Strategic responsiveness and Bowman's risk–return paradox

One of the most enduring puzzles in the strategy literature is the negative association between risk and return known as the Bowman paradox. This paper formalizes a model of strategic conduct based on the concept of strategic fit and the heterogeneity of firm strategic capabilities. This model is shown mathematically to yield the negative association of the Bowman paradox. Furthermore, the model makes several other testable predictions. To examine these predictions, simulated data from the model are compared with a large empirical study of 45 industries during 1991–2000. The predictions of the model are consistent with the empirical data. Copyright © 2007 John Wiley & Sons, Ltd.     

GOVERNANCE OF PRODUCTION CO‐OPERATIVES IN RUSSIAN AGRICULTURE

Many Soviet kolkhozy and sovkhozy were transformed into agricultural production co‐operatives, because the farm workers would have had large transaction costs in any other type of organization. These co‐operatives still hold a strong market position. This study explores the hypothesis that this market strength could be due to low governance costs, obtained through strong manager power. As managers want the co‐operative to survive, they make limited investments in the co‐operative and pay low wages. The members, however, do not consider this to be problematic. They appreciate the community within the village, their private plots of land and the co‐operative's services. Hence the existence of the co‐operatives is not threatened.     

Selection bias and the perils of benchmarking

To find the secrets of business success, what could be more natural than studying successful businesses? In fact, nothing could be more dangerous, warns this Stanford professor. Generalizing from the examples of successful companies is like generalizing about New England weather from data taken only in the summer. That's essentially what businesspeople do when they learn from good examples and what consultants, authors, and researchers do when they study only existing companies or--worse yet--only high-performing companies. They reach conclusions from unrepresentative data samples, falling into the classic statistical trap of selection bias. Drawing on a wealth of case studies, for instance, one researcher concluded that great leaders share two key traits: They persist, often despite initial failures, and they are able to persuade others to join them. But those traits are also the hallmarks of spectacularly unsuccessful entrepreneurs, who must persist in the face of failure to incur large losses and must be able to persuade others to pour their money down the drain. To discover what makes a business successful, then, managers should look at both successes and failures. Otherwise, they will overvalue risky business practices, seeing only those companies that won big and not the ones that lost dismally. They will not be able to tell if their current good fortune stems from smart business practices or if they are actually coasting on past accomplishments or good luck. Fortunately, economists have developed relatively simple tools that can correct for selection bias even when data about failed companies are hard to come by. Success may be inspirational, but managers are more likely to find the secrets of high performance if they give the stories of their competitors'failures as full a hearing as they do the stories of dazzling successes.     

Purchasing by Swedish grocery chains

In this article, the results from a study of the purchasing procedures in the two largest companies in Swedish grocery distribution are presented. Comparisons with similar studies are interwoven throughout the text concerning distribution companies in the U. S. A., Canada, the U. K., Finland and Norway. A tentative conclusion from the comparisons is that there are some general differences in purchasing procedures between North America and Europe. Factors which could explain these differences are market size and the degree of concentration in the food distribution industry.     

Tenants' participation — A study of residential service planning

During recent years there has been a large interest in residential service in Sweden. Several experiments and investigations have been carried out concerning various service facilities in residential districts and attempts to let the tenants themselves participate in the planning of this service. One of the most comprehensive projects is the one that was conducted in the district of Högaholm in Malmö. This article reports from an evaluation of the planning procedure in this district, where opinions and wants of the tenants have been continually collected in order to make the residential service as good as possible. The article mainly comprises a presentation of how the tenants participated in the planning process, an analysis of the reasons why this planning failed in some respects and a comparison to other research in this field.

---

Zusammenfassung Der Beitrag beschäftigt sich mit schwedischen Erfahrungen mit der Berücksichtigung von Mieterwünschen. Dem Versuch, Bewohner an der Planung ihrer eigenen Wohnumwelt zu beteiligen, war bereits eine Reihe von Untersuchungen gewidmet. Eines der umfassendsten Projekte ist im Gebiet von Högaholm in Malmö durchgeführt worden. Der Aufsatz berichtet über die Vorgehensweise bei der Planung in diesem Gebiet, bei der die Wünsche und Vorstellungen der Bewohner systematisch erfaßt wurden, um die Anlagen des Wohngebietes möglichst gut daran anzupassen. Er schildert vor allem, auf welche Weise die Bewohner in den Planungsprozeß einbezogen wurden, analysiert dann die Ursachen dafür, daß die Partizipation in mancher Beziehung fehlschlug, und zieht Vergleiche zu anderen Forschungsergebnissen.

---

---

Jerker Nilsson is a Research Assistent at the Department of Business Administration, University of Lund, PO box, S-220 05 Lund 5, Sweden. He wishes to express his thanks to Britt Pedersen, who is a Lecturer at the Department of Building Function Analysis at the Lund Institute of Technology. Britt Pedersen has not only given valuable advice for this article, but she has also been deeply involved in the Högaholm experiment of residential service.     

THE NATURE OF COOPERATIVE VALUES AND PRINCIPLES

ABSTRACT * : Members' transaction costs decrease as a consequence of cooperative principles and cooperative values. The members' cooperative values reduce their uncertainty in relation to each other and in their relationship to the business environment. Thus, there are two categories of values: social values and sovereignty values. The cooperative principles are characteristics of the cooperative organization that aim to reduce transaction costs in the members' relationships with the cooperative. Thus we find two types of principles: business principles and society principles. Business principles state how relationships between the cooperative enterprise and the members should be designed. Society principles reduce transaction costs for members in their interactions.     

Do Entrenched Managers Pay Their Workers More?

Analyzing a panel that matches public firms with worker-level data, we find that managerial entrenchment affects workers' pay. CEOs with more control pay their workers more, but financial incentives through cash flow rights ownership mitigate such behavior. Entrenched CEOs pay more to employees closer to them in the corporate hierarchy, geographically closer to the headquarters, and associated with conflict-inclined unions. The evidence is consistent with entrenched CEOs paying more to enjoy private benefits such as lower effort wage bargaining and improved social relations with employees. Our results show that managerial ownership and corporate governance can play an important role for employee compensation.     

Inferring superior capabilities from sustained superior performance: A Bayesian analysis

To what extent can one infer that superior capabilities are driving sustained superior performance? Modeling performance as some combination of differences in capabilities and processes of cumulative advantage, we argue that a Bayesian framework in which decision makers take into account the differences in cumulative advantage provides for a correct inference. We show, using both simulated and real performance data, that the Bayesian method gives rise to estimates relevant for the inference problem. The estimates also illustrate why a firm with superior performance during a longer period can be less likely to possess superior capabilities than a firm with superior performance during a shorter period. Our work has implications for the origins of competitive advantages and for organization learning in strategy research. Copyright © 2012 John Wiley & Sons, Ltd.