The voice of the loyal manager: Distinguishing attachment from commitment

The purpose of this article is to use Albert Hirschman's Exit, Voice, and Loyalty framework to analyze the extent to which corporate employees are merely attached to the firm rather than committed. A model of managerial loyalty is developed where loyalty is defined as the percentage pay increase that an employee would require to leave the current firm for alternative employment. Independent variables in the model include barriers to exit and voice. This model was tested on three data sets from North American airlines. This model received empirical support during a stable environment but was not strongly supported during a more turbulent environment. Implications of the results are discussed.     

SERVCON: development and validation of a multidimensional service convenience scale

As customers have demanded greater convenience in service exchanges, researchers have responded by incorporating the convenience construct into their conceptual models and empirical studies, but a comprehensive, formally validated measure of convenience remains lacking. This study conceptualizes service convenience as a second-order, five-dimensional construct that reflects consumers’ perceived time and effort in purchasing or using a service. Service convenience dimensions are salient at different stages of the purchase decision process. Given this conceptualization, the study presents the development and validation of the SERVCON scale, a comprehensive instrument for measuring service convenience. The five dimensions are independent within a nomological network that illustrates distinct antecedent and consequent effects, and the results reinforce the multidimensional representation, offering insight into the distinctive relationships between each service convenience dimension and its antecedents, such as competitive intensity, and consequences, such as repurchase behavior. The findings help researchers and managers understand a fully conceptualized convenience construct and facilitate the measurement of convenience in future empirical studies.     

Assessing Voluntary Programs to Improve Environmental Quality

The last decade has seen a dramatic increase in the use of voluntaryapproaches (VAs) to environmental protection, which has spurned agrowing literature on the relative merits of voluntary vs. mandatoryapproaches. This paper draws on that literature to discuss both thetheoretical and empirical issues that arise in the evaluation orassessment of a particular VA. We consider both the environmentaleffectiveness and the efficiency of this policy approach. Our aim is toaid policymakers in evaluating a specific program or in thinking aboutthe use and design of a VA. We identify some key features that arelikely to increase both the effectiveness and the efficiency of VAs.     

Stochastic Demand for Hospitals and Optimizing "Excess" Bed Capacity

This paper addresses the issue of hospital bed capacity by considering the stochastic demand for United States hospitals. An equilibrium condition for the optimal number of "excess" beds is derived and applied using a cost function estimated with a panel data model for the period 1987-1992. Results indicate that it may be difficult to justify the costliness of existing levels of empty hospital beds. The Department of Justice and the Federal Trade Commission should be cognizant of the potential effects of hospital mergers on undesirable excess bed capacity.     

Measuring market response to regulation of the cable TV industry

During the 1988–1990 period, the cable television industry was subject to a number of regulatory events. These centered on possible reregulation of rates for basic service and reduction of entry barriers for potential competitors. Using the event study methodology on a portfolio of cable firms, we find evidence that news of no reregulation caused significant positive abnormal returns. News of reregulation caused insignificant negative abnormal returns. These findings provide some support for the traditional consumer protection theory of regulation. News related to entry barriers generally had no significant effect on returns, which suggests that elements of natural monopoly may exist in the industry.     

A Reexamination of the Corporate Demand for Reinsurance

This study examines the effect of the state of the international reinsurance market on the demand for reinsurance by U.S. insurers using data from the years 1993 through 2000. Both the overall demand for reinsurance and the utilization of foreign reinsurance by U.S. insurers are explored. In addition to supporting the findings of prior literature related to the traditional motives for the corporate demand for insurance, evidence indicates that the state of the U.S. reinsurance industry impacts the amount of reinsurance demanded by U.S. insurers. The study also investigates reasons why U.S. insurers utilize a reinsurance program composed of both U.S. and foreign reinsurers. The results indicate that the decision to utilize some percentage of foreign reinsurance is driven primarily by the financial and operational characteristics of the ceding company such as firm size, group affiliation, and organizational form. However, no support is found for the hypothesis that possible differences between the foreign and U.S. reinsurance markets impact the decision to utilize foreign reinsurance.     

Inter‐temporal economies of scope,organizational modularity,and the dynamics of diversification

The question of whether corporations add value beyond that created by individual businesses has engendered much debate in recent years. Some of this debate has focused on the pros and cons of related vs. unrelated diversification. A standard explanation of the benefits of related diversification has to do with the ability to obtain intra‐temporal economies of scope from contemporaneous sharing of resources by related businesses within the firm. In contrast, this paper deals with inter‐temporal economies of scope that firms achieve by redeploying resources and capabilities between related businesses over time, as firms exit some markets while entering others. The transfer of resources due to market exit distinguishes our treatment of inter‐temporal economies of scope from standard intra‐temporal economies of scope. In addition, these inter‐temporal economies can benefit from a decentralized and modular organizational structure. This ability to obtain inter‐temporal economies of scope via organizational modularity and recombination suggests that corporations do not necessarily need a high degree of coordination between business units in order to benefit from a strategy of related diversification. Copyright © 2004 John Wiley & Sons, Ltd.     

Outsourcing Internal Audit Services: An Empirical Study on Queensland Public-Sector Entities

A study of Queensland public-sector entities suggests outsourcing of internal audit services to be extensive (88%), with 51% of respondent agencies adopting co-sourcing and 37% of the agencies fully outsourcing. Results suggest that internal audit outsourcing is largely adopted for non-financial reasons such as lack of technological know-how and service quality rather than financial reasons. Deficiencies of current governance arrangements concerning internal audit outsourcing include (1) a lack of audit committee involvement in outsourcing processes, particularly in co-sourcing entities, and (2) inadequate segregation of duties whereby the same senior management is involved in key arrangements including selection, approval, negotiation and evaluation of contractual performance.