Outsourcing: reap the fruit; contain the “bad apple”

2018 ◽  
Vol 39 (5) ◽  
pp. 50-55 ◽  
Author(s):  
Nelson Oly Ndubisi ◽  
Setiadi Umar
Keyword(s):  
Asia Pacific ◽  
Content Type ◽  
Provider Perspectives ◽  
Ex Post ◽  
Ex Ante ◽  
Negative Effect ◽  
Conflict Handling ◽  
Destructive Conflict ◽  
Ethical Norms

Purpose The purpose of this study is to show how outsourcing partners can maximise the benefits of outsourcing while containing the negative effect of destructive conflict (the “bad apple”) on trust and commitment. Design/methodology/approach The study reviewed existing literature on the benefits and limitations of outsourcing from the principal’s (outsourcer) and the agent’s (service provider) perspectives. The study further draws on empirical evidence from studies conducted across ten industries in three countries within the Asia–Pacific Rim and the Middle-East, namely, Australia, Malaysia and Saudi Arabia. Findings Long-term orientation and ethical norms are robust ex-ante (i.e. before the destructive conflict) handling strategies, whereas integrative conflict handling style and (to a lesser degree) accommodating and compromising conflict handling styles are effective ex-post (i.e. after the destructive conflict) handling strategies. Forcing and avoidance conflict handling styles can escalate destructive conflict and should be completely avoided by outsourcing partners at all times. Practical implications The benefits of outsourcing outweigh its challenges. Trust and commitment are positively affected by ex-ante and ex-post (destructive conflict) strategies. Destructive conflicts (or the bad apple effect) can be contained through these strategies. Firms should leverage the upsides of outsourcing relationships and contain the downsides by integrating long-term orientation and ethical norms that can help to pre-empt and forestall destructive conflict. They should adopt an integrative conflict handling strategy in the event of a manifest conflict. Other strategies that can be applied to manifest conflict (albeit more sparingly) are accommodating and compromising strategies. Each has the potential to increase trust and commitment in the relationship. Originality/value The authors unveil before and after (the destructive conflict) handling strategies that do not depend on contextual factors or industry/sectoral differences.

Labor lawsuits and debt maturity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Omer Unsal
Keyword(s):  
Chief Executive ◽  
Debt Maturity ◽  
Employee Relations ◽  
Short Term ◽  
Content Type ◽  
Negative Effect ◽  
Debt Market ◽  
Legal Fees

Purpose This paper aims to investigate how firms’ relationships with employees define their debt maturity. The authors empirically test the role of employee litigations in influencing firms’ choice of short-term versus long-term debt. The authors study employee relations by analyzing the importance of the workplace environment on capital structure. Design/methodology/approach The author’s test hypotheses using a sample of US publicly traded firms between 2000 and 2017, including 3,056 unique firms with 4,256 unique chief executive officer, adopting the fixed effect panel model. Findings The authors document that employee litigations have a significant negative effect on the use of short-term debt and a significant positive affect on long-term debt. Employee litigations, along with legal fees, outcomes and charging parties, matter the most in explaining debt maturity. In addition, frequently sued firms abandon the short-term debt market and use less shareholders’ equity to finance their operations while relying more on the longer debt market. Originality/value To the best of the authors’ knowledge, this is the first study to examine the role of employee mistreatment in debt maturity choice. The study extends the lawsuit and finance literature by examining unique, hand-collected data sets of employee lawsuits, allegations, violations, settlements, charging parties, case outcomes and case durations.

Help us to help you

2019 ◽  
Vol 35 (10) ◽  
pp. 29-30
Keyword(s):  
Asia Pacific ◽  
Asia Pacific Region ◽  
Content Type ◽  
Pertinent Information ◽  
Short And Long Term ◽  
Long Term Performance ◽  
Performance Gains ◽  
Term Performance ◽  
Practical Implications

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings Hotels in the Asia-Pacific region have yet to fully utilize social media to promote their CSR initiatives. This means there is huge potential for improved stakeholder engagement, leading to short- and long-term performance gains. Originality The briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

The persistent effect of banking crises on investment and the role of financial markets

2014 ◽  
Vol 6 (1) ◽  
pp. 64-77 ◽  
Author(s):  
Felix Rioja ◽  
Fernando Rios-Avila ◽  
Neven Valev
Keyword(s):  
Financial Markets ◽  
Financial Development ◽  
Banking Crisis ◽  
Banking Crises ◽  
Output Growth ◽  
Long Term Effects ◽  
Content Type ◽  
Negative Effect

Purpose – While the literature studying the effect of banking crises on real output growth rates has found short-lived effects, recent work has focused on the level effects showing that banking crises can reduce output below its trend for several years. This paper aims to investigate the effect of banking crises on investment finding a prolonged negative effect. Design/methodology/approach – The authors test to see whether investment declines after a banking crisis and, if it does, for how long and by how much. The paper uses data for 148 countries from 1963 to 2007. Econometrically, the authors test how banking crises episodes affect investment in future years after controlling for other potential determinants. Findings – The authors find that the investment to GDP ratio is on average about 1.7 percent lower for about eight years following a banking crisis. These results are robust after controlling for credit availability, institutional characteristics, and a host of other factors. Furthermore, the authors find that the size and duration of this adverse effect on investment varies according to the level of financial development of a country. The largest and longer-lasting decrease in investment is found in countries in a middle region of financial development, where finance plays its most important role according to theory. Originality/value – The authors contribute by finding that banking crisis can have long-term effects on investment of up to nine years. Further, the authors contribute by finding that the level of development of the country's financial markets affects the duration of this decrease in investment.

Co-creation and higher order customer engagement in hospitality and tourism services

2016 ◽  
Vol 28 (2) ◽  
pp. 222-245 ◽  
Author(s):  
Prakash K. Chathoth ◽  
Gerardo R. Ungson ◽  
Robert J. Harrington ◽  
Eric S.W. Chan
Keyword(s):  
Value Creation ◽  
Higher Order ◽  
Customer Engagement ◽  
Service Dominant Logic ◽  
Content Type ◽  
Dominant Logic ◽  
Ex Post ◽  
Ex Ante ◽  
Experiential Value

Purpose – This paper aims to present a review of the literature associated with co-creation and higher-order customer engagement concepts and poses critical questions related to the current state of research. Additionally, the paper presents a framework for customer engagement and co-creation with relevance to hospitality transactions. Design/methodology/approach – Earlier research on co-production, co-creation, consumer engagement and service-dominant logic are discussed and synthesized. Based on this synthesis, links and contrasts of these varying research streams are presented providing an articulation of key characteristics of each and how these might be applied within a hospitality context. Findings – Modalities in service transactions vary among traditional production, co-production and co-creation based on changes in attitudes, enabling technologies and the logic or ideology supporting the change. Transaction characteristics vary among manufacturing, quasi-manufacturing and services based on several key categories including differences in boundary conditions, enablers, success requirements, sustainability requirements, the dominant logic used and key barriers/vulnerabilities. When creating experiential value for consumers, firms should consider several aspects ex-ante, in-situ and ex-post of the change and during the change process. Research limitations/implications – Firms need to move toward higher-order customer engagement using co-creative modalities to enhance value creation. Current practices in the hotel industry may not in their entirety support this notion. Ex-ante, in-situ and ex-post considerations for creating experiential value need to be used as part of a checklist of questions for firms to pose in order to move toward managing customer experiences using the service-dominant logic as part of the firm’s orientation toward its market. This would give it the required thrust to create superior engagement platforms that use co-creative modalities while addressing the barriers to higher-order customer engagement as identified in the literature. Originality/value – The hospitality and tourism literature on co-creation and higher-order customer engagement is still in its infancy. A synthesis of these early studies provides support for the need for future research on co-creation that more clearly articulates the modality firms could use to move toward co-creation. This paper develops a dynamic framework using characteristics of co-creation that integrate the various stages of value creation (i.e. input, throughput and output).

scholarly journals How should we regulate artificial intelligence?

2018 ◽  
Vol 376 (2128) ◽  
pp. 20170360 ◽  
Author(s):  
Chris Reed
Keyword(s):  
Artificial Intelligence ◽  
Neural Networks ◽  
Decision Making ◽  
Current System ◽  
General System ◽  
Fundamental Rights ◽  
Ex Post ◽  
Ex Ante ◽  
Human Decision

Using artificial intelligence (AI) technology to replace human decision-making will inevitably create new risks whose consequences are unforeseeable. This naturally leads to calls for regulation, but I argue that it is too early to attempt a general system of AI regulation. Instead, we should work incrementally within the existing legal and regulatory schemes which allocate responsibility, and therefore liability, to persons. Where AI clearly creates risks which current law and regulation cannot deal with adequately, then new regulation will be needed. But in most cases, the current system can work effectively if the producers of AI technology can provide sufficient transparency in explaining how AI decisions are made. Transparency ex post can often be achieved through retrospective analysis of the technology's operations, and will be sufficient if the main goal is to compensate victims of incorrect decisions. Ex ante transparency is more challenging, and can limit the use of some AI technologies such as neural networks. It should only be demanded by regulation where the AI presents risks to fundamental rights, or where society needs reassuring that the technology can safely be used. Masterly inactivity in regulation is likely to achieve a better long-term solution than a rush to regulate in ignorance. This article is part of a discussion meeting issue ‘The growing ubiquity of algorithms in society: implications, impacts and innovations'.

Dividend policy and probability of extreme returns

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohammed Bouaddi ◽  
Omar Farooq ◽  
Neveen Ahmed
Keyword(s):  
Stock Returns ◽  
Stock Price ◽  
Dividend Policy ◽  
Actual State ◽  
Content Type ◽  
Market Participants ◽  
Dividend Payments ◽  
Ex Post ◽  
Ex Ante ◽  
The Future

PurposeThis study examines the effect of dividend policy on the ex ante probability of stock price crash and the ex ante probability stock price jump.Design/methodology/approachWe use the data of publicly listed non-financial firms from France and the ex ante measures of crash and jump probabilities (based on the Flexible Quadrants Copulas) to test our hypothesis during the period between 1997 and 2019.FindingsOur results show that dividend payments are negatively associated with the ex ante probability of crash and positively associated with the ex ante probability of jump. Our results are robust across various sub-samples and across different proxies of dividend policy. Our findings also hold when we use ex-post measures of crash and jump probabilities.Originality/valueUnlike prior literature, we use ex ante measures of crash and jump probabilities. The main advantage of this forward looking measure is that it allows for more flexibility by modeling the dependence between market returns and stock returns as functions of their actual state. Our measure is also consistent with the behavior of investors and market participants in a way that the market participants do not know the future outcome with certainty, but rather they are anticipating the future.

The impact of guaranteed bailout assistance on bank loan overstatement

2016 ◽  
Vol 12 (2) ◽  
pp. 177-210
Author(s):  
Alejandro Hazera ◽  
Carmen Quirvan ◽  
Salvador Marin-Hernandez
Keyword(s):  
Financial Crisis ◽  
Emerging Market ◽  
Balance Sheet ◽  
Bank Loan ◽  
Content Type ◽  
Put Options ◽  
Regulatory Policies ◽  
Ex Post ◽  
Ex Ante ◽  
The Impact

Purpose – The purpose of this paper is to highlight how the basic binomial option pricing model (BOPM) might be used by regulators to help formulate rules, prior to financial crisis, that help prevent loan overstatement by banks in emerging market economies undergoing financial crises. Design/methodology/approach – The paper draws on the theory of soft budget constraints (SBC) to construct a simple model in which banks overstate loans to minimize losses. The model is used to illustrate how guarantees of bailout assistance (BA) (to banks) by crisis stricken countries’ financial authorities may encourage banks to overstate loans and delay the implementation of IFRS for loan valuation. However, the model also illustrates how promises of BA may be depicted as binomial put options which provide banks with the option of either: reporting loan values on poor projects accurately and receiving the loans’ liquidation values; or, overstating loans and receiving the guaranteed BA. An illustration is also provided of how authorities may use this representation to help minimize bank loan overstatement in periods of financial crisis. In order to provide an illustration of how the option value of binomial assistance may evolve during a financial crisis, the model is generalized to the Mexican financial crisis of the late 1990s. During this period, Mexican authorities’ guarantees of BA to the nation’s largest banks encouraged those institutions to overstate loans and delay the implementation of (previously adopted) international “best practices” based loan valuation standards. Findings – Application of the model to the Mexican financial crisis provides evidence that, in spite of Mexico’s “official” 1997 adoption of international “best accounting practices” for banks, “iron clad” guarantees of BA by the country’s financial authorities to Mexico’s largest banks provided those institutions with an incentive to knowingly overstate loans in the late 1990s and early 2000s. Research limitations/implications – The model is compared against only one country in which the BA was directly infused into banks’ loan portfolios. Thus, as conceived, it is directly applicable to crisis countries in which the bailout took this form. However, the many quantitative variations of SBC models as well as recent studies which have applied the binomial model to other forms of bailout (e.g. direct purchases of bank shares by authorities) suggest that the model could be modified to accommodate different bailout scenarios. Practical implications – The model and application show that guaranteed BA can be viewed as a put option and that ex-ante regulatory policies based on the correct valuation of the BA as a binomial option might prevent banks from overstating loans. Social implications – Use of the binomial or similar approaches to valuing BA may help regulators to determine the level of BA that will not encourage banks to overstate the value of their loans. Originality/value – Recent research has used the BOPM to value, on an ex-post basis, the BA which appears on the balance sheet of institutions which have been rescued. However, little research has advocated the use of this type of model to help prevent, on an ex-ante basis, the overstatement of loans on poor projects.

The effect of task conflict on outsourcers’ long-term orientation toward suppliers: the moderating role of formal control and Chinese guanxi

2019 ◽  
Vol 35 (2) ◽  
pp. 260-269 ◽  
Author(s):  
Shuting Li ◽  
Mark H. Haney ◽  
Gukseong Lee ◽  
Mingu Kang ◽  
Changsuk Ko
Keyword(s):  
Conflict Management ◽  
Design Methodology ◽  
Manufacturing Firms ◽  
Task Conflict ◽  
Content Type ◽  
Formal Control ◽  
Negative Effect ◽  
Moderating Role

Purpose This paper aims to investigate the antecedents of manufacturing firms’ long-term orientation towards their suppliers in the context of outsourcing relationships in China. Design/methodology/approach Based on survey data collected from 224 manufacturing firms in China, this study examines the hypothesized relationships. Findings The results show that task conflict has a negative effect on long-term orientation, both Chinese guanxi and formal control are useful governance mechanisms to enhance long-term orientation, and the negative effect of task conflict on the long-term orientation weakens as Chinese guanxi between a manufacturer and its supplier increases. Originality/value This study contributes to a better understanding of conflict management in outsourcing relationships in China.

Determinants of house buyers’ expected holding periods in boom and bust markets in California

2017 ◽  
Vol 10 (2) ◽  
pp. 256-281 ◽  
Author(s):  
Ekaterina Chernobai ◽  
Tarique Hossain
Keyword(s):  
Rational Expectation ◽  
House Price ◽  
Housing Markets ◽  
Real Estate Market ◽  
Disposition Effect ◽  
Content Type ◽  
Ex Post ◽  
Novel Approach ◽  
Ex Ante ◽  
Financial Characteristics

Purpose This study aims to investigate the determinants of homeowners’ planned holding periods. Real estate market is known for displaying buying and selling behavior that does not conform to traditional economic theories such as rational expectation or expected utility. Mounting evidence of anomalous observations appear to be supported by other theories, such as prospect theory, which in particular helps explain the disposition effect – sellers are too quick to sell when prices are climbing and hold on to properties longer when prices are plummeting. While this evidence is widely documented in housing studies based on data on realized holding periods (i.e. ex post), this study explores factors that may motivate homeowners to alter their expected holding horizons (i.e. ex ante) to form new preferred holding periods that may be shorter or longer than those planned during house search. Design/methodology/approach The empirical study uses data collected from two cross-section surveys of recent homebuyers in rising and declining housing markets in Southern California in 2004-2005 and 2007-2008, respectively. Findings The empirical results demonstrate that in addition to the financial characteristics of the recent homebuyer, the characteristics of the buying experience – non-monetary, such as the realized search duration, and monetary, such as perception of negative or positive premium paid for the house relative to its market value – have a statistically significant effect on the holding horizon revision. The data strongly indicate that the perception of having overpaid increases the likelihood of upward revision of the original holding horizon. This effect is stronger in the declining than in the rising market – a crucial finding that mirrors the disposition effect. Originality/value This study sheds new light on what may contribute to the disposition effect in housing markets that has not yet been investigated in past literature. The novel approach here is to look at how different house price environments may affect homeowners’ holding periods ex ante when they begin, rather than ex post when already realized.

scholarly journals Applicability of Z-score Models on the Agricultural Companies in the Republic of Srpska (Bosnia and Herzegovina)

2018 ◽  
Vol 18 (4) ◽  
pp. 227
Author(s):  
Tamara Stojanović ◽  
Ljiljana Drinić
Keyword(s):  
Safe Zone ◽  
Z Score ◽  
Financial Variables ◽  
Financial Difficulties ◽  
Ex Post ◽  
Ex Ante ◽  
The Republic ◽  
Near Future ◽  
Ex Post Analysis

The aim of our research was to test the predictability of Altman’s Z-score models in the case of agricultural companies in the Republic of Srpska. Due to the fact that according to these models the companies from the critical zone are supposed to go bankrupt in the near future, while the companies from the safe zone are not supposed to go bankrupt, these two groups of companies have been subject to ex-ante analysis during the period of five years (2011-2015) in order to estimate the predicting efficiency of Z-score models. The authors have also performed the ex-post analysis to see how the bankrupt companies had been classified according to these models in the years preceding their bankruptcy. The results of these analyses show that Z-score models are not reliable in predicting bankruptcy, nor for the creditworthiness analysis, but can be useful in identifying agricultural companies with long-term financial difficulties especially if other, non-financial variables are included.

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