technology strategy and financial performance examining the moderating role of the firm s competitive environment abstract success in today s competitive environment requires a company to pursue a coherent technology strategy to articulate its plans to develop acquire and deploy technological resources to achieve superior financial performance this strategy clarifies the company s choices on being a technological pioneer or a follower the breadth of the technology product and process portfolios amounts of investments in internal r d and external sources of technology and levels of technological forecasting to be performed in turn these choices require making decisions on the basic and applied r d to be conduced the intended offensive or defensive uses of the technology and emphasis on incremental and radical r d to date however few studies have attempted to document the collective implications of a company s technological choices for its financial performance in response data from 176 manufacturing companies were used to examine the association between a company s technology strategy and its financial performance and to explore the moderating effect of the environment on the technology strategy performance link therefore the study focused on a company s perceptions of environmental dynamism hostility and heterogeneity dynamism indicated the perceived continuity of changes in an industry hostility referred to the changes in the industry that could adversely impact the firm s operations and performance heterogeneity meant that the environment encompassed many segments with different needs the study developed and empirically tested the following hypotheses 1 h1a pioneering will be highest among firms whose environments are highly dynamic moderately hostile and moderately heterogeneous 2 h1b followership will be highest among firms whose environments are highly hostile and moderately dynamic but low in heterogeneity 3 h2a radical product technologies will be pursued most by firms whose environments are highly dynamic moderately hostile and moderately heterogeneous 4 h2b radical process technologies will be pursued most by firms whose environments are moderately dynamic moderately hostile and moderately heterogeneous 5 h2c incremental product and process technologies will be pursued most by firms whose environments are stable low dynamism benign low hostility and highly heterogeneous 6 h3 the broadest technological portfolios will exist among firms whose environments are characterized by moderate dynamism high heterogeneity and moderate or low hostility 7 h4 r d spending will be highest among firms whose environments are highly dynamic highly heterogeneous and highly benign low in hostility 8 h5 the use of external technology sources will be highest among firms whose environments are highly dynamic highly hostile and highly heterogeneous 9 h6 emphasis on technological forecasting will be highest among firms whose environments are highly dynamic highly hostile and highly heterogeneous 10 h7 the environment is a quasi moderator of the technology strategy performance relationship the results supported the study s hypotheses except h2c and h3 and suggested five ideas for managerial action 1 executives should develop and use a comprehensive technology strategy to ensure that their company achieves superior financial performance 2 executives should be cautious in applying generic prescriptions of how to utilize technological resources to achieve profitability because the financial payoff from technology strategy variables varies from one environment to the other instead executives should examine their company s goals capacity to manage diverse product and process initiatives risk taking orientation resources and the environment 3 attention to developing and using process technology innovation is necessary for success in fact a broad process innovation portfolio is positively associated with return on assets in the overall sample and in three of the study s five clusters 4 managers need to adopt a long term perspective in making r d investments where patient investments over several years are the norm increasing r d spending should not be viewed as a quick fix for the company s poor competitive position 5 whereas the external sources of technology can improve the company s performance managers should identify the conditions under which external sources can be used and educate their employees on the growing importance of these technologies for achieving profitability

is firm specific innovation associated with greater value appropriation the roles of environmental dynamism and technological diversity abstract this paper extends the resource based theory of the firm to examine the contingencies that either intensify or reduce the relationship between firm specific innovation and value appropriation based on a large scale analysis of a sample of us manufacturing firms we found that greater innovation rents appropriation is associated with an increase in firm specificity of its innovative knowledge but the positive relationship between firm specific innovations and firm value appropriation tends to decrease when the product or technology market is highly dynamic further under high environmental dynamism firms should increase the diversity in their knowledge composition in order to mitigate the risk of value erosion associated with firm specific innovations

a multiplicative model of optimal ceo incentives in market equilibrium this paper presents a unified theory of both the level and sensitivity of pay in competitive market equilibrium by embedding a moral hazard problem into a talent assignment model by considering multiplicative specifications for the ceo s utility and production functions we generate a number of different results from traditional additive models first both the ceo s low fractional ownership the jensen murphy incentives measure and its negative relationship with firm size can be quantitatively reconciled with optimal contracting and thus need not reflect rent extraction second the dollar change in wealth for a percentage change in firm value divided by annual pay is independent of firm size and therefore a desirable empirical measure of incentives third incentive pay is effective at solving agency problems with multiplicative impacts on firm value such as strategy choice however additive issues such as perk consumption are best addressed through direct monitoring jel d2 d3 g34 j3

the influence of information technology on the use of loosely coupled organizational forms an industry level analysis information technology it enhances coordination both within the firm and between the firm and its external partners consequently it investment can promote both loosely and tightly coupled organizational forms indeed in some industries widespread investment in it is associated with high levels of disaggregation in other industries this is not the case we argue that the specific influence of it on firm boundaries depends on the broader industrial context we investigate conditions whereby it investments enable industries to be more loosely coupled through alliance formation and the use of contingent workers we use transaction cost and modular systems theory to ground our theoretical development the extent to which industrywide it investment is associated with loosely coupled organizational forms depends on 1 limited asset specificity because of industry standards 2 the level of industry uncertainty resulting from technological change and 3 the overall complexity of the industry in terms of diverse inputs specifically when industry standards exist it investment leads to greater use of both alliances and contingent workers it investment has a stronger positive relationship with the use of contingent workers when levels of technological change are low as compared to when levels of technological change are high when there are high levels of input diversity and industry standards exist it investment led to an increased use of contingent workers our analyses provides a more refined view of it influence on firm boundaries

organisational and spatial determinants of the multi unit firm evidence from the french industry galliano d and soulie n organizational and spatial determinants of the multi unit firm evidence from french industry regional studies this article aims to analyse the factors internal characteristics spatial and industrial environments that determine the existence of multi unit firms and the intensity of their organizational fragmentation at a national scale the empirical models are based on individual data on all french industrial firms collected by the french national institute of statistics the results show the importance of internal characteristics scale economies specific assets as research and development and advertising skill level etc in organizational choice they also highlight the major role played by multi location and by the spatial profile of the firms on the intensity of their fragmentation galliano d and soulie n

a survey of agency models of organizations abstract in recent years neoclassical economists have begun to turn their attention to issues of firm organization stimulated in large part by methodological advances in the economics of incentives and incomplete information the paradigm on which much of this work is based views an organization as an agency relationship agency models incorporate two basic features of organizations incomplete information and goal conflict among members of the organization this essay characterizes and critiques the existing research on agency models of organizations in order to broaden the set of consumers of such models and to stimulate the production of new research

strategic goals perceived uncertainty and economic performance in volatile environments an untested proposition in the normative strategic management literature is that strategists should make decisions based on accurate assessments of their external environments empirical organization theory literature holds the assumption that high levels of perceived uncertainty are detrimental to performance both literatures assume goal consensus to be important to effectiveness this study investigated the relationship between top management perceptions of uncertainty corporate goal structures and industry volatility in explaining economic performance in 20 firms findings suggested that attempts to avoid true environmental uncertainty and to seek high levels of goal congruence may be dysfunctional

organizational transformation as punctuated equilibrium an empirical test the punctuated equilibrium model of organizational transformation has emerged as a prominent theoretical framework for explaining fundamental changes in patterns of organizational activity to date

ex ante randomization in agency models we consider how a principal can use randomized strategies in designing optimal contracts in agency settings we distinguish between ex post randomization overfee schedulesfollowing act selection by the agent and ex ante randomization overfee schedules before act selection we show that ex ante randomization may be efficient in both full information and private information settings under certain assumptions regarding preferences and the production technology it is particularly significant that additive separability and concavity ofthe agent s utility function as well as concavity of the production function do not rule out efficient ex ante randomized contracts in private information settings although as is known they rule out ex post randomization

a causal model of linkages among environmental dimensions macro organizational characteristics and performance an integrative model of relationships among environmental dimensions diversification strategy firm size structural divisionalization and economic performance was developed and tested using environmental and organizational data from 110 large manufacturing firms the results suggested that among those organizations 1 higher levels of environmental instability were associated with lower levels of divisionalization and diversification 2 strategy followed structure and 3 size did not mediate the strategy structure relationship furthermore both environmental instability and diversification were positively related to market determined performance and instability was negatively related to operating performance the results provided support for portions of each of three models the external control strategic management and inertial models

information constrained optima with retrading an externality and its market based solution this paper studies the efficiency of competitive equilibria in environments with a moral hazard problem and unobserved states both with retrading in ex post spot markets the interaction between private information problems and the possibility of retrade creates an externality unless preferences have special restrictive properties the externality is internalized by allowing agents to contract ex ante on market fundamentals determining the spot price or interest rate over and above contracting on actions and outputs then competitive equilibria are equivalent with the appropriate notion of constrained pareto optimality examples show that it is possible to have multiple market fundamentals or price islands created endogenously in equilibrium

contracting theory and accounting abstract this paper reviews agency theory and its application to accounting issues i discuss the formulation of models of incentive problems caused by moral hazard and adverse selection problems i review theoretical research on the role of performance measures in compensation contracts and i compare how information is aggregated for compensation purposes versus valuation purposes i also review the literature on communication including models where the revelation principle does not apply so that nontruthful reporting and earnings management can take place the paper also discusses capital allocation within firms including transfer pricing and cost allocation problems

impact of information technology capital on firm scope and performance the role of asset characteristics this research draws on transaction cost and resource based theory to examine how information technology it capital moderates the relationship between different types of assets and firm scope both vertical integration and diversification the analysis suggests that it capital enables firms with narrowly valuable assets to be less vertically integrated and less diversified and enables firms with broadly valuable assets to be more vertically integrated and more diversified the moderating influence of it capital on the relationship between different types of assets and firms vertical and product market scope is consistent with transaction cost as well as resource based traditions abstract from author

reconceptualizing the context design issue for the information systems function the authors develop theory for predicting the distribution of decision making between the corporate and business unit levels of management for a subset of information systems is resources referred to as systems development drawing on literature from the fields of mis strategic management and organization theory they first determine how potentially influential context factors are likely to affect the locus of the lead decision making role from a multiple contingencies perspective then they theorize how conflicting corporate and business unit contingencies are likely to be resolved they present a set of six propositions that predict a centralized decentralized or compromise design solution for a given business unit on the basis of 1 business level strategy 2 whether or not information technology it plays a strategic role for the business unit 3 the degree of line managers it knowledge at the business unit level and 4 the level at which opportunities for it related synergies across business units are being pursued at the corporate level

misselling through agents this paper analyzes the implications of the inherent conflict between two tasks performed by direct marketing agents prospecting for customers and advis ing on the product s suitability for the specific needs of customers when structuring salesforce compensation firms trade off the expected losses from misselling unsuitable products with the agency costs of providing market ing incentives we characterize how the equilibrium amount of misselling and thus the scope of policy intervention depends on features of the agency problem including the internal organization of a firm s sales process the transparency of its commission structure and the steepness of its agents sales incentives jel m31 m37 m52 when purchasing unfamiliar products consumers often rely on information and advice pro vided by representatives of the seller this creates the possibility of misselling the question able practice of a salesperson selling a product that may not match a customer s specific needs 1 this problem is particularly severe in markets for technically complex products such as con sumer electronics auto repairs medical care and retail financial services including securities pensions insurance policies and mortgages an important feature of these markets is that the seller often deals with the customer through an agent rather than directly for example financial brokers typically recommend purchase of a specific product after inquiring about their customers particular circumstances and needs the possibility of abuse has led to regulation in some of these markets most notably for securities transactions the financial industry regulatory authority finra the major self regulatory organization for securities firms operating in the united states mandates that broker dealers make a reasonable effort to obtain information about the individual characteristics of their noninstitutional cus tomers and to ensure that their recommendations are suitable to customers financial situations

crisis and competition in expert organizational decision making credit rating agencies and their response to turbulence in emerging economies firms often delegate elements of strategic decisions to outside experts who promise objective assessments which are especially valuable in unstable environments however experts themselves may be prone to skewed decision making as the stability of their own industry environment changes and as their positioning within the industry shifts we examine this possibility in the context of expert credit rating agencies agencies and their risk ratings of emerging market sovereign borrowers ratings published from 1987 to 1998 a period that includes both industry stability 1987 1996 and industry turbulence set off by financial crises in several emerging market countries 1997 1998 after controlling for macroeconomic and related objective risk factors linked to the sovereigns themselves we find several points 1 agency ratings during crisis induced industry turbulence are negatively skewed indicating undue pessimism among these experts in line with decision making perspectives predicting negative reaction by experts in an effort to retain legitimacy with salient stakeholders in this case investors and public regulators 2 this negative shift is greater for incumbent firms and regionally focused firms possibly because of the loss of previous informational advantages and 3 this negative shift during crisis induced turbulence is greater as industry rivalry among these experts increases in particular market segments possibly indicating the development of competitive bandwagons among experts together our results suggest that objective assessments by expert organizations are vulnerable to substantial distortion from the confluent effects of industry instability and expert positioning within the industry particularly positioning affecting rivalry among experts ironically experts may be most likely to mislead clients in unstable industry environments when experts command greater attention and should show greater fidelity to disinterested objectivity

how optimal distinctiveness affects new ventures failure risk a contingency perspective abstract in this article we apply the concept of optimal distinctiveness to test whether category spanning has a nonlinear effect on new ventures risk to fail we argue that by being optimally distinct i e by attaining a level of category spanning that allows new ventures to benefit from balancing the competing needs of conformity with and differentiation from competitors new ventures can improve their survival chances in addition we argue that the relevance of optimal distinctiveness varies with a venture s age and a category s density we tested our hypotheses using data from 1668 metal bands that were founded in the united kingdom between 1967 and 2005 the results indicate that optimal distinctiveness is relevant to new ventures failure risk moreover we show that venture age attenuates the relevance of optimal distinctiveness whereas category density strengthens that factor s relevance

how does regional institutional complexity affect mne internationalization international business research is only beginning to develop theory and evidence highlighting the importance of supranational regional institutions to explain firm internationalization in this context we offer new theory and evidence regarding the effect of a region s institutional complexity on foreign direct investment decisions by multinational enterprises mnes we define a region s institutional complexity using two components regional institutional diversity and number of countries we explore the unique relationships of both components with mnes decisions to internationalize into countries within the region drawing on semiglobalization and regionalization research and institutional theory we posit an inverted u shaped relationship between a region s institutional diversity and mne internationalization extremely low or high regional institutional diversity has negative effects on internationalization but moderate diversity has a positive effect on internationalization larger numbers of countries within the region reduces mne internationalization in a linear fashion we find support for these predicted relationships in multilevel analyses of 698 japanese mnes operating in 49 countries within 9 regions regional institutional complexity is both a challenge and an opportunity for mnes seeking advantages through the aggregation and arbitrage of individual country factors

on transparency in organizations when is it best for the principal to commit to not disclosing all that he she knows in moral hazard interactions i show that whenever the agent would choose the same action under complete information at several distinct states then full transparency can generically be improved upon this implies that full transparency is generically suboptimal whenever the dimension of the information held by the principal exceeds the dimension of the agent s action in a simple class of problems i make further progress on the best disclosure policy assuming the principal can either disclose fully the state or remain silent

contextual influences on the corporate entrepreneurship performance relationship a longitudinal analysis abstract over the past several years corporate entrepreneurship has been widely touted by executives and researchers alike as an effective means for revitalizing companies and improving their financial performance for the most part the call for greater entrepreneurial behavior on the part of established companies has been accepted on faith as an inherently desirable objective the implicit logic behind the pervasive belief in the value of corporate entrepreneurship seems to be that risk taking innovation and aggressive competitive action the key elements of entrepreneurial corporations will help in identifying and pursuing lucrative product market opportunities and in providing new bases for achieving superior competitive positions but what do we really know about the financial consequences of corporate entrepreneurship most of the evidence that corporate entrepreneurship pays off is anecdotal in nature or based on cross sectional studies that focus on the short term implications of entrepreneurial behaviors as such in a definitive sense we know very little about the financial consequences of corporate entrepreneurship in an attempt to improve our understanding of this issue this article describes a study of corporate entrepreneurship and its impact on company financial performance data were collected from three different samples over a seven year period to assess the longitudinal impact of corporate entrepreneurship on firm performance these samples consist of 24 medium sized manufacturing firms representing 14 industry segments 39 chemical companies and 45 fortune 500 industrial firms representing five industry segments data were gathered on each sample using both primary and secondary sources regression analysis was then used to analyze the data the results suggest that corporate entrepreneurship has a positive impact on financial measures of company performance this effect on performance which tends to be modest over the first few years increases over time suggesting that corporate entrepreneurship may indeed be a generally effective means for improving long term company financial performance moreover the results indicate that corporate entrepreneurship is a particularly effective practice among companies operating in hostile environments as opposed to benign environments the study has three principal implications for practicing managers first the study documents the general financial viability of engaging in corporate entrepreneurship this is not to suggest that corporate entrepreneurship is a panacea for improving financial performance however entrepreneurial behavior when considered on the whole i e across firms and industries is associated with superior financial performance second the study suggests a need to use a long term time horizon in order to adequately judge the financial consequences of corporate entrepreneurship the use of a shorter evaluation period may not allow sufficient time for entrepreneurial actions to have their full market and corresponding financial impact finally the study identifies the context specific character of effective entrepreneurial practice specifically corporate entrepreneurship appears to be a particularly effective strategic practice among firms operating in hostile business settings

lotteries sunspots and incentive constraints we study a prototypical class of exchange economies with private information and indivisibilities we establish an equivalence between lottery equilibria and sunspot equilibria and show that the welfare and existence theorems hold to establish these results we introduce the concept of the stand in consumer economy which is a standard convex finite consumer finite good pure exchange economy with decreasing absolute risk aversion and no indivisibilities we prove that no lotteries are actually used in equilibrium we provide a simple numerical example with increasing absolute risk aversion in which lotteries are necessarily used in equilibrium we also show how the equilibrium allocation in this example can be implemented in a sunspot equilibrium

production and innovation when techniques are tacit the case of education abstract the central theme of this paper is that the conventional economic theory of production does not hold even approximately in a field like education after examining the result of input output studies in education and the effect of government attempts to enhance education effectiveness we provide a sketch of a new production theory for sectors where techniques are poorly articulated and idiosyncratic

contracts without memory in multiperiod agency models abstract settings are considered in which optimal multiperiod contracts can have no memory i e where second period payments do not need to depend on first period outcomes if contracts have no memory a repeated agency game can be played myopically there are no gains to long term relationships conditions on preferences for a no memory contract are presented in an agency game with moral hazard on the act selection preference separability and domain additivity imply the existence of a no memory contract in a setting without moral hazard but with asymmetric information on the outcome domain additivity implies no memory

dynamic optimal income taxation with government commitment abstract we analyze the optimal income tax problem when consumers work for many periods can information about abilities learned in one period be used later to attain more redistribution than is possible in a one period world when the government can commit to future policies and has the same discount rate as individuals intertemporal nonstationarity of tax schedules can lead to pareto improvements by relaxing lifetime self selection constraints analogous to randomization in a one period world more significant use of information is possible when the social discount rate is less than individuals rates the taxes converge over time to a nondistortionary schedule

international experience in the executive suite the path to prosperity attention is increasingly focused on the potential individual career and firm level benefits of international experience for upper level executives this research examines the relationships between ceo international experience ceo tenure firm internationalization succession events and corporate financial performance results indicate a significant interactive effect between ceo tenure and outside succession on ceo international experience in addition to a relationship with ceo international experience there are two additional interactive effects in the examination of corporate financial performance 1 ceo international experience and the degree of firm internationalization and 2 ceo international experience and ceo succession these interactive effects are evident in accounting and market indicators of corporate financial performance copyright 2000 john wiley sons ltd

preference representation and randomization in principal agent contracts abstract conditions on an agent s preferences that induce a demand for ex ante randomization are derived when the agent has constant absolute risk aversion in wealth but additive separable preferences in wealth and effort optimal contracts often require randomization under additive separability the principal can use randomization to exploit the interaction between incentive considerations and the agent s outside opportunities however when the agent has constant absolute risk aversion in wealth but multiplicative separable preferences participation and incentive considerations separate hence optimal contracts do not exhibit ex ante randomization

licensee technological potential and exclusive rights in international licensing a multilevel model granting of exclusive rights is an important consideration for firms using licensing as a mode of entry into foreign markets as exclusive contracts reduce licensors flexibility in a given market during the term of the agreement by granting exclusivity to a licensee with greater technological potential the exchange partners can increase the potential transactional value of the licensing agreement at the same time a licensee with strong technological potential will increase the threat of transactional hazards due to underinvestment and rent appropriation in this paper we develop and empirically test a model that evaluates the balancing of transactional value and transaction costs in exclusive licensing in particular we identify the conditions under which exclusive contracts are likely to be granted to foreign licensees with strong technological potential empirical results from a multilevel model based on 375 international licensing agreements of us firms in high technology industries during 1995 2008 show that licensees with a stronger technological potential are more likely to be granted exclusive rights in countries with strong intellectual property rights protection and in industries with a high rate of technological change but are less likely to be granted exclusive rights when there is a high degree of overlap between licensor and licensee products

incentives for information production and optimal job assignment with human capital considerations in this paper we examine the problem of inducing a manager to acquire information which is useful in determining his optimal job assignment but which might also adversely affect his market value we show that spot contracts are optimal and generate the first best effort level when the manager is risk neutral when the manager is risk averse the optimal contact consists either of a partial insurance contract against downward revisions in compensation or a competitive spot contract depending upon the nature of prior information

a new venture s optimal entry time abstract we formulate a model of the decision of when a new venture should enter the market based on the uncertain evolution over time of environmental volatility and market competition we characterize the performance maximizing time to enter the market and show how this entry time is affected by changes in the business environment by further focusing our modeling assumptions we are able to translate our time based criteria into environmental terms and propose that management set a target environment level that must be met before entering the market we also demonstrate that management should adjust this target over time to respond to changes in the business context this modeling feature is important because it allows for a better assessment of when to enter a market based on future performances we translate the model s theoretical insights into testable propositions and explore possible ways to operationalize these for empirical testing

move to the beat rhythms of change and firm performance this study examines how different rhythms of change relate to firm performance an explorative analysis of 67 european insurance companies between 1995 and 2004 reveals that corporate strategic changes occur in four distinct rhythms which are classified as either regular or irregular focused punctuated and temporarily switching subsequent quantitative analysis shows that companies that change regularly outperform those that change irregularly this finding prevails under different internal and external contingencies under different change characteristics and over time periods we also find that the rhythm and frequency of change have distinct performance effects our findings contribute to research on the change stability paradox by showing that a regular and sequential balance between change and stability is associated with long term success

existence of optimal mechanisms in principal agent problems we provide general conditions under which principal agent problems with either one or multiple agents admit mechanisms that are optimal for the principal our results cover as special cases pure moral hazard and pure adverse selection we allow multidimensional types actions and signals as well as both financial and non financial rewards our results extend to situations in which there are ex ante or interim restrictions on the mechanism and allow the principal to have decisions in addition to choosing the agent s contract beyond measurability we require no a priori restrictions on the space of mechanisms it is not unusual for randomization to be necessary for optimality and so it should be and is permitted randomization also plays an essential role in our proof we also provide conditions under which some forms of randomization are unnecessary

why reputation favors joint ventures over vertical and horizontal integration a simple model abstract this paper investigates the effect of reputation in a model where two parties make noncontractable contributions to an economic undertaking it is shown that the optimal allocation of ownership between the parties is more similar in a repeated than in a one shot version of the model this implies that unified ownership and reputation are substitutes low discount rates and repeated investment decisions thus favor subcontracting and joint venture arrangements of the type commonly observed in japanese industry while full integration is more likely to be optimal when reputational forces are weak

a reduced form optimal nonlinear income tax problem abstract for a finite population with quasilinear preferences it is shown how mirrlees optimal nonlinear income tax problem can be simplified to a reduced form problem involving only the allocation of the consumption good this result is a finite version of a proposition established in the continuum by s lollivier and j c rochet

firm and industry as determinants of executive perceptions of the environment this study examines variation in top executives environmental perceptions within firms and within industries more specifically we investigate how industry and organizational membership affect top executives perceptions of five environmental attributes results indicate that significant homogeneity of perceptions exists within firms and also within industries approximately 40 percent of the variance in individual top level executives perceptions of aspects of their respective organization s environment is explained by their organizational and industry membership implications of the findings for strategic management and organization theory and for future research are presented 1998 john wiley sons ltd commonality of views about a firm s environment among a firm s top managers is frequently discussed but there is little empirical evidence to validate the notion we do not know whether homogeneity of perceptions within top management teams tmts is more imaginable than real an assumed executive team property corresponding to what common sense says should be the case further if there is within firm commonality of views concerning the environment we do not know whether this might not actually be an industry effect the purpose of the research reported here is to assess the degree of homogeneity in executives perceptions within firms and within industries and to compare organizational vs industry membership as explanations of the relative proportion of agreement about organizational environments one of the most compelling reasons to examine the homogeneity of top managers environmental perceptions within firms and within industries

technology based adolescent firm configurations abstract managers and stakeholders of entrepreneurial firms have an obvious vested interest in understanding those factors that contribute to the success or failure of such firms insight into strategic and contextual factors related to success for 162 adolescent 5 12 years old firms competing within a variety of rapidly changing technology based industries results from this study analyses focus on pinpointing patterns of strategy context and performance in the first stage of analysis six nonmutually exclusive dimensions of strategy were identified 1 technology product leader 2 product market breadth 3 marketing sales expertise 4 quality service 5 customer alliances and 6 specialization second cluster analysis was conducted to group the firms on their overall pattern of strategic emphasis six groups clusters were identified each group corresponded with one of the following four strategy quadrants 1 defenders k specialists 2 entrepreneurs r specialists 3 analyzers k generalists and 4 prospectors r generalists subsequent analysis of variance demonstrates significant differences across the six clusters on three contextual variables environmental instability stage of product development and firm age and on six outcomes rd direct sales and support these firms compete on their reputation in their targeted market segment their ability to find and sell to a narrow range of customers and customer service this strategy occurred in relatively stable and mature industries and resulted in high performance in operating efficiency market development financial stability and overall performance sales growth was average cluster 2 n 12 spin offs reliant on contracts with original employers these firms represent an outsourcing opportunity for larger companies not desiring to develop in house expertise in a product area they are the youngest and the smallest and have products in the earliest stage of development their environment is relatively stable given the dependence of their large customers for their product they are average performers except for having relatively high operating efficiency they trade high performance for the security of long term arrangements with major clients cluster 3 n 39 marketing and sales expertise targeted at narrow market these firms likely assemble and package others technological products or if they manufacture follow the technological developments of their competitors they create value through their marketing and sales expertise and effort and through customer service support they face average environmental instability and stage of product development this strategy however creates insufficient value added for the long term viability of the firms they have low performance on sales growth market development operating efficiency and financial stability and also have low expectations for their future prospects cluster 4 n 23 technology leaders with a high degree of specialization quality and service these firms differentiate their products based on technology leadership in a specialized product domain where high quality and service are emphasized they compete in relatively unstable environments attributable to rapid technological change and are in an early stage of product development they are relatively small consistent with their narrow product domain they have the highest performance on r d results sales growth and future prospects and are very high on overall performance cluster 5 n 24 lacking in a clear strategic profile these firms lack any clear pattern of strategic activity although faced with average environmental instability these firms compete in the most mature product areas therefore while other firms are becoming more entrenched in their competitive positions advantages these firms are floundering they are poor performers and lack long term viability they score low on sales growth market development r d results operating efficiency and overall performance cluster 6 n 46 broad and aggressive product market reach with relatively high quality and service these firms pursue a full line of products sold through a wide variety of methods this approach evolved in a highly unstable environment due to rapid change and growth yet has a large number of growth opportunities they are highly successful in market development sales growth and financial stability they are also highly optimistic about their future prospects this identification of firm configurations can help managers and stakeholders recognize the relationships among strategy context and performance for young technological firms this should lead to more effective managerial decisions on strategic and contextual issues leading to better performance

the development and use of machine tools in historical perspective abstract improvements and diffusion of machine tools have had a major impact on productivity in manufacturing industry since the industrial revolution the impact has been both direct and indirect the direct impact consists of rising labor productivity through the use of faster more accurate more mechanized machines and of the higher capital productivity through higher operating rates greater reliability and higher utilization rates the indirect impact arises as the use of new or improved machine tools has necessitated or facilitated organizational changes affecting both labor capital raw materials and energy the magnitude of these impacts has varied over the years with the areas of application as new production methods have made possible entirely new products or lowered the cost of existing products sufficiently to create new markets the first part of the paper contains a review of the historical development of machine tool technology since the industrial revolution paying particular attention to the role of interaction between producers and users of machine tools the second part focuses on the way in which recent development differs from that in earlier periods in particular it is found that the major changes in machine tool technology from the so called american system of manufactures in the early 19th century to the development of detroit automation in the 1950s have tended to improve mass production methods by contrast the development of numerical control beginning in 1948 has opened up the possibility of extending industrial production methods and automation to areas previously characterized more by handicraft methods even though this technology is not yet fully utilized it is clear that the economics of industrial production has been revolutionized by the cost reduction of small scale production relative to large scale and the degree of flexibility offered by the technology the third section of the paper deals with the present development trends particularly discussing the increasing importance of flexibility and the shifting emphasis from development of individual pieces of machinery to integration and control of entire manufacturing processes i a through the use of industrial robots the reasons for the need for greater flexibility in manufacturing are also identified

on the optimal taxation of capital income abstract we show that in models in which labor services are supplied jointly with human capital the chamley and judd result on zero capital income taxation in the limit extends to labor taxes as long as accumulation technologies are constant returns to scale moreover for a class of widely used preferences consumption taxes are zero in the limit as well however we show by the construction of two examples that these results no longer hold for certains types of restrictions on tax rates or if there are profits generated journal of economic literatureclassification numbers e62 h21

how to play the names game patent retrieval comparing different heuristics patent statistics represent a critical tool for scholars statisticians and policy makers interested in innovation and intellectual property rights many analyses are based on heterogeneous methods delineating the inventors or firms patent portfolios without questioning the quality of the method employed we assess different heuristics in order to provide a robust solution to automatically retrieve inventors in large patent datasets patstat the solution we propose reduces the usual errors by 50 and casts doubts on the reliability of statistical indicators and micro econometric results based on common matching procedures guidelines for researchers ttos firms venture capitalists and policy makers likely to implement a names game or to comment on results based on a names game are also provided

economic reforms and the competitive environment of firms this article lays out several hypotheses to establish a specific link between structural economic reforms and the competitive environment of firms we test our hypotheses on data from the steel industry in three post reform economies we find that economic reforms tend to have a positive effect on environmental munificence but they also produce short term instability in the environment we elaborate on the implications of our results for managers policymakers and scholars copyright 2007 oxford university press

using cost observation to regulate firms the paper emphasizes the use of accounting data in regulatory or procurement contracts when the supplier 1 has superior information about the cost of the project and 2 invests in cost reduction the main result states that under risk neutrality the supplier announces an expected cost and is given an incentive contract linear in cost overruns this optimal contract moves toward a fixed price contract as the announced cost decreases an investment choice is then introduced and the use of a rate of return regulation is studied

dynamism capital structure and performance in a sub saharan economy extending the institutional difference hypothesis extant research examining the capital structure performance relationship has been undertaken primarily in developed economies these studies integrate agency theory considerations with the contingency perspective and suggest a positive interaction between sector dynamism equity and performance our study extends this research stream by examining the capital structure performance link in a sub saharan economy an underresearched but economically emerging region using logic undergirding a substantial stream of institutional theory based studies that we term the institutional difference hypothesis we argue that the implications of the capital structure performance relationship are contingent on the extent of national level institutional underdevelopment taking into account institutional differences between developed economies and those in the sub saharan region we hypothesize a negative interaction between sector dynamism equity and firm performance in sub sahara using longitudinal data from ghanaia

as the left foot follows the right the dynamics of strategic and structural change this study empirically tested the contingency relationship between strategy and structure proposed by chandler and others with hypotheses linking the probability timing and magnitude of changes i

intertemporal incentives under loss aversion this paper studies the intertemporal allocation of incentives in a repeated moral hazard model with reference dependent preferences as in k oszegi and rabin 2009 besides consumption utility the agent experiences utility from the change in his beliefs about present and future eort and income when eort plans are rational the prospect of being disappointed by the outcome realization equals that of being pleasantly surprised and hence the loss averse agent is on net hurt by news in contrast to the prediction with classical preferences but consistent with real world contracts if consumption utility is not too concave and news about present income carries suciently larger weight in utility than news about future income a contract setting a current

an examination of opportunistic action within research alliances evidence from the biotechnology industry abstract like a photographer trying to take a perfect picture an entrepreneur trying to increase the odds of survival must learn very quickly that focus is everything and what demands an entrepreneur s immediate focus is the development of new products entrepreneurial ventures depend on the rapid creation of new products to gain access to early cash flows create legitimacy grab early market share and increase their odds of survival schoonhoven eisenhardt and lymman 1990 however the increasing costs and complexity of new product development are making it difficult for entrepreneurial ventures to contain the assets needed for successful r d within their boundaries forcing them to reach beyond their borders to access resources barley et al 1992 document the use of more than 900 contractual research agreements within the biotechnology industry alone recent research has also found a positive relationship between the use of alliances in the r d process and the rate of new product development deeds and hill 1996 shan walker and kogut 1994 this particular study focuses on the use of relational contracts in the r d process and extends the prior work on relational contracts to create an explanatory model of the deterrents to opportunism within a relational contract the article begins with a discussion of the traditional modes of deterring opportunism and of modes of deterring opportunism based on the development of a strong cross boundary relationship from this discussion hypotheses are derived that relate certain characteristics of the alliance frequency of communication strength of contractual deterrents hostage investments age of the relationship etc to the level of opportunism within the relationship these hypotheses are then tested on a sample of 109 research alliances in the biotechnology industry we found significant evidence that a strong relationship between the partners serves as a much more effective deterrent to opportunistic action than the creation of hostage investments or contingent claims contracts in particular the results for frequency of communication and the background of the firm highlight the importance of the top management team s understanding and involvement in the management of research alliances the strong results for background congruence indicates the importance of shared expectations and understandings between the partners the strong empirical results for the hypothesized u shaped relationship between age and opportunism provide support for the existence of both a honeymoon period in the relationship and a liability of adolescence among research alliances the data also suggest that the honeymoon period for an alliance will last about 4 6 years we also find that the honeymoon period for alliances that are of little importance to the future of the firm is only 4 1 years and in our sample of alliances that were important to the future of the firm the honeymoon period extended from 4 6 years to 6 1 years

mitigating risk in international mergers and acquisitions the role of contingent payouts previous internationalization studies have focused on the entry modes employed by multinational firms but have not considered the contractual heterogeneity that underlies each mode it is important to examine these contractual details as the firm may be able to obtain some of the benefits typically associated with one entry mode while selecting another in the case of international mergers and acquisitions m as a key contractual variable is whether the parties agree to a performance contingent payout structure which can mitigate the risk of adverse selection in this paper we examine the antecedents of contingent payouts in the form of earnouts and stock payments the results indicate that firms lacking international and domestic acquisition experience turn to contingent payouts when purchasing targets in high tech and service industries firms tend to avoid contingent payouts in host countries with problems with investor protection and legal enforceability

noncontrollable costs and responsibility accounting an important characteristic of management control systems is the use of responsibility accounting as baiman 1982 p 197 notes responsibility accounting states that a person should be evaluated only on the basis of those factors that he controls this is usually interpreted to mean that a person should be evaluated only on the basis of those outcomes that he affects emphasis in the original this notion gives rise to the desire to distinguish between controllable and noncontrollable costs because the latter presumably should not be used to evaluate an individual s performance for example solomons 1965 p 83 states that it is almost a self evident proposition that in appraising the performance of divisional management no account should be taken of matters outside the division s control however this interpretation of responsibility accounting is often violated in practice for example we often observe a division manager who has profit responsibility for his division being evaluated and compensated on the basis of his division s capacity costs over which he exercises no control in this paper we reexamine the process of constructing performance

cultural diversity and the performance of multinational firms we test the hypothesis that culturally related international diversification will have a positive impact on firm performance and that the opposite will be true for culturally unrelated globalization cultural diversity for fortune 500 firms was used to predict performance over a ten year period 1985 1994 controlling for several organizational and industry characteristics regression tests using nine indicators of cultural diversity revealed no significant cultural effects alternate interpretations are offered

parallelism in information production moral hazard and relative performance evaluations we analyse how to design incentive schemes for agents producing information the agents may for example be divisional managers market researchers or consultants financial analysts corporate auditors research scientists or political pollsters we show that an agent should be compensated more for making a correct rather than an incorrect prediction and for agreeing rather than disagreeing with colleagues depending on the environment correctness should be compensated more or less than agreement also compensation should increase with the difficulties of making correct or conforming predictions one consequence of the result is that it may sometimes reduce a principal s total incentive costs to engage with more information producers performing parallel investigations because the possibility to make relative performance evaluations of the agents may substantially reduce the costs of motivating the agents in performing their duties as desired

environmental scanning behavior in a transitional economy evidence from russia we examined the effects of perceived strategic uncertainty in seven environmental sectors on the scanning behavior of russian executives strategic uncertainty was highest in sectors influenced by

ceo hubris and firm risk taking in china the moderating role of managerial discretion this study linked ceo hubris to firm risk taking and examined the moderating role of managerial discretion in this relationship drawing on upper echelons theory and behavioral decision theory we

borrowing from pui to pay pom multiple borrowing and over indebtedness in rural thailand summary rural financial markets have grown rapidly in asian emerging market economies thus contributing to economic development and the reduction of poverty at the same time however the level of indebtedness of rural households has increased making households more vulnerable to shocks one of the reasons for rising household debt is the ease of borrowing simultaneously from a growing number of lending institutions this paper addresses two major questions first does borrowing from multiple sources increase rural households risk of over indebtedness second do over indebted rural households refinance their outstanding loans through multiple borrowing running the risk of becoming trapped in a debt cycle employing a dynamic random effects bivariate probit model for a unique set of longitudinal household panel data from northeast thailand this study examines the bidirectional relationship between over indebtedness and multiple borrowing to determine to what extent rural households become trapped in debt cycles on the one hand the results indicate that households in northeast thailand take on multiple loans which further increases their risk of becoming over indebted on the other hand our model results do not confirm the widespread notion that over indebted rural households use multiple loans to refinance unpayable debts

randomization in optimal income tax schedules abstract the optimal income tax problem is one of many problems in economics for which a randomized allocation may be desirable for a two class economy we characterize optimal random tax schedules and present necessary and sufficient conditions for local randomization either to be pareto improving or to extend the constrained pareto frontier we present another sufficient condition for nonlocal randomization to be pareto improving which need not violate ex post or ex ante horizontal equity lastly an example demonstrates that the gains from randomization may be large

entrepreneurs optimism and new venture performance a social cognitive perspective previous research indicates that entrepreneurs are generally high in dispositional optimism the tendency to expect positive outcomes even when such expectations are not rationally justified findings of the current study demonstrate a negative relationship between entrepreneurs optimism and the performance revenue and employment growth of their new ventures past experience creating ventures and industry dynamism moderated these effects strengthening the negative relationship between entrepreneurs optimism and venture performance these findings illustrate the benefits of applying a social cognitive perspective toward efforts to understand key aspects of the new venture creation and development process

the emergence of an educational tool industry opportunities and challenges for innovation in education the paper addresses two issues one concerns the general conditions and procedures involved in the emergence of a tool industry tool industries emerge and evolve as a collection of capital goods and tool inventors and manufacturers one of our goals is to use some of the works on historical cases to build a heuristic framework concerning the main conditions for the emergence and development of tool industries the other issue is more factual and involves the question whether a tool industry is today emerging in the area of education the paper describes the emergence of a population of firms specialised in developing and commercialising educational tools and instructional technologies and discuss whether this trend can be seen as part of the solution to the innovation deficit and cost disease problems in this sector

an analysis of the principal agent problem most analyses of the principal agent problem assume that the principal chooses an incentive scheme to maximize expected utility subject to the agent s utility being at a stationary point an important paper of mirrlees has shown that this approach is generally invalid we present an alternative procedure if the agent s preferences over income lotteries are independent of action we show that the optimal way of implementing an action by the agent can be found by solving a convex programming problem we use this to characterize the optimal incentive scheme and to analyze the determinants of the seriousness of an incentive problem

the multiperiod principal agent problem in repeated principal agent models long term contracts can improve on short term contracts only if they commit either principal or agent to a payoff in some future circumstance lower than could be obtained from a short term contract negotiated if that circumstance occurs we show that efficient contracting under moral hazard alone does not require long term commitment from the principal provided a short term contract can punish the agent sufficiently in a sense made precise it requires no commitment from the agent either then linking payoffs in one period to outcomes in previous periods does not improve the tradeoff between incentives and risk sharing

on the relation between conservatism in accounting standards and incentives for earnings management this paper studies the role of conservative accounting standards in alleviating rational yet dysfunctional unobservable earnings manipulation we show that when accounting numbers serve both the valuation role in which potential investors use accounting reports to assess a firm s expected future payoff and the stewardship role in which current shareholders rely on the same reports to monitor their risk averse manager current firm owners have incentives to engage in earnings management such manipulation reduces accounting numbers stewardship value and leads to inferior risk sharing we then show that risk sharing and hence contract efficiency can be improved under a conservative accounting standard where absent earnings management accounting earnings represent true economic earnings with a downward bias compared with under an unbiased standard where absent earnings management accounting earnings represent true economic earnings without bias

learning to compete in a transition economy experience environment and performance does organizational learning as measured by experience in a host country affect international expansion performance if so does such a relationship between experience and performance hold over time how do the environmental forces in the host country affect such a relationship focusing on organizational learning by multinational enterprises mnes operating in a transition economy this study answers these three critical questions by exploring the relationships among experience environment and performance at the subsidiary level based on a recent survey of 108 mne subunits operating in china we find that the intensity and diversity of host country experience is an important predictor of subunit performance while the positive effect of the intensity of experience on performance diminishes over time the impact of the diversity of experience on performance remains unchanged moreover for mnes experiencing greater environmental dynamism complexity and hostility there is a stronger positive relationship between experience and performance

institutional polycentrism entrepreneurs social networks and new venture growth what is the interrelationship among formal institutions social networks and new venture growth drawing on the theory of institutional polycentrism and social network theory we examine this question using data on 637 entrepreneurs from four different countries we find the confluence of weak and inefficient formal institutions to be associated with a larger number of structural holes in entrepreneurial social networks while the effect of this institutional order on the revenue growth of new ventures is negative a network s structural holes have a positive effect on revenue growth furthermore the positive effect of structural holes on revenue growth is stronger in an environment with a more adverse institutional order i e weaker and more inefficient institutions the contributions and implications of these findings are discussed abstract from author