Chen Lin, Micah S. Officer, Rui Wang (Erik), H. Zou
We analyze the effect of directors' and officers' liability insurance (D&O insurance) on the spreads charged on bank loans. We find that higher levels of D&O insurance coverage are associated with higher loan spreads and that this relation depends on loan characteristics in economically sensible ways and is attenuated by monitoring mechanisms. This association between loan spreads and D&O insurance coverage is robust to controlling for endogeneity (because both could be related to firm risk). Our evidence suggests that lenders view D&O insurance coverage as increasing credit risk (potentially via moral hazard or information asymmetry). Further analyses show that higher levels of D&O insurance coverage are associated with greater risk taking and higher probabilities of financial restatement due to aggressive financial reporting. While greater use of D&O insurance increases the cost of debt, we find some evidence that D&O insurance coverage appears to improve the value of large increases in capital expenditure for firms with better internal and external governance.
{"title":"Directors’ and Officers’ Liability Insurance and Loan Spreads","authors":"Chen Lin, Micah S. Officer, Rui Wang (Erik), H. Zou","doi":"10.2139/ssrn.1865679","DOIUrl":"https://doi.org/10.2139/ssrn.1865679","url":null,"abstract":"We analyze the effect of directors' and officers' liability insurance (D&O insurance) on the spreads charged on bank loans. We find that higher levels of D&O insurance coverage are associated with higher loan spreads and that this relation depends on loan characteristics in economically sensible ways and is attenuated by monitoring mechanisms. This association between loan spreads and D&O insurance coverage is robust to controlling for endogeneity (because both could be related to firm risk). Our evidence suggests that lenders view D&O insurance coverage as increasing credit risk (potentially via moral hazard or information asymmetry). Further analyses show that higher levels of D&O insurance coverage are associated with greater risk taking and higher probabilities of financial restatement due to aggressive financial reporting. While greater use of D&O insurance increases the cost of debt, we find some evidence that D&O insurance coverage appears to improve the value of large increases in capital expenditure for firms with better internal and external governance.","PeriodicalId":350660,"journal":{"name":"POL: Other Resource Based Strategy & Policy (Topic)","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125606059","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The process industries span several industrial sectors such as minerals and metals, pulp and paper, food and beverages, chemicals and petrochemicals, utilities and generic pharmaceuticals, and thus constitute a considerable part of all manufacturing industry. Application development, as an institutionalised function in process industry firms, focuses on bridging the gap between a product supplier's knowledge of the product's performance scope and the customer's knowledge of its own production process requirements. In an exploratory survey of major process firms in the Swedish process industries, the importance of application development to firms was judged to be very high, but there also seemed to be a window of opportunity for improvements. The most important driver was ‘an opportunity to establish long-term sustainable customer relationships and to secure future product sales’. Expected customer outcomes differed substantially between firms. As extremes, one firm expected 80% of application development to give the customers improved products, while the other extreme expected only improved customer process technology. Because most of the firms in the study population had customers on a global market, it is argued that the research findings may be relevant and of value also to the larger worldwide population of interest.
{"title":"Application Development in Process Firms: Adding Value to Customer Products and Production Systems","authors":"T. Lager, Per Storm","doi":"10.1111/radm.12013","DOIUrl":"https://doi.org/10.1111/radm.12013","url":null,"abstract":"The process industries span several industrial sectors such as minerals and metals, pulp and paper, food and beverages, chemicals and petrochemicals, utilities and generic pharmaceuticals, and thus constitute a considerable part of all manufacturing industry. Application development, as an institutionalised function in process industry firms, focuses on bridging the gap between a product supplier's knowledge of the product's performance scope and the customer's knowledge of its own production process requirements. In an exploratory survey of major process firms in the Swedish process industries, the importance of application development to firms was judged to be very high, but there also seemed to be a window of opportunity for improvements. The most important driver was ‘an opportunity to establish long-term sustainable customer relationships and to secure future product sales’. Expected customer outcomes differed substantially between firms. As extremes, one firm expected 80% of application development to give the customers improved products, while the other extreme expected only improved customer process technology. Because most of the firms in the study population had customers on a global market, it is argued that the research findings may be relevant and of value also to the larger worldwide population of interest.","PeriodicalId":350660,"journal":{"name":"POL: Other Resource Based Strategy & Policy (Topic)","volume":"107 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131970896","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Hafizia is the sixth generation business, after a legacy was established by Late Mr. Haji Noor Mohammad, followed by his grandson, Late Mr. Haji Ilahi Baksh. Later, he migrated to Sitapur in 1968. His legacy was followed by the Grandfather then, Late Mr. Haji Asghar Ali and further by Mr. Hafiz Mohammad Akram.Hafizia was set up in 1992 at Sitapur (U.P), India. It had been a leading manufacturer and exporter of superior range of home furnishing products. Hafizia supplied floor covering products to many Indian retail stores. It gave direct employment to 450-500 people and indirectly supporting more than 1000 families. The Business of Hafizia is totally owned and operated by Family members with the help of other team members. As of now, most of the marketing activity is handled by Mr. Zubair Akram and Mr. Umair Akram, two elder son of the Founder Mr. H.M. Akram. Both are Directors in the business. Mr. Zubair Akram had been active in Sampling and Research and Development, being a core competence of any business. The Board was separated the areas of Marketing, region wise, to avoid conflict and miscommunication. Mr. H.M. Akram, Managing Director of Hafizia worked as a mentor for marketing and daily operations. Hafizia emerged as the sole exports’ firm to some of the major destinations of the international markets. Mr. Ubaid Akram, had been the Director and third son of the Founder. Most of the activities of the business from marketing, sampling, production, finance, to day to day activity of the organization handled and operated by the family members. Strategy still, is undefined, the firm produces and sells world over but has not been able to create a brand name for itself. Diversification is another issue.The imbroglio surrounds professionalization amidst growing concerns of internationalization of business. The firm has to have a decision making unit which takes away all the redundancies associated with it being a traditional and a purely family run business. Will Hafizia be able to put itself right across the vents of being only a family run business and emerge as a Professionally organized business? Will the firm have an Entrepreneurial Strategy surrounding creation of Hafizia as a reliable and internationally renowned brand? Will Hafizia be able to utilize its full potential to diversify also? Amidst these, the firm thrives and grows, but inconsistently!!
Hafizia是第六代企业，由已故的Haji Noor Mohammad先生和他的孙子Haji Ilahi Baksh先生继承了遗产。后来，他于1968年移居西塔普尔。继承他遗产的是祖父，已故的哈吉·阿斯加尔·阿里先生和哈菲兹·穆罕默德·阿克拉姆先生。Hafizia于1992年在印度西塔普尔(北方邦)成立。它一直是高档家居产品的主要制造商和出口商。Hafizia为许多印度零售店提供地板铺装产品。它为450-500人提供了直接就业机会，并间接支持了1000多个家庭。Hafizia的业务完全由家族成员拥有和经营，并有其他团队成员的帮助。截至目前，大部分营销活动由Zubair Akram先生和Umair Akram先生处理，他们是创始人H.M. Akram先生的两个长子。两人都是公司的董事。Zubair Akram先生一直活跃于采样和研发，这是任何业务的核心竞争力。为了避免冲突和沟通不周，董事会按照地区划分了营销部门。H.M. Akram先生是Hafizia的董事总经理，曾担任营销和日常运营的导师。Hafizia成为唯一一家向国际市场主要目的地出口的公司。乌拜德·阿克拉姆先生是董事和创始人的第三个儿子。企业的大部分活动，从营销、抽样、生产、财务，到组织的日常活动，都由家族成员处理和经营。战略仍然是不明确的，该公司在世界各地生产和销售，但未能为自己创造一个品牌名称。多元化是另一个问题。在对商业国际化日益关注的背景下，专业化问题陷入了混乱。公司必须有一个决策部门，以消除与传统和纯粹的家族经营企业相关的所有冗余。Hafizia能否摆脱家族企业的束缚，成为一家专业组织的企业?公司是否会制定创业战略，将Hafizia打造成一个可靠的国际知名品牌?Hafizia是否也能充分利用其多样化的潜力?在这些中，公司蓬勃发展，但不一致!!
{"title":"Connecting Family Business & Generations: A Case of Hafizia Art & Crafts Pvt. Ltd.","authors":"M. Joshi, Apoorva Srivastava","doi":"10.2139/SSRN.2184614","DOIUrl":"https://doi.org/10.2139/SSRN.2184614","url":null,"abstract":"Hafizia is the sixth generation business, after a legacy was established by Late Mr. Haji Noor Mohammad, followed by his grandson, Late Mr. Haji Ilahi Baksh. Later, he migrated to Sitapur in 1968. His legacy was followed by the Grandfather then, Late Mr. Haji Asghar Ali and further by Mr. Hafiz Mohammad Akram.Hafizia was set up in 1992 at Sitapur (U.P), India. It had been a leading manufacturer and exporter of superior range of home furnishing products. Hafizia supplied floor covering products to many Indian retail stores. It gave direct employment to 450-500 people and indirectly supporting more than 1000 families. The Business of Hafizia is totally owned and operated by Family members with the help of other team members. As of now, most of the marketing activity is handled by Mr. Zubair Akram and Mr. Umair Akram, two elder son of the Founder Mr. H.M. Akram. Both are Directors in the business. Mr. Zubair Akram had been active in Sampling and Research and Development, being a core competence of any business. The Board was separated the areas of Marketing, region wise, to avoid conflict and miscommunication. Mr. H.M. Akram, Managing Director of Hafizia worked as a mentor for marketing and daily operations. Hafizia emerged as the sole exports’ firm to some of the major destinations of the international markets. Mr. Ubaid Akram, had been the Director and third son of the Founder. Most of the activities of the business from marketing, sampling, production, finance, to day to day activity of the organization handled and operated by the family members. Strategy still, is undefined, the firm produces and sells world over but has not been able to create a brand name for itself. Diversification is another issue.The imbroglio surrounds professionalization amidst growing concerns of internationalization of business. The firm has to have a decision making unit which takes away all the redundancies associated with it being a traditional and a purely family run business. Will Hafizia be able to put itself right across the vents of being only a family run business and emerge as a Professionally organized business? Will the firm have an Entrepreneurial Strategy surrounding creation of Hafizia as a reliable and internationally renowned brand? Will Hafizia be able to utilize its full potential to diversify also? Amidst these, the firm thrives and grows, but inconsistently!!","PeriodicalId":350660,"journal":{"name":"POL: Other Resource Based Strategy & Policy (Topic)","volume":"111 4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-12-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117294941","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article discusses the motives and determinants of global business service outsourcing. Similar to foreign production, outsourcing providers seek resources, new markets, efficiency, and strategic assets or capabilities. Similarities between multinational enterprises producing goods and multinational enterprises offering services with respect to theories related to global strategy, location, management (e.g. managing international data sharing), ownership, internationalization and external environment are also discussed.
{"title":"Global Business Service Outsourcing","authors":"Ahmad H. Juma'h","doi":"10.2139/ssrn.1025341","DOIUrl":"https://doi.org/10.2139/ssrn.1025341","url":null,"abstract":"This article discusses the motives and determinants of global business service outsourcing. Similar to foreign production, outsourcing providers seek resources, new markets, efficiency, and strategic assets or capabilities. Similarities between multinational enterprises producing goods and multinational enterprises offering services with respect to theories related to global strategy, location, management (e.g. managing international data sharing), ownership, internationalization and external environment are also discussed.","PeriodicalId":350660,"journal":{"name":"POL: Other Resource Based Strategy & Policy (Topic)","volume":"48 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2007-11-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122384898","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
JVs were once the domain of international market entry – a “necessary evil” to comply with restrictions on foreign ownership. In so doing, they also afforded access to local expertise and enabled companies to effectively “trial” a foreign market entry with a smaller commitment of resources – and with a natural exit option in the event that the trial failed. However, the nature of JVs has changed. Previously in decline, we have seen a new surge in collaborative deals in many sectors and countries, with the primary impetus being to gain access to positional assets, organizational capabilities and technologies, to gain scale, or to syndicate risk and capital. JV success is as much about creating an attractive opportunity as it is about finding an attractive opportunity – deal design, design of the operating model and implementation. Our perspectives are based on our research, empirical data and field experience.
{"title":"The Joint Venture (JV) Handbook","authors":"M. Jelinek, J. Pettit","doi":"10.2139/ssrn.2127281","DOIUrl":"https://doi.org/10.2139/ssrn.2127281","url":null,"abstract":"JVs were once the domain of international market entry – a “necessary evil” to comply with restrictions on foreign ownership. In so doing, they also afforded access to local expertise and enabled companies to effectively “trial” a foreign market entry with a smaller commitment of resources – and with a natural exit option in the event that the trial failed. However, the nature of JVs has changed. Previously in decline, we have seen a new surge in collaborative deals in many sectors and countries, with the primary impetus being to gain access to positional assets, organizational capabilities and technologies, to gain scale, or to syndicate risk and capital. JV success is as much about creating an attractive opportunity as it is about finding an attractive opportunity – deal design, design of the operating model and implementation. Our perspectives are based on our research, empirical data and field experience.","PeriodicalId":350660,"journal":{"name":"POL: Other Resource Based Strategy & Policy (Topic)","volume":"13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133366494","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 1900-01-01DOI: 10.4018/978-1-60960-587-2.CH818
L. Biggiero
Notwithstanding the warning of myopic view, when giving too much emphasis to the short run and stable environments, efficiency is usually claimed by standard economics as the main goal of competitive firms. This is challenged by management and organization scholars, who argue that, in presence of strong uncertainty due to environmental turbulence, slack resources can be a competitive advantage. In order to put some sound block in this debate through, this paper tests four groups of hypotheses on an agent-based model of industry competitiveness based on suppliers’ quality. It innovates current literature in two ways: first, it considers redundancy in terms of organizational knowledge, and not in terms of personnel or financial assets or other types of resources, which are usually taken as object of study. Secondly, it compares the effects of two forms of perturbations: environmental shock and opportunism. The results show that these two forms impact differently on industry profitability and that knowledge redundancy can (limitedly) compensate the effects of environmental shocks but not of opportunism. Moreover, it demonstrates that, as agents exchange (and accumulate) more information, knowledge efficiency declines, but less than proportionally to the increase of knowledge exchange.
{"title":"Knowledge Redundancy, Environmental Shocks, and Agents’ Opportunism","authors":"L. Biggiero","doi":"10.4018/978-1-60960-587-2.CH818","DOIUrl":"https://doi.org/10.4018/978-1-60960-587-2.CH818","url":null,"abstract":"Notwithstanding the warning of myopic view, when giving too much emphasis to the short run and stable environments, efficiency is usually claimed by standard economics as the main goal of competitive firms. This is challenged by management and organization scholars, who argue that, in presence of strong uncertainty due to environmental turbulence, slack resources can be a competitive advantage. In order to put some sound block in this debate through, this paper tests four groups of hypotheses on an agent-based model of industry competitiveness based on suppliers’ quality. It innovates current literature in two ways: first, it considers redundancy in terms of organizational knowledge, and not in terms of personnel or financial assets or other types of resources, which are usually taken as object of study. Secondly, it compares the effects of two forms of perturbations: environmental shock and opportunism. The results show that these two forms impact differently on industry profitability and that knowledge redundancy can (limitedly) compensate the effects of environmental shocks but not of opportunism. Moreover, it demonstrates that, as agents exchange (and accumulate) more information, knowledge efficiency declines, but less than proportionally to the increase of knowledge exchange.","PeriodicalId":350660,"journal":{"name":"POL: Other Resource Based Strategy & Policy (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122576872","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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