Does a Store Brand Always Hurt the Manufacturer of a Competing National Brand?

It is generally believed that store brands hurt the manufacturers of competing national brands while benefiting retailers. In this study, we challenge this notion by studying the impacts of a store brand when it is introduced by a power retailer. We show that a store brand may benefit the manufacturer when the interaction between the manufacturer and retailer is modeled as a retailer‐led Stackelberg game. This phenomenon occurs because the store brand changes the nature of the strategic interaction between the manufacturer and retailer in our model. In particular, while the interaction is always vertical strategic substitutability without a store brand, it may become vertical strategic independence with one. With the store brand, the demand for the national brand becomes larger, and the wholesale price for the national brand may increase, both of which benefit the manufacturer. Finally, the store brand may lessen the double marginalization problem of the supply chain for the national brand in the retailer‐led Stackelberg game, but does so in an unconventional way: The reduction in the double marginalization effect may come from a lowered retail markup instead of a lowered wholesale price. Our results reconcile some discrepancies between theoretical predictions and empirical findings regarding the impacts of store brands on manufacturers.     

Is It Always Worth Waiting? The Effect of Autonomy‐supportive Teaching on Short‐term and Long‐term Learning Outcomes

Autonomy is known for its positive effects and its use in management practice. Recently an urgent debate has emerged on its drawbacks on individual outcomes. In this study, we investigate and test a model on the effect on individual learning of an autonomy‐supportive teaching style and its interplay with the learner's previous experience and perceived management support. Specifically, while research has emphasized the positive effect of similar contexts, this study focuses on its differential effect on short‐term and long‐term learning outcomes, challenging the traditional view of autonomy. We also explore how job experience and management support can improve the effects of autonomy on individual learning. We test our model by collecting longitudinal data on a sample of 200 individuals participating in a training programme on managerial skills. Our results show that (1) the extent to which teachers were perceived as autonomy‐supportive presents a linear relationship with short‐term learning outcomes (utility reactions) and a positive curvilinear relationship with training transfer in the long term; (2) learner job experience and perceived management support for learning have a positive moderating effect on the linear relationship between autonomy and learning outcomes.     

Potential Pitfalls for the Purchasing‐Power‐Parity Puzzle? Sampling and Specification Biases in Mean‐Reversion Tests of the Law of One Price

The PPP puzzle is based on empirical evidence that international price differences for individual goods (LOOP) or baskets of goods (PPP) appear highly persistent or even nonstationary. The present consensus is these price differences have a half‐life that is of the order of five years at best, and infinity at worst. This seems unreasonable in a world where transportation and transaction costs appear so low as to encourage arbitrage and the convergence of price gaps over much shorter horizons, typically days or weeks. However, current empirics rely on a particular choice of methodology, involving (i) relatively low‐frequency monthly, quarterly, or annual data, and (ii) a linear model specification. In fact, these methodological choices are not innocent, and they can be shown to bias analysis towards findings of slow convergence and a random walk. Intuitively, if we suspect that the actual adjustment horizon is of the order of days, then monthly and annual data cannot be expected to reveal it. If we suspect arbitrage costs are high enough to produce a substantial “band of inaction,” then a linear model will fail to support convergence if the process spends considerable time random‐walking in that band. Thus, when testing for PPP or LOOP, model specification and data sampling should not proceed without consideration of the actual institutional context and logistical framework of markets.     

Does Corporate Culture Affect Bank Risk‐Taking? Evidence from Loan‐Level Data

Using comprehensive corporate and retail loan data, we show that the corporate culture of banks explains their risk‐taking behaviour. Banks whose corporate culture leans towards aggressive competition are associated with riskier lending practices: higher approval rate, lower borrower quality, and fewer covenant requirements. Consequently, these banks incur larger loan losses and make greater contributions to systemic risk. The opposite behaviour is observed among banks whose culture emphasizes control and safety. Our findings cannot be explained by heterogeneity in a bank's business model, CEO compensation incentives or CEO characteristics. We use an exogenous shock to the US banking system during the 1998 Russian default crisis to support a causal inference.     

A Multi‐theory Perspective of Board Leadership Structure: What Does the Egyptian Corporate Governance Context Tell Us?

Much of the existing research in corporate governance has been directed at examining the consequences of board leadership structure on various organizational issues, with little to say about the determinants of this structure. By exploring either agency theory or stewardship theory, researchers provide contested conclusions regarding board leadership structure. The underlying premise of both theories is that ‘one universal structure fits all’. However, the main argument of this paper is that the appropriate board leadership structure varies with some contextual variables and certain actors in a given environment. Econometric analysis demonstrates that board leadership structure varies with firm size, age and ownership structure. The implication of this result is that the assertion of both agency theory (CEO non‐duality structure) and stewardship theory (CEO duality structure) may be valid under certain conditions. Thus, existing theories might need to be treated as complementary viewpoints, each of which draws upon a part of the whole picture, because depending on just one single perspective is more likely to result in misleading conclusions about the structure as a whole.     

Tradeoffs in Manufacturing? A Meta‐Analysis and Critique of the Literature

An ongoing, important question in the operations strategy literature pertains to tradeoffs: Can manufacturers focus on multiple priorities simultaneously or achieve strength on multiple capabilities without sacrificing performance of another? In this paper, we accumulate, integrate, and examine the wide spectrum of conclusions reached in the literature concerning tradeoffs using modified meta‐analysis methods. Based on two decades of empirical research in operations strategy, we find that the evidence in the literature indicates manufacturers, on average, do not report experiencing tradeoffs among the competitive dimensions of quality, delivery, flexibility, and cost as suggested by the classical tradeoffs model. Our meta‐analysis also reveals that the way variables are operationalized, whether initiatives are implemented, and the unit of analysis are all related to the degree and nature of the evidence a paper contains with respect to the tradeoffs issue. We interpret our meta‐analysis results in the context of the prevailing model of manufacturing strategy and the theory of performance frontiers. We also discuss how the research designs used in this literature, which are predominantly cross‐sectional, affect the nature of the evidence generated and the conclusions that can be drawn. We go on to suggest research designs that more directly assess the tradeoffs issue.     

Do the Falling Earnings of Immigrants Apply to Self‐employed Immigrants?

It is well known that the earnings of recent cohorts of immigrant men have fallen further behind native‐born men. Using several years of Canadian Census data, this study finds that immigrants have turned to self‐employment at a much faster rate than the native born. In addition, the earnings gap between self‐employed immigrant and native‐born men has not grown with successive cohorts, but rather has followed a cyclical movement: narrowing at the peak, and widening in times of weaker economic activity. However, immigrants choosing self‐employment still face challenges, as their earnings are far below native‐born earnings, and convergence is a lengthy process.     

Does Security Impact E‐procurement Performance? Testing a Model of Direct and Moderated Effects

Despite the widespread adoption of e‐procurement and the critical role of information security in these situations, academic research examining the relationship between information security and e‐procurement performance has been surprisingly minimal. This study represents an interdisciplinary approach to present and test a theoretical model that links security in e‐procurement processes to e‐procurement performance. E‐procurement performance is measured as a combination of cost savings, order quality, and satisfaction of fulfillment as perceived by buyers. The model also posits that two aspects of the procurement process will enhance the value of security in e‐procurement, namely, process complexity and process interdependence. We empirically examine these relationships using data collected from procurement managers. Our results have important implications for managing the e‐procurement process.     

Design of the Reverse Channel for Remanufacturing: Must Profit‐Maximization Harm the Environment?

A key attribute of a remanufacturing strategy is the division of labor in the reverse channel, especially whether remanufacturing is performed in‐house or outsourced. We investigate this decision for a retailer who accepts returns of a remanufacturable product. Our formulation considers the cost structures of the two strategies, uncertainty in the input quality of the collected/returned used products, consumer willingness‐to‐pay for remanufactured product, the extent to which the remanufactured product cannibalizes demand for a new product, and the power structure in the channel. For the profit‐maximizing retailer, the differentials in variable remanufacturing costs drive strategy choice, and higher fixed costs of in‐house remanufacturing favors outsourcing. The variable remanufacturing costs and the balance of power in the prospective outsourced reverse channel are the key drivers of environmental impact, as measured by the retailer's propensity to remanufacture. While profitability and environmental goals often conflict, they align under certain conditions. These include (a) the third party has less bargaining power; or (b) the fixed cost for in‐house remanufacturing is relatively high. All else equal, when remanufacturing is outsourced, the environment fares better if the third party has leadership power. We generalize to the cases when remanufacturing achieves a quality level less than “good‐as‐new" and when used items have non‐zero salvage value. Analysis of these extensions illuminates how relative power in the reverse channel drives the firms’ preferences, as well as the end customers’ consumption experience.     

PhD Graduates with Post‐doctoral Qualification in the Private Sector: Does It Pay Off?

Abstract. In this paper, we address the question of the early careers of French PhD graduates in science and engineering sciences in 1996. Post‐doctoral training was initially developed for PhD graduates wishing to embark on a career in the public sector. However, a large proportion of post‐doctorate graduates turn to the private sector, and in particular to occupations that do not involve research. The question we raise is that of the wage premium on post‐doctoral training. To control for selection bias arising in the case where unobservable elements are correlated between participation and wages, we first estimate a treatment effect model. The main finding is that when selection bias is not controlled for, post‐doctoral participation increases earnings; however, when selection bias is controlled for, the participation in a post‐doctoral programme has no positive effect. With regards to this finding we show that post‐doctoral programmes play much more the role of a signal in the first stage of a career. This finding is also reinforced when we use a bivariate selection rule to control for the endogenous nature of having been recruited in the private sector.     

Does managerial ability influence the quality of financial reporting?

The purpose of this paper is to study the influence of managerial ability on the quality of their financial reporting. Using a large bank sample from nine different countries and for the time period 2004–2010, we expect that bank earnings quality and accounting conservatism increase with more able managers that disclose more accurate earnings and who report higher information about banks’ future earnings and cash flows.The results confirm that managerial abilities play a significant role in the quality of financial reporting in banks, and that capable bank managers are less likely to manage earnings opportunistically. This study is timely and relevant given the recent emphasis on earnings quality of banks over the last few years, and the criticisms of managerial abilities after the financial crisis. The evidence from this study can help standard-setters and regulators to better understand the business practices and accounting behavior of banks in the light of managerial abilities.     

Does Experience Teach? Professionals and Minimax Play in the Lab

Does expertise in strategic behavior obtained in the field transfer to the abstract setting of the laboratory? Palacios‐Huerta and Volij (2008) argued that the behavior of professional soccer players in mixed‐strategy games conforms closely to minimax play, while the behavior of students (who are presumably novices in strategic situations requiring unpredictability) does not. We reexamine their data, showing that the play of professionals is inconsistent with the minimax hypothesis in several respects: (i) professionals follow nonstationary mixtures, with action frequencies that are negatively correlated between the first and the second half of the experiment, (ii) professionals tend to switch between under‐ and overplaying an action relative to its equilibrium frequency, and (iii) the distribution of action frequencies across professionals is far from the distribution implied by minimax. In each respect, the behavior of students conforms more closely to the minimax hypothesis.     

Does the capital of social capital matter? Relational resources of the board and the performance of Brazilian companies

Based on theories of social capital, in this study, we seek to assess the impact of a board’s social capital on the market value of companies listed on the Brazilian stock exchange. As our indicator of social capital, we use the relational resources identified in the direct, indirect and heterogeneous ties of the board. Employing panel data from 508 observations, our results indicate that heterogeneous relational resources have a stronger and more significant influence than the resources available from board members’ direct relationships. Additionally, as the effects of board interlock are endogenously determined by several factors related to the firm level, we seek to mitigate the endogeneity problem using models of instrumental variables and simultaneous equations. Our hypotheses were consistent after controlling for endogeneity. We also check whether the board’s social capital could present a U-inverted effect on the market value. This relationship was only plausible in social capital by indirect ties. Finally, we isolate the effect of relational resources within and between industries on Tobin’s Q. There was no significant effect through interlocks within the same industry. However, ties with companies in several other industries were significant.     

Requirement or Promise? An Analysis of the First‐Mover Advantage in Quality Contracting

Quality contracting is critical and challenging due to the many unique issues related to quality. In this study, we analyze the first‐mover right in quality contracting by considering two different strategies for the buyer: the quality requirement strategy (QR) where buyer moves first by posting quality requirement to suppliers and quality promise strategy (QP) where buyer voluntarily gives up the first‐mover right to suppliers to ask them to promise quality. We study which strategy (1) better encourages suppliers' quality improvement efforts and (2) leads to a higher expected profit for the buyer. To analyze the drivers behind the buyer's choice between QR and QP, we start with the basic model where buyer faces only one supplier who has the opportunity to make quality improvements. We then gradually add other business features such as information asymmetry and supplier competition, analyzing how each feature adds/changes the driving forces and how they interact in the buyer's decision between QR and QP. We consider both the case where the wholesale price is fixed (when the buyer has the power to dictate price or price is set by the market) and the case where the wholesale price is included as a variable (when price is part of the negotiation). We find that QP always leads to the first‐best quality efforts from the supplier(s) while QR limits their efforts. However, this does not guarantee higher expected profit for the buyer under QP. We provide insightful guidelines in buyer's choice between QP and QR. This research enriches the limited literature on quality contracting with quality improvement opportunity and asymmetric information.     

Do Chief Executives’ Traits Affect the Financial Performance of Risk‐trading Firms? Evidence from the UK Insurance Industry

We examine the effects of four key dimensions of Chief Executive Officers’ (CEOs’) traits on six financial performance metrics using panel data for 1999?2012 drawn from the UK's property?casualty insurance industry. We find that CEO insurance experience and CEO financial expertise enhance financial performance, while two other CEO traits ? power and age ? are generally not significant. Our results thus reinforce the importance of CEO insurance industry expertise and CEO financial expertise in the management and trading of risks. Our results have potential commercial and policy implications.     

How Portable Is Level‐0 Behavior? A Test of Level‐k Theory in Games With Non‐Neutral Frames

We test the portability of level‐0 assumptions in level‐k theory in an experimental investigation of behavior in Coordination, Discoordination, and Hide and Seek games with common, non‐neutral frames. Assuming that level‐0 behavior depends only on the frame, we derive hypotheses that are independent of prior assumptions about salience. Those hypotheses are not confirmed. Our findings contrast with previous research which has fitted parameterized level‐k models to Hide and Seek data. We show that, as a criterion of successful explanation, the existence of a plausible model that replicates the main patterns in these data has a high probability of false positives.     

Does Formal Education for Older Workers Increase Earnings? — Evidence Based on Rich Data and Long‐term Follow‐up

Governments in Europe, Canada and the USA have expressed an ambition to stimulate education of older. In this paper, we analyse if there are effects on annual earnings of formal education for participants aged 42–55 at the time of enrolment in 1994–95. The analysis explores longitudinal population register data stretching from 1982 to 2007. The method used is difference‐in‐differences propensity score matching based on a rich set of covariates, including indicators of health and labor market marginalization. Our findings underline the importance of long follow up periods and imply positive effects for women, especially so for women with children, and no significant average earnings effects for men. These results differ from earlier studies but are stable to several alternative assumptions regarding unobservable characteristics. Data further indicate that the gender gap in our estimates may stem from differences in underlying reasons for enrolment.     

Does shareholder protection affect the performance of analysts as a gatekeeper?

This paper investigates the effect of shareholder protection on analysts’ performance. The important corporate governance role analysts can play by monitoring management has largely been ignored in the literature. Using a newly constructed index, we are for the first time able to analyse how changes in shareholder protection over time affect analysts’ performance as a gatekeeper. We find that strengthened shareholder protection improves analysts’ performance as a gatekeeper, i.e. analysts’ ability to reduce information asymmetry improves with strengthened shareholder protection. However, we also find a substitution effect: Strengthened shareholder protection makes analysts’ services less valuable to investors, thereby leading to a reduction in the number of analysts following firms.