BUILDING REPUTATION FOR CONTRACT RENEWAL: IMPLICATIONS FOR PERFORMANCE DYNAMICS AND CONTRACT DURATION

We study how career concerns affect the dynamics of incentives in a multi‐period contract, when the agent's productivity is a stochastic function of his past productivity and investment. We show that incentives are stronger and performance is higher when the contract approaches its expiry date. Contrary to common wisdom, long‐term contracts may strengthen reputational effects whereas short‐term contracting may be optimal when investment has persistent, long‐term effects.     

LEGAL STANDARDS,ENFORCEMENT, AND CORRUPTION

Stricter laws require more incisive and costlier enforcement. Because enforcement activity depends both on available tax revenue and the honesty of officials, the optimal legal standard of a benevolent government is increasing in per capita income and decreasing in officials' corruption. In contrast to the “tollbooth view” of regulation, the standard chosen by a self‐interested government is a non‐monotonic function of officials' corruption, and can be either lower or higher than that chosen by a benevolent regulator. International evidence on environmental regulation shows that standards correlate positively with per‐capita income, and negatively with corruption, consistent with the model's predictions for benevolent governments. (JEL: D73, K42, L51)     

NATURE OF PROBLEM ILL-STRUCTUREDNESS: IMPLICATIONS FOR PROBLEM FORMULATION AND SOLUTION

The distinction between ill-structured and well-structured decision problems is extended in this paper to include the degree of familiarity that a decision maker has with the initial state of the problem, its desired state, and appropriate transformations for resolving the problem. It is shown that problem ill-structuredness may result from inadequate information regarding any of these components and that the nature of problem ill-structuredness has important implications for problem formulation and solution. A decision tree is presented which represents strategies for either reformulating primary problems of each class of ill-structuredness to a more readily solved form, or solving the problem as initially formulated.     

A CANONICAL ANALYSIS OF MANAGERIAL-ENVIRONMENTAL RELATIONSHIPS: IMPLICATIONS FOR METHODOLOGY AND POLICY*

The present study uses canonical analysis to examine the contingency model of organizations in the nursing home field. Data on environmental pressures and managerial practices relevant to the decision-making process are analyzed. Results support the theory that managerial practices are contingent on environmental pressures. The implications of these results for health-care decision makers and for future assessments of managerial-environmental relationships are discussed.     

TRANSFER-PRICING AND OUTPUT DECISIONS: THE DYNAMIC INTERACTION

This paper is concerned with the dynamic interactions between output and transferprice decisions in a three-country model for a multinational firm when profits taxation and ad valorem tariffs are applied simultaneously. A numerical example is used to illustrate that the three-country model modifies considerably conclusions reached in the traditional two-country, two-goods framework.     

PSYCHOLOGICAL DETERMINANTS OF BOUNDED RATIONALITY: IMPLICATIONS FOR DECISION-MAKING STRATEGIES

In this paper the implications of cognitive strain for decision-making effectiveness are explored. Literature concerning the psychological processes of decisionmakers which underlie the operation of cognitive strain and which predispose them to the effects of cognitive strain, is reviewed. Next, the impact of cognitive strain on narrowly constraining or “bounding” rational decision-making is examined, and the choice strategies of satisficing and incrementalizing are criticized as failing to broaden the bounds of rational decision-making. Finally, elements of an eclectic choice strategy designed to assist decision-makers handle the informational demands of complex decision problems are discussed.     

PERCEIVED INFORMATION STRUCTURE: IMPLICATIONS FOR DECISION SUPPORT SYSTEM DESIGN

Top-level decision making in business organizations is characterized by high degrees of uncertainty, incomplete information, and conflicting objectives. To support top-level decision making effectively, decision support systems (DSSs) have been proposed. Information supplied by a DSS must be selective in that not all possible information sets may be feasibly or economically represented in the data base. This study suggests that discovery of perceptual complexity (dimensionality) of information items, and the subsequent categorization of decision makers having the same perceptions of those information items, is a first step in the ultimate design of an effective DSS. Through the use of multidimensional scaling in a field setting, this study shows the feasibility of creating relatively homogeneous groups of decision makers according to the content and number of dimensions associated with various information items. Further results of the research suggest that information can be tailored to classes of users, which has cost-benefit implications as well as the potential to improve the quality of the resultant decisions.     

THE ACADEMIC FLOW MODEL: A MARKOV-CHAIN MODEL FOR FACULTY PLANNING*

A Markov-chain faculty planning model to be used with institution-specific data is presented to describe and better understand the complex phenomena of faculty movement through an institution and on its relationship to salary costs, composition of the faculty, and faculty turnover rate. The model updates the earlier work done at Stanford University and Oregon State University by the addition of states for fixed-term appointments and for part-time FTEs to reflect accurately the current hiring trends at many institutions. The model is implemented and tested at two different institutions. The findings suggest that the model is a viable means of gaining useful insights and quantitative data on the faculty profile, salary costs, expected departures, and part-time trends. And further, when used as a planning tool, and the model apparently is comprehensive and flexible enough to analyze the probable effects, both in the short and long run, of alternative personnel policies on the faculty composition.     

UNDER PRESSURE: GENDER DIFFERENCES IN OUTPUT QUALITY AND QUANTITY UNDER COMPETITION AND TIME CONSTRAINTS

Gender gaps in the workplace are widespread. One explanation for gender inequality stems from the effects of the interaction between competition and two pressure sources, namely, task stereotypes and time constraints. This study uses a laboratory experiment to find that the gender gap in performance under competition and preferences for competition can be partly explained by the differential responses of men and women to the above pressures. In particular, while women underperform the men in a high‐pressure math‐based tournament, women greatly increase their performance levels and their willingness to compete in a low‐pressure verbal environment, such that they actually surpass the men. This effect appears largely due to the fact that extra time in a verbal competition improves the quality of women’s work, reducing their mistake share. On the other hand, men use this extra time to increase only the quantity of work, which results in a greater relative number of mistakes. A labor market study suggests that the nature of the job and the stress level are correlated with the gender gap in the labor market in a manner consistent with the results of my experiment.     

A LOGIT-MARKOVIAN MODEL OF CONSUMER PURCHASE BEHAVIOR BASED ON EXPLANATORY VARIABLES: EMPIRICAL EVALUATION AND IMPLICATIONS FOR DECISION MAKING*

This study describes and empirically evaluates an approach to modeling purchase behavior that integrates a Logit-Markov-based multivariate brand-choice model structure with stochastic components. Using actual market data for a frequently purchased consumer product obtained from a consumer purchase panel survey, the paper highlights some marketing applications of the model. Given its general structure, the model can aid marketing managers in defining and evaluating target market segments and in assessing the impact of alternative marketing strategies.     

SEARCH INTENSITY,DIRECTED SEARCH,AND THE WAGE DISTRIBUTION

We propose a search equilibrium model in which homogeneous firms post wages along with a vacancy to attract job seekers while homogeneous unemployed workers invest in costly job seeking. The key innovation relies on the organization of the search market and the search behavior of the job seekers. The search market is continuously segmented by wage level, individuals can spread their search investment over the different submarkets, and search intensity has marginal decreasing returns in each submarket. We demonstrate the existence of a nondegenerate equilibrium wage distribution. The density of this wage distribution is increasing at low wages and decreasing at high wages. The distribution can be right‐tailed, and, under additional restrictions, is hump‐shaped. Our results are illustrated by an example generating a Beta wage distribution.     

PREFERENCE MAPPING OF PERCEIVED INFORMATION STRUCTURE: IMPLICATIONS FOR DECISION SUPPORT SYSTEMS DESIGN

In a recent issue of this journal, Watkins [13] presented an approach for discovery of decision-maker perceptions of the complexity (dimensionality) of information items that might be supplied by a decision support system. Through use of multidimensional scaling and cluster analysis, relatively homogeneous groups of decision makers, sharing common perceptions of various information items, were formed. This prior research was referred to as a first step in suggesting that information reports could be tailored to groups of decision makers classified on the basis of common perceptions of information. The current research extends the prior study by evaluating decision maker preferences for information in a variety of decision-making scenarios in relation to the previously identified perceptions of the information. Based on the results of the study, conclusions are made which suggest that the tailoring of information to groups of decision makers should be based on both perceptions and preferences for information. Even so, it is demonstrated that the decision tasks have an impact on the preferences for information which may affect the attempt to tailor information to groups of decision makers.     

THE EFFECTS OF TWO NORMATIVE STRUCTURAL INTERVENTIONS ON ESTABLISHED AND AD HOC GROUPS: IMPLICATIONS FOR IMPROVING DECISION MAKING EFFECTIVENESS1

This paper focuses on a direct comparison of consensual, nominal, and conventional decision making techniques in established and ad hoc groups. The impact of the structural interventions on group decision quality and group attitudes is examined, and the appropriateness of the techniques in various situations is discussed.     

CONSTITUENCIES OF JOURNALS IN PRODUCTION AND OPERATIONS MANAGEMENT: IMPLICATIONS ON REACH AND QUALITY*

I analyzed the contributions made by members of the following constituencies in terms of the number of articles published in the Journal of Operations Management (JOM), Manufacturing and Service Operations Management (M&SOM), and Production and Operations Management (POM): the top 20 U.S. business schools and the top 7 non‐U.S. business schools as ranked by Business Week or U.S. News and World Report, business and government organizations, U.S. business schools ranked between 21 and 50, non‐U.S. business schools not included above, and U.S. business schools not included above. I also analyzed the contributions made by U.S. business schools with top 10 programs in production and operations management; 9 of which are also in the list of top 20 U.S. business schools. Authors from the schools with top 10 programs in production and operations management contributed 20.2% of the articles published in POM and 3.5% of the articles published in JOM during 1997‐2001. They contributed 24.6% of the articles in the eight issues (from July 2000 through June 2002) of M&SOM. During these periods, authors from the top 27 schools contributed 29.3% of the articles published in POM, 9.4% of the articles published in JOM, and 37.4% of the articles to the eight issues of M&SOM. Also during the same periods, authors from business and government organizations contributed 6.6% of the articles published in POM, 1.9% of the articles published in JOM, and 5.8% of the articles published in the eight issues of M&SOM. The findings reported in this paper reflect the reach of the three journals and the perceptions of various constituencies regarding journal quality. The findings about POM and JOM have a very high degree of validity because both journals are more than 10 years old and have well‐established constituencies. The conclusions about the M&SOM constituencies are tentative because it is about 3 years old, and it is still developing its constituencies.     

ON CONSUMER- VERSUS FIRM-LEVEL ANALYSIS OF ADVERTISING EFFECTIVENESS: IMPLICATIONS FOR MODEL BUILDING*

Issues relating to the construction of marketing models are discussed. These include determining the level of aggregation of model construction, specifying the structure of the model, and the aggregation level of data to be employed in estimating model parameters. These issues are addressed through specifying and estimating both consumer-level and firm-level models and comparing the results. An important conclusion is that inferences about consumer behavior should not be drawn from firm-level models since aggregation bias may exist.     

OPTIMUM SCHEDULE FOR PREVENTIVE MAINTENANCE: A GENERAL SOLUTION FOR A PARTIALLY SPECIFIED TIME-TO-FAILURE DISTRIBUTION

The classic problem of determining an optimum schedule for preventive maintenance when the time-to-failure (TTF) is random has been previously addressed in the literature under various distributional assumptions. However, no general solution that requires only partial distributional information (in the form of the first few moments) has been suggested. In this paper we develop solution procedures characterized by four features: (1) The solutions are general in the sense that only the first few moments of the TTF distribution need to be specified. (2) The optimal solution is given explicitly in terms of the decision variables, thus allowing simple sensitivity analysis. (3) When the TTF moments are unknown, a new two-moment (partial and complete) distributional fitting procedure, used in the solution routine, ensures a better representation for the underlying TTF distribution relative to three-moment or four-moment distributional fitting. (4) When the TTF observations are truncated, simple routines to calculate maximum likelihood estimates are developed. We demonstrate that the partiál distributional specification, required for the new solution procedures, does not detract meaningfully from the optimality of the solution.     

PROTESTANT RELATIONAL IDEOLOGY: THE COGNITIVE UNDERPINNINGS AND ORGANIZATIONAL IMPLICATIONS OF AN AMERICAN ANOMALY

Cross-national comparisons of relational work styles suggest that the United States is an anomaly in its low relational focus. This article describes Protestant Relational Ideology (PRI), a cultural construct that explains the origins and nature of this anomaly. This construct refers to a deep-seated belief that affective and relational concerns are considered inappropriate in work settings and, therefore, are to be given less attention than in social, non-work settings. Akin to an institutional imprinting perspective, a review of sociological and historical research links PRI to the beliefs and practices of the founding communities of American society. A social cognition perspective is used to explain the mechanisms through which PRI influences American relational workways. The article also describes a program of research that uses PRI to address a wider set of organizational behavior issues that include: antecedents of prejudice and discrimination in diverse organizations; sources of intercultural miscommunication; beliefs about team conflict; mental models of “professionalism” and its effect on organizational recruitment and selection.     

A GAP FOR ME: ENTREPRENEURS AND ENTRY

We present a theory of entrepreneurial entry (and exit) decisions. Knowing their own managerial talent, entrepreneurs decide which market to enter, where markets differ in size. We obtain a striking sorting result: Each entrant in a large market is more efficient than any entrepreneur in a smaller market because competition is endogenously more intense in larger markets. This result continues to hold when entrepreneurs can export their output to other markets, thereby incurring a unit transport cost or tariff. The sorting and price competition effects imply that the number of entrants (and hence product variety) may actually be smaller in larger markets. In the stochastic dynamic extension of the model, we show that the churning rate of entrepreneurs is higher in larger markets. (JEL: L11, L13, M13, F12)     

LEAN,GREEN, AND THE QUEST FOR SUPERIOR ENVIRONMENTAL PERFORMANCE

We examine the relationship between lean manufacturing practices and environmental performance as measured in terms of air emissions and resource use. We draw on two unique surveys of 31 automobile assembly plants in North America and Japan, which contain information on manufacturing practice and environmental performance, as well as in‐depth interviews with 156 plant level employees at 17 assembly plants. Our survey results and interviews suggest that lean management and reduction of air emissions of volatile organic compounds (vocs) are associated negatively. Lean manufacturing practices contribute to more efficient use of paints and cleaning solvents, but these in‐process changes are not sufficient to meet the most stringent air regulations. We found some evidence to support the link between lean practices and resource efficiency. While our survey results were in hypothesized direction, they were not statistically significant. In‐depth semi‐structured interviews, however, suggest a more robust relationship, and we use them to describe some mechanisms by which all three aspects of lean management (buffer minimization, work systems, and human resource management) may be related to environmental management practices and performance.