When to Carry Eccentric Products? Optimal Retail Assortment under Consumer Returns

To understand whether retailers should consider consumer returns when merchandising, we study how the optimal assortment of a retailer is influenced by its return policy. The retailer selects its assortment from an exogenous set of horizontally differentiated products. Consumers make purchase and keep/return decisions in nested multinomial logit fashion. Our main finding is that the optimal assortment has a distinct structure for relatively strict return policies: it is optimal to offer a mix of the most popular and most eccentric products when the refund amount is sufficiently low, which can be viewed as a form of risk sharing between the retailer and consumers. In contrast, if the refund is sufficiently high or when returns are disallowed, the optimal assortment is composed of only the most popular products (a common finding in the literature). We provide preliminary empirical evidence for one of the key drivers of our results: more eccentric products have higher probability of return—conditional on purchase. In light of our analytical findings and managerial insights, we conclude that retailers should take returns into account when merchandising.     

Returns to Schooling in Spain: How Reliable are Instrumental Variable Estimates?

This paper studies the ordinary least–squares (OLS) and instrumental variable (IV) estimates of the returns to schooling for male workers in Spain. OLS estimates are often biased due to the endogeneity of schooling, measurement errors or omitted variables. Proper IV estimates correct this bias. The reliability of family background, natural experiments (based on changes in the education system and season of birth) and the availability of a college in the province is checked using Spanish data. The results suggest that background and college availability are valid instruments and that the IV estimates of the returns to schooling are higher than OLS estimates. These results are in line with the majority of previous results in the literature.     

How Responsive Is Investment in Schooling to Changes in Redistributive Policies and in Returns?

This paper uses an unusual pay reform to test the responsiveness of investment in schooling to changes in redistribution schemes that increase the rate of return to education. We exploit an episode where different Israeli kibbutzim shifted from equal sharing to productivity‐based wages in different years and find that students in kibbutzim that reformed earlier invested more in high school education and, in the long run, also in post‐secondary schooling. We further show that the effect is mainly driven by students in kibbutzim that reformed to a larger degree. Our findings support the prediction that education is highly responsive to changes in the redistribution policy.     

Changes to National Practitioner Data Bank reporting--effective or not?

Unless a physician has been living in another galaxy far, far away with Luke Skywalker, he or she is aware of the National Practitioner Data Bank. On March 31, 1994, the Department of Health and Human Services (HHS) announced that each practitioner can now place in the Data Bank a six-hundred character "rebuttal" of a report, without formally disputing the factual accuracy of the report. Does this change make the Data Bank fair? Not really. It is a step in the right direction, but further reform is needed. "Health Law" is a regular feature of Physician Executive contributed by Epstein Becker & Green. Mark Lutes of the law firm's Washington, D.C., offices serves as editor of the column.     

Off to Plan or Out to Lunch? Relationships between Design Characteristics and Outcomes of Strategy Workshops

Strategy workshops, also known as away days, strategy retreats and strategic ‘off‐sites’, have become widespread in organizations. However, there is a shortage of theory and evidence concerning the outcomes of these events and the factors that contribute to their effectiveness. Adopting a design science approach, in this paper we propose and test a multidimensional model that differentiates the effects of strategy workshops in terms of organizational, interpersonal and cognitive outcomes. Analysing survey data on over 650 workshops, we demonstrate that varying combinations of four basic design characteristics – clarity of goals and purpose, routinization, stakeholder involvement and cognitive effort – predict differentially these three distinct types of outcomes. Calling into question conventional wisdom on the design of workshops, we discuss the implications of our findings for integrating further the strategy process, strategy‐as‐practice and strategic cognition literatures, to enrich understanding of the factors that shape the nature and influence of contemporary strategic planning activities more generally.     

Strategic vision or strategic con?: Rhetoric or reality?

Major companies devote considerable effort to communicating corporate visions and missions. Yet three recent surveys suggest that much of this effort has been counter-productive. A gap has emerged between rhetoric and reality. Arenas of confrontation have arisen between directors and managers, head offices and business units, holding companies and their subsidiaries, and between specialists and generalists. A widespread desire for corporate transformation is not matched by understanding of how to bring it about. The lack of top management commitment and of communication skills are major barriers to change. More competent directors and more effective boards are needed. The article suggests key roles for the chairman and the chief executive. It examines how best to share a compelling vision, and identifies a requirement for new attitudes and approaches to communication.     

Doing or being?

The founder of Aikido, Morihei Ueshiba, would occasionally distill the essence of the art into three simple shapes--a circle, a square, and a triangle. These are three basic ways of dealing with what's coming at you. The square is the simplest. It is about, essentially, doing nothing. The saying here is from the old spiritual: "I shall not be moved." You meet the challenge head on. The triangle is about forward motion--attack, cutting right to the heart of what is coming at you, or cutting right past it to the space beyond. The circle is often the most interesting space. The circle is not about standing ground or cutting through. The circle is about dancing with whatever is headed your way. The real danger lies in being stuck in any one mode--perpetually intransigent, always flailing away in attack mode, or forever slip-sliding through one dance step after another. It is only when our response is embodied in who we are that we will have the power truly to lead other people.     

Hold or fold?

This article examines some of the problems of the health care organizations we serve and that support us. While external problems can besiege an organization, the fundamental building block for success is to develop physician buy-in and a well-functioning team. The author describes how his IPA failed because the physicians in his organization didn't bond sufficiently, and for a sustained period, to carry out business operations. What are the warning signals that might help you decide whether to stay or move on? An IPA must have: (1) A clearly articulated vision of what success will look like, one that is accepted by its members; (2) effective leadership; (3) clear evidence of adaptability and flexibility; (4) financial stability; and (5) good data available to physicians. There can be other evidence of trouble you need to watch for. In some areas, hospitals and health plans are hostile to physician initiatives. Don't rely on politically motivated decisions--they are too easily changed. If you plan to be a leader for your physician organization, focus on creating or revising the internal architecture of the group.     

Are Married Women in Turkey More Likely to Become Added or Discouraged Workers?

Abstract. The purpose of this study is to examine the labour market outcomes of married couples to find out which of the added and discouraged worker effects is dominant in urban Turkish families. Using household labour force survey and province‐level data from 1988 and 1994, we look for evidence regarding the dependency of the labour force participation decisions of wives and the employment status of their husbands. On yearly and pooled samples of married couples in their prime ages, bivariate probit estimates indicate that the two decisions are negatively correlated. However, the correlation is found to be statistically significant only in the economic crisis year of 1994. We interpret this finding to mean that the added worker effect dominates the discouraged worker effect.     

Governance Choices for Corporate Social Responsibility: to Contribute,Collaborate or Internalize?

Within a competitive business environment where resources are limited, it is increasingly important for senior management to make every investment count. Measuring ‘return on investment’ occurs at every level of operations—so why not also in the arena of Corporate Social activity? Until now, much research has focused on finding the link between corporate social responsibility (CSR) and increased business performance. Researchers have not examined the cost implications associated with the different forms of governance utilized by companies to implement their CSR activities, e.g., outsourcing through charitable contributions, developing an in-house program, or creating a more collaborative model, which benefits both the company and the partner nonprofit organization. Careful examination and evaluation of these costs will help senior management choose the governance structure that will maximize the benefits they reap from CSR activities.Drawing upon insights from organizational economics, this article develops a framework to compare the alternative modes of CSR governance and identifies the key drivers that affect governance choice, including associated costs. Most importantly, it provides a decision-making tool that can guide senior management in this vital choice as a way to contribute to the competitive advantage of the firm.     

Anticipating or Accommodating to Public Concern? Risk Amplification and the Politics of Precaution Reexamined

Regulatory use of the precautionary principle (PP) tends to be broadly characterized either as a responsible approach for safeguarding against health and environmental risks in the face of scientific uncertainties, or as “state mismanagement” driven by undue political bias and public anxiety. However, the “anticipatory” basis upon which governments variably draw a political warrant for adopting precautionary measures often remains ambiguous. Particularly, questions arise concerning whether the PP is employed preemptively by political elites from the “top down,” or follows from more conventional democratic pressures exerted by citizens and other stakeholders from the “bottom up.” This article elucidates the role and impact of citizen involvement in the precautionary politics shaping policy discourse surrounding the U.K. government's “precautionary approach” to mobile telecommunications technology and health. A case study is presented that critically reexamines the basis upon which U.K. government action has been portrayed as an instance of anticipatory policy making. Findings demonstrate that the use of the PP should not be interpreted in the preemptive terms communicated by U.K. government officials alone, but also in relation to the wider social context of risk amplification and images of public concern formed adaptively in antagonistic precautionary discourse between citizens, politicians, industry, and the media, which surrounded cycles of government policy making. The article discusses the sociocultural conditions and political dynamics underpinning public influence on government anticipation and responsiveness exemplified in this case, and concludes with research and policy implications for how society subsequently comes to terms with the emergence and precautionary governance of new technologies under conflict.     

Build-operate-transfer Outsourcing Contracts in Services – Boon or Bane to Emerging Market Vendor Firms?

Build-operate-transfer (BOT) contracting has been widely used in the engineering and construction industry and has recently spread into the service industry domains. Notably, service provider firms from emerging markets, India in particular, are now offering BOT outsourcing contracts in which the client firms are allotted call options, i.e. the right, but not the obligation, to transfer pre-specified assets from the service provider. As such, BOT outsourcing contracts seems to be an interesting contractual novelty that combines the advantages of outsourced and captive offshoring operations. In this paper we investigate under which circumstances a BOT outsourcing contract (i.e. a contract where the client firm exercises its call option) is beneficial, or the opposite, to the emerging market vendor firm. Whether BOT outsourcing contracts are boon or bane to an emerging market vendor basically hinges, we submit, on its internal diffusion of client-specific knowledge and capabilities prior to the execution of the call option.     

The Performance of MNE Subsidiaries in China: Does It Matter to Be Close to the Political or Business Hub?

This study examines the impact of distance on financial performance of multinational enterprise (MNE) subsidiaries in China. We hypothesized and found that MNE subsidiaries performed better when located closer to the country's business hub, but performed less well when located closer to the political hub. We also hypothesized that distance effects are moderated by subsidiary size, subsidiary network, and state capital contribution to subsidiary. Our findings were based upon 45,248 MNE subsidiaries with location and geographic distance measured at the prefectural level in China.     

Senior physician slowdown-problem or opportunity?

Examine a plan for physician slowdown or relief of call and learn how it can extend the professional lives of experienced physicians at a time when practices are facing a physician shortage.