Can Environmental Insurance Succeed Where Other Strategies Fail? The Case of Underground Storage Tanks

Private risk reduction will be socially efficient only when firms are liable for all the damage that they cause. We find that environmental insurance can achieve social efficiency even when two traditional policy instruments—ex post fines and risk management mandates with ex ante fines—do not. Inefficiency occurs with ex post fines, when small firms declare bankruptcy and escape their liabilities, limiting the incentives from this policy tool. Firms ignore mandates to implement efficient risk management because regulatory agencies do not have sufficient resources to monitor every firm. The evolution of the U.S. Environmental Protection Agency's and states’ underground storage tank programs suggests that mandating environmental insurance can address inefficiency due to small firms declaring bankruptcy. Comparing insurance mandates to risk management mandates, the burden on a regulator is lower if all it has to do is to confirm that the firm has insurance rather than that the firm has actually, and effectively, implemented required management practices. For underground storage tanks, we show that insurance lowered toxic releases.     

Participative planning at Swiss reinsurance

Reinsurance—the insurance of insurance companies—is very much a behind-the-scenes business. It is not surprising to see that planning seminars and planning literature rarely touch on the problems of developing and implementing corporate planning models in this field. The Swiss Reinsurance planning example might show how sources from various industries and ‘doctrines’ were blended together and built to form a compact medium-term planning ‘package’ for a very specific type of service business.     

规避农副产品原材料产出不确定风险的商业保险策略

为了保证产品质量、降低生产成本，许多农副产品制造商选择自己种植原材料以满足农副产品的加工生产。然而，农作物的产出易受不利事件（如各种自然灾害）的影响而具有不确定性。这种不确定性可能导致最终产品产出不足，严重时甚至引发财务危机。为了应对潜在风险，农副产品制造商可向金融机构购买商业保险。本文建立了单周期农副产品制造商的计划产量决策模型，通过研究制造商购买商业保险的边界条件及最优商业保险策略，分析商业保险策略在制造商规避原材料产出不确定风险时所具有的价值。研究结果表明：（1）只有保费的安全因子低于外部融资的单位惩罚成本时，制造商才会购买商业保险；（2）最优商业保险策略与计划产量无关；（3）最终产品单位净收益越低，商业保险的价值反而越高。     

感知的创业激情、 信任与员工创新行为关系研究

实践中, 制造商可通过商业保险策略降低因零部件质量问题造成的经济损失.然而, 商业保险购买成本较高且可能导致供应商轻视质量问题, 放弃质量改进.为此, 本文基于完全信息下单周期两级供应链的采购合约决策模型, 研究制造商如何利用商业保险管理供应链质量风险的问题.通过比较研究, 找出商业保险策略的实施条件, 并给出最优采购合约及商业保险策略.研究结果表明: (1) 当供应商的企业规模较小、抗风险能力较低时, 商业保险策略可完全消除风险承受能力对双方交易的制约, 促进双方达成交易; (2) 当供应商的企业规模较大、抗风险能力较高时, 制造商可利用商业保险策略降低零部件采购价格, 提高期望利润; (3) 在商业保险策略下, 制造商的最优商业保险策略是全额投保; (4) 商业保险的实施不一定造成零部件质量水平的下降.当质量成本或供应商的风险承受能力较低时, 商业保险策略与质量改进之间具有互补效应.当风险承受能力和质量成本均比较高时, 商业保险策略与质量改进之间具有替代效应.     

Competitive strategies in the Dutch insurance industry

Strategies formulated by companies are always an anticipation of or a reaction to environmental changes. This article describes the changes that have occurred in the environment of Dutch insurance companies. The well-known Porter model is used to describe the developments in the industry over a time-span of more than 10 years. These developments have resulted in a less attractive business environment. The larger Dutch insurance companies have reacted to this new environment in four major ways—internationalization; concentration; moving closer to the customer; acquiring bank-like activities.     

On Some Polyhedra Covering Problems

Let P ⁰, P ¹ be two simple polyhedra and let P ² be a convex polyhedron in E ³. Polyhedron P ⁰ is said to be covered by polyhedra P ¹ and P ² if every point of P ⁰ is a point of P ¹ P ². The following polyhedron covering problem is studied: given the positions of P ⁰, P ¹, and P ² in the xy-coordinate system, determine whether or not P ⁰ can be covered by P ¹ P ² via translation and rotation of P ¹ and P ²; furthermore, find the exact covering positions of these polyhedra if such a cover exists. It is shown in this paper that if only translation is allowed, then the covering problem of P ⁰, P ¹ and P ² can be solved in O(m ² n ²(m + n)l)) polynomial time, where m, n, and l are the sizes of P ⁰, P ¹, and P ², respectively. The method can be easily extended to the problem in E ^d for any fixed d > 3.     

Strategic benchmarking at ICI Fibres

Learning from comparison has two generic forms in business, at the strategic or business level, and at the level of individual processess. Most literature has discussed the ‘micro’ form—focused on specific practices or processes. The case of ICI Fibres shows that:

• 1.1. business performance benchmarks are just as measurable as those for processes,
• 2.2. there is a clear hierarchy of strategic/operating/ micro-process benchmarks which managers need to understand,
• 3.3. effective strategic management brings together benchmarks for business strengths and benchmarks for process capabilities,
• 4.4. you cannot benchmark your way to profit with the wrong strategy.

     

E‐Business: A Review of Research Published in Production and Operations Management (1992–2008)

We review, classify, consolidate, and synthesize the contributions to the expanding field of e‐business that have been published in Production and Operations Management. We classify e‐business research in the following four categories: (1) e‐auctions, (2) radio frequency identification, (3) e‐business system design, and (4) competition, conflict, collaboration, and coordination (C⁴ in e‐business). We identify important research themes, research methodologies, and research techniques within each of these categories. We also provide directions for future research and discuss the managerial implications of the e‐business research reported in our paper.     

A parameterized perspective on packing paths of length two

We study (vertex-disjoint) packings of paths of length two (i.e., of P ₂’s) in graphs under a parameterized perspective. Starting from a maximal P ₂-packing ℘ of size j we use extremal combinatorial arguments for determining how many vertices of ℘ appear in some P ₂-packing of size (j+1) (if such a packing exists). We prove that one can ‘reuse’ 2.5j vertices. We also show that this bound is asymptotically sharp. Based on a WIN-WIN approach, we build an algorithm which decides, given a graph, if a P ₂-packing of size at least k exists in time O^*(2.448^3k)\mathcal{O}^{*}(2.448^{3k}) .     

基于混合DEA模型的医药行业上市公司经营效率相对有效性评价

DEA模型作为一种客观的多指标决策方法应用十分广泛.但目前使用频率较高的两种通用模型C²R模型和C²GS²模型,在单独使用时都有比较大的局限性,评判结果往往无法令人满意;针对这一问题,本文提出构建混合DEA模型,并应用混合DEA模型对医药上市公司的经营效率相对有效性评价进行实证分析,阐述了混合DEA模型的使用方法,验证了评判方法的可行性和科学性.     

Natural Capitalism: Path to Sustainability?

In this article, the Lovins’² explain what is meant by Natural Capitalism, four principles that enable business to behave responsibly towards both nature and people while increasing profits, inspiring their workforce and gaining competitive advantage. It combines radically increased resource productivity; closed-loop, zero-waste, nontoxic production; a business model that rewards both; and reinvestment in natural capital. The article describes how, even today, when nature and people are typically valued at zero, protecting and restoring nature, culture and community can be far more profitable than liquidating them.     

Extending the pursuit of flow (lean) management to encompass sales,general and administrative functions

Abstract

Operations management tends to be treated independent of other business functions—the silo syndrome. In this article, we call for operations management (OM) to broaden its perspective by strengthening linkages with other functions of the business, thereby to realize competitive advantages and strategic integration, as well as to avoid resource misallocation. The issues involved are presented and tested by examining the effects of intermeshing sales, general and administrative (SG&A) expenditures with customer-centred flow manufacturing, the latter being measured by system inventory as surrogate for customer lead time. In doing so, we designate trends in total inventory as the independent variable—representative of a dominant target of flow/lean management—and trends in SG&A expenditures as the output variable. The research tasks are enabled by inventory and SG&A data being widely available in companies’ audited financial statements. Such hard data offers methodological and validation advantages over, say, opinion-based survey research. The research adds bulk to existing flow/lean management theory and can be helpful in inducing primary business functions (e.g. OM, finance, sales and marketing) and sub-functions (such as SG&A and management accounting) to engage in cross-functional efforts in the cause of flow-oriented process improvement and company competitiveness.     

The potential for recall insurance to improve food safety

This paper explores the food safety implications of insurance products that compensate for business losses when food contamination causes a processing firm to initiate a recall. Discoveries of meat and poultry product contamination, in particular life-threatening pathogens, are increasing. The financial losses that follow a recall can be substantial as illustrated by several recent U.S. cases—Hudson Foods, Bil Mar, and Thorn Apple Valley Inc. Additionally, contaminated food product that escapes the current recall system poses a threat to consumer safety. The conceptual analysis presented here suggests that insurance underwriters could motivate earlier recalls and more diligent implementation of Hazard Analysis and Critical Control Point (HACCP). With sound underwriting, these changes could ultimately reduce the incidence of illness and death from foodborne pathogens.     

Institutional Predictors of and Complements to Industry Self‐regulation with Regard to Labor Practices

In recent years, there has been increasing managerial and academic attention given to a variety of mechanisms for companies to respond to stakeholder concerns about global business ethics. One area that merits further analysis is the role of industry‐level cooperation regarding issues in global business ethics such as labor practices. There are two main issues that we will address in this article: institutional pressures that predict when an industry will create a code of conduct and institutional complements for an industry‐level code of conduct to be “successful” with regard to responding to stakeholder concerns about international business operations. We offer a number of propositions—bringing together work from both the corporate social responsibility and (neo)institutional theory literatures—with regard to both predictors and complements of industry self‐regulation in reference to labor practices.     

Stakeholder Theory: The State of the Art

Abstract

For the last 30 years a growing number of scholars and practitioners have been experimenting with concepts and models that facilitate our understanding of the complexities of today’s business challenges. Among these, “stakeholder theory” or “stakeholder thinking” has emerged as a new narrative to understand and remedy three interconnected business problems—the problem of understanding how value is created and traded, the problem of connecting ethics and capitalism, and the problem of helping managers think about management such that the first two problems are addressed. In this article, we review the major uses and adaptations of stakeholder theory across a broad array of disciplines such as business ethics, corporate strategy, finance, accounting, management, and marketing. We also evaluate and suggest future directions in which research on stakeholder theory can continue to provide useful insights into the practice of sustainable and ethical value creation.     

A data envelopment analysis approach for ranking journals

We create a data envelopment analysis (DEA) model to rank business journals, using data from the Thomson Reuters Journal Citation Reports^® (JCR). As opposed to previous models that ranked journals in only one field and mostly relied on survey data, this model is used to rank 358 business journals from five different JCR categories according to such citation-based factors as the number of articles, the number of citations, impact factor, five-year impact factor, immediacy index, eigenfactor score, and article influence score. We compute relative efficiencies of the journals and thereby create plausible journal rankings that largely, but not completely, corroborate three widely used business publication journal ranking lists. In addition, we show how the different characteristics of the JCR data impact the DEA ranking model. Finally, we identify journals that are not on the business publication lists but consistently perform very well relative to those benchmark journals, and should possibly be included in the business publication ranking lists. We also identify journals whose inclusion in widely used business publication rankings cannot be justified by our methodology.     

ALLIANCES BETWEEN COMPETITORS AND CONSUMER INFORMATION

Alliances between competitors in which established firms provide access to proprietary resources—for example, their distribution channels—are important business practices. We analyze a market where an established firm, firm A, produces a product of well‐known quality, and a firm with an unknown brand, firm B, has to choose to produce high or low quality. Firm A observes firm B's quality choice but consumers do not. Hence, firm B is subject to a moral hazard problem which can potentially be solved by firm A. Firm A can accept or reject to form an alliance with firm B, which is observed by consumers. If an alliance is formed, firm A implicitly certifies the rival's product. Consumers infer that firm B is a competitor with high quality, because otherwise why would the established firm accept to form an alliance? The mechanism we discover allows for an economic interpretation of several types of business practices. (JEL: L15, L13, L24, L42, M21, M31, D43)     

Can Sustainable Development and the Market Co-exist?

This article looks at Shell vision of sustainable development which is based on three essential and inseparable building blocks — the creation and maintenance of economic wealth, environmental improvement and social equity. All three must be integrated and balanced for long-term success, and all three underpin the Shell approach to global markets.The process of moving towards a sustainable future is under way, but the rate of progress depends on customer choice, innovation and investment — in other words, on market forces. If governments set targets and provide a good framework, companies like Shell will take the chances and offer solutions that support sustainable development. Then the markets will decide.Shell companies see support for sustainable development as a key element in continuing business success. This article discusses some of the ways Shell works with a wide range of partners to seek ways of achieving the best balance between economic, environmental and social considerations and between short term and long-term benefits. On this basis, the market supports the aims of sustainable development and Shell companies intend to play their part by providing, responsibly, efficiently and profitably, the energy the world's growing populations will need and want in the 21^st century.     

How will technology impact your business?

Over 1980–1982 the Business Environment Study Group of the Strategic Planning Society considered how new and emerging technology is likely to impact on business. This included a consideration of the mechanisms by which technology is taken up by business and the ramifications of the technological impacts in the coming decades.This material formed a Study Group publication [R. H. G. Whaley, New Technology Impacts on Business, Proceedings of the Business Environment Study Group, Society for Strategic and Long Range Planning (1983)]. During 1986 the Study Group revised and added to the material as part of the exercise of merging its previous publications into one document— the technology section of which is the subject of this paper.The Study Group does not carry out research, but conducts a networking process where corporate planning and allied opinion on aspects of the business environment are distilled. This enables planners to confirm aspects of their work with others, and for newcomers to pick up the concepts. After discussion a surprising degree of consensus is generally obtained.The Study was carried out by considering the types of technology impacts on business, technology and people's values, innovation, emerging technologies, and the ramifications of technology impacts in the coming decades in different business areas.     

Induced Earthquakes from Long‐Term Gas Extraction in Groningen,the Netherlands: Statistical Analysis and Prognosis for Acceptable‐Risk Regulation

Recently, growing earthquake activity in the northeastern Netherlands has aroused considerable concern among the 600,000 provincial inhabitants. There, at 3 km deep, the rich Groningen gas field extends over 900 km² and still contains about 600 of the original 2,800 billion cubic meters (bcm). Particularly after 2001, earthquakes have increased in number, magnitude (M, on the logarithmic Richter scale), and damage to numerous buildings. The man‐made nature of extraction‐induced earthquakes challenges static notions of risk, complicates formal risk assessment, and questions familiar conceptions of acceptable risk. Here, a 26‐year set of 294 earthquakes with M ≥ 1.5 is statistically analyzed in relation to increasing cumulative gas extraction since 1963. Extrapolations from a fast‐rising trend over 2001–2013 indicate that—under “business as usual”—around 2021 some 35 earthquakes with M ≥ 1.5 might occur annually, including four with M ≥ 2.5 (ten‐fold stronger), and one with M ≥ 3.5 every 2.5 years. Given this uneasy prospect, annual gas extraction has been reduced from 54 bcm in 2013 to 24 bcm in 2017. This has significantly reduced earthquake activity, so far. However, when extraction is stabilized at 24 bcm per year for 2017–2021 (or 21.6 bcm, as judicially established in Nov. 2017), the annual number of earthquakes would gradually increase again, with an expected all‐time maximum M ≈ 4.5. Further safety management may best follow distinct stages of seismic risk generation, with moderation of gas extraction and massive (but late and slow) building reinforcement as outstanding strategies. Officially, “acceptable risk” is mainly approached by quantification of risk (e.g., of fatal building collapse) for testing against national safety standards, but actual (local) risk estimation remains problematic. Additionally important are societal cost–benefit analysis, equity considerations, and precautionary restraint. Socially and psychologically, deliberate attempts are made to improve risk communication, reduce public anxiety, and restore people's confidence in responsible experts and policymakers.