, against the background of other influences, on the increasing or decreasing competitive advantage of particular regions relative to the nation. We employ two measures of regional growth. The first is the differential rate of investment growth across states between 1978 and 1984. The results for output growth show that states both in the South and outside the South stand to lose their competitive edge in manufacturing activity from rising unit labor cost and energy cost. Rising taxes hurt industrial activity in the North but are not critical in the South. Agglomeration economies that benefit the North, apparently have no detrimental effect in the South. Rising workers' compensation cost is significant in the decline in southern competitiveness; it is not in the North. Both regions enhance their competitive position when local markets grow. For regional manufacturing investment, we find that unit labor cost and energy cost have no significant effect on the competitive position of states in the South. However, taxes and workers' compensation costs hurt investment opportunities in South.     

Bank mergers: Integration and profitability

The Treasury Department's 1991 recommendations for financial service reform would have allowed interstate branching by banks, eliminating the requirement that banking companies form a separate subsidiary for each state in which they do business. Supporters of the proposal argue that allowing bank holding companies to merge their subsidiary banks would improve performance. We tested this proposition by studying the before- and-after performance of all bank mergers in the New England states between 1982 and 1987. In the aggregate, merging banks did not achieve significant improvements in operating profits relative to other banks during the first two years after a merger. It is important to distinguish, however, between mergers of newly acquired banks and mergers of banks acquired earlier by the holding company. Mergers of previously acquired banks performed significantly better than mergers of newly acquired banks and, measured by operating return on assets, achieved significant performance improvements relative to the industry.This article may not be reproduced in any form without permission of the authors, who hold the copyright.     

EMPLOYING LATENT CLASS REGRESSION ANALYSIS TO EXAMINE LOGISTICS THEORY: AN APPLICATION OF TRUCK DRIVER RETENTION

Multiple regression analysis assumes that one model or theory is relevant for the entire population, yet research has shown that this assumption is often false and may severely limit valid theory development and testing. Latent class regression analysis overcomes this limitation and allows the researcher to identify and develop regression models that are relevant for different segments within the same population. Latent class regression analysis is introduced and is used to analyze truck drivers' intentions to stay with the same firm. This article demonstrates the advantages of testing logistics theory with latent class regression analysis and provides numerous applications for practitioners.     

Volatility dynamics of NYMEX natural gas futures prices

We examine the volatility dynamics of NYMEX natural gas futures prices via the partially overlapping time‐series model of Smith (2005. Journal of Applied Econometrics, 20, 405–422). We show that volatility exhibits two important features: (1) volatility is greater in the winter than in the summer, and (2) the persistence of price shocks and, hence, the correlations among concurrently traded contracts, displays substantial seasonal and cross‐sectional variation in a way consistent with the theory of storage. We demonstrate that, by ignoring the seasonality in the volatility dynamics of natural gas futures prices, previous studies have suggested sub‐optimal hedging strategies. © 2008 Wiley Periodicals, Inc. Jrl Fut Mark 28:438–463, 2008