COVID-19 and business renewal: Lessons and insights from the global airline industry

The emergence of the COVID-19 pandemic has adversely affected the fortunes of multiple companies around the globe. Accordingly, questions are increasingly being asked about how organizations can revitalize during and after a crisis. Yet, we have limited understanding of how organizations renew themselves during crises over time. We explore this question through the lens and examination of two South-Asian airlines: Pakistan International Airlines and Sri Lankan Airlines. The cases offer important insights into the reasons behind underperformance of state-controlled enterprises and renewal activities. We shed light on strategic renewal (SR) in the wake of increasing liberalization and deregulations in the global airline industry. To this end, we propose a four-stage approach towards renewing such underperforming organizations to respond effectively to black swan events and external shocks.     

Building relationship innovation in global collaborative partnerships: big data analytics and traditional organizational powers

This study examines how relationship innovation can be developed in global collaborative partnerships (alliances, joint ventures, mergers, and acquisitions). The recently emerging theory of big data analytics linked with traditional organizational powers has attracted a growing interest, but surprisingly little research has been devoted to this important and complex topic. Therefore, after developing the theoretical foundations, our study empirically quantifies the links between the theoretical constructs based on the data collected from chief executive officers, managing directors, and heads of departments who work in contemporary global data‐and‐information driven collaborative partnerships. The results from structural equation modeling indicate that the relationship innovation depends on the power of big data analytics and non‐mediated powers (NMP, expert and referent). The power of big data analytics also mediates the correlation between NMP and relationship innovation. However, mediated powers (coercive and manipulative) negatively affect the power of big data analytics and relationship innovation. The interaction effects further depict that analytically powered partnerships have better relationship innovation compared with those which focus less on the analytical power. Consequently, the contributions of this study provide a deeper understanding of mechanisms of how modern collaborative partnerships can use big data analytics and traditional organizational powers to co‐create relationship innovation.     

New development: China renews reform of central–local fiscal relations and provides for basic national public services

China’s reform on central–local fiscal reform has slowed down in recent years. The appointment of a new finance minister experienced in local government affairs is expected to renew the reform affirmed by the Chinese Communist Party (CCP) congress in late 2017. China has unprecedentedly identified a comprehensive list of 81 national basic public services as entitlements. Eighteen of them are subject to national and local standards, and co-financed by central and local governments. A new cost-sharing method for 10 of these services classifies sub-national jurisdictions into five tiers, in which the central government’s share declines from 80% to 10%. These measures, effective in 2019, aim at creating a ‘harmonious and moderately prosperous society’.     

A regularity theory of causality for the social sciences

Quality & Quantity - This article discusses a regularity theory of causality (RTC) for the social sciences. With RTC, causality is a relationship between X and Y characterized by three...     

Balancing social and political strategies in emerging markets: Evidence from India

This article explores the substitution and complementary effects between political and social strategies on firm performance in the context of an emerging market (EM). Using in‐depth, historical case‐study approach, the article investigates how companies integrate political and social resources in this market. Corporate performance includes traditional measures, such as accounting performance and nonfinancial measures like the ease of doing business. The study finds that social strategies are stronger enablers of firm long‐term performance than political strategies. The latter have a short‐term impact on performance, but their success over time is limited. The main drawback of reliance on political resources in EMs is the lack of political stability, fragmented polity, and weak political coalitions. We identify rather limited evidence of firms using these two strategies as complements. Thus, we suggest that firms should employ both these strategies in the EM.     

Getting the Most Out of a Mandatory Subordinated Debt Requirement

Recent advances in asset pricing—the reduced-form approach to pricing risky debt and derivatives—are used to quantitatively evaluate several proposals for mandatory bank issue of subordinated debt. We find that credit spreads on both fixed- and floating-rate subordinated debt provide relatively clean signals of bank risk and are not unduly influenced by nonrisk factors. Fixed-rate debt with a put is unacceptable, but making the putable debt floating resolves most problems. Our approach also helps to clarify several different notions of “bank risk.”     

The Benefits of Visibility Improvement: New Evidence from the Los Angeles Metropolitan Area

This article examines the impact of a specific aspect of air quality—visibility, or the ability to clearly see distant objects—on housing values. Our analysis is based on a data set constructed by matching residential housing sales data from the Los Angeles Metropolitan Area for the period 1980 through 1995 with visibility and other air pollution data and other characteristics. We find that visibility differences are capitalized into housing values, producing a measurable hedonic price gradient. The time-series design facilitates an estimate of the demand for visibility that we use to calculate the benefits of changes in visual range.