http://repub.eur.nl/res/org/1/ List of Publications en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/32039/ 2012-07-01T00:00:00Z In almost all literature on inventory models with lost sales and periodic reviews the lead time is assumed to be either an integer multiple of or less than the review period. In a lot of practical settings such restrictions are not satisfied. We develop new models allowing constant lead times of any length when demand is compound Poisson. Besides an optimal policy, we consider pure and restricted base-stock policies under new lead time and cost circumstances. Based on our numerical results we conclude that the latter policy, which imposes a restriction on the maximum order size, performs almost as well as the optimal policy. We also propose an approximation procedure to determine the base-stock levels for both policies with closed-form expressions. Bijvank, M. Johansen, S.G. http://repub.eur.nl/res/pub/32345/ 2012-06-07T00:00:00Z This dissertation examines the differential effects of formal and informal societal orders, or institutions, in stable markets. Patterns of individual and organizational conformity with and deviance from these structures may arise from either the dynamics of the institutional order or the overlap of different institutions. Institutional change is often conceptualized as the replacement of an established institution with a new set of beliefs and practices. However, change may also reflect a more subtle process of modification that ensures that the institution retains its coherence over time. I propose three different forms of institutional change, expansion, displacement, and contraction, and argue that the effect of each form on potency differs. In order to ascertain the presence of these forms of institutional change, I first analyze modifications to the provisions of a formal institution, the Enterprise Bankruptcy Law of the People’s Republic of China. I then examine their influence on organizational entry into bankruptcy and find that displacement and contractive have a negative effect on potency. In addition to differences in how institutions change, differences in audience expectations may also contribute to patterns of observed deviance. I examine the effect of social status and market categories at the individual and organizational level on the inter-firm mobility of attorneys working for international law firms in Hong Kong. Results from a longitudinal study indicate that while individual-level deviance from the categorical order is sanctioned, the association with status moderates this negative effect. At the organizational level, category spanning positively influenced inter-firm mobility if the attorney occupied the same categories as their current employer. Betancourt, N. http://repub.eur.nl/res/pub/32344/ 2012-06-07T00:00:00Z This dissertation focuses on how executive compensation is designed and its implications for corporate finance and government regulations. Chapter 2 analyzes several proposals to restrict CEO compensation and calibrates two models of executive compensation that describe how firms would react to different types of restrictions. We find that many restrictions on CEO compensation would have unintended consequences. Restrictions on total realized (ex-post) payouts lead to higher average compensation, higher rewards for mediocre performance, lower risk-taking incentives, and the fact that some CEOs would be better off with a restriction than without it. Restrictions on total ex-ante pay lead to a reduction in the firm's demand for CEO talent and effort. Restrictions on particular pay components, and especially on cash payouts, can be easily circumvented. Chapter 3 examines how executive dividend protection affects corporate payout policy. I find that the dividend protection on executive restricted stock and option grants is associated with higher dividend payouts and lower share repurchases. Using the 2003 tax reform as an exogenous shock in dividend payouts, I provide further evidence that executive dividend protection causes changes in dividend payout policies. Chapter 4 studies a special subset of CEOs who works for a one-dollar annual salary. Rather than being the sacrificial acts they are projected to be, our findings suggest that some adoptions of one-dollar CEO salaries are opportunistic behavior of the wealthier, more overconfident, influential CEOs. Overall, these findings support the literature which claims that CEOs employ camouflage in compensation schemes to reduce the likelihood of public outrage over private benefits. Zhang, D. http://repub.eur.nl/res/pub/32343/ 2012-06-04T00:00:00Z Innovation is the engine of sustained organizational performance and is central to organizations’ competitive advantage. This thesis aims to further the understanding of how firms can stimulate two types of innovation outcomes: i) product and service innovation, and ii) management innovation. To this end, this thesis analyzes how managerial and organizational factors and their interrelations inhibit or enable these two types of innovation. Reserach findings indicate that offshoring is an important mechanism that can stimulate the introduction of new products and services; however, over-offshoring poses the risk of reducing firms’ innovativeness. Furthermore, this research sugests that when members of the top management team (TMT) share the task of leadership firms can achieve higher levels of both exploratory and exploitative innovation. Also, findings indicate that TMT learning processes (i.e., processes that systematically challenge the status-quo) can stimulate firms’ management innovation. Mihalache, Oli Radu http://repub.eur.nl/res/pub/31355/ 2012-06-01T00:00:00Z This paper investigates how underwriters set the IPO firm’s fair value, an ex-ante estimate of the market value, using a unique dataset of 228 reports from French underwriters. These reports are issued before the IPO shares start trading on the stock market and detail how underwriters determined fair value. We document that underwriters often employ multiples valuation, dividend discount models and discounted cash flow (DCF) analysis to determine fair value but that all of these valuation methods suffer from a positive bias with respect to equilibrium market value.We also analyze how this fair value estimate is subsequently used as a basis for IPO pricing. We report that underwriters deliberately discount the fair value estimate when setting the preliminary offer price. Part of the intentional price discount can be recovered by higher price updates. We find that, controlling for other factors such as investor demand, part of underpricing stems from this intentional price discount. -------------------------------------------------------------------------------- Roosenboom, P.G.J. http://repub.eur.nl/res/pub/32167/ 2012-05-10T00:00:00Z To survive and prosper firms have to renew their strategies to maintain a dynamic strategic fit with their changing environments. Strategic renewal can be understood as the adaptive choices and actions a firm undertakes to alter its path dependence and maintain a dynamic strategic fit with changing environments over time. In this dissertation we endeavor to develop and test theory on how, and under what environmental, firm, and team conditions, the organization’s key decision makers –its Upper Echelons, pursue particular adaptive responses. We focus on some contingencies that prompt Chief Executive Officers (CEOs), Top Management Teams (TMTs), and Middle Managers (MMs) to adapt through internal and/or external modes of renewal. We propose that heterogeneity in adaptive strategic choices ensues from the contingent search patterns (behavioral, cognitive, and informational) adopted by the organization’s Upper Echelons. In the first study we find asymmetric behavioral search patterns of CEOs in relation to different cross-level correlates. In study two we find that TMT attributes influence cognitive search-focus in dynamic environments to explain heterogeneous adaptive responses. In the third study we find that TMT and MM attributes can either enable or hamper changes in structures, processes, and practices. Study four exposes how the complex interaction between TMT diversity and shared TMT vision drive new knowledge creation from the stock of knowledge acquired through informational search activities by TMTs. The findings from the four studies, each adopting a unique database, provide evidence on how contingent search patterns of Upper Echelons drive different modes of renewal. Heyden, M.L.M. http://repub.eur.nl/res/pub/32166/ 2012-05-08T00:00:00Z In this dissertation, we evaluate the roles senior management teams and individual middle managers play in realizing the performance benefits of entrepreneurial orientations. We investigate the role of senior management teams by focusing on a sample of 9.000 firms in the Netherlands. The first study focuses on antecedents of entrepreneurial orientation, i.e. internal and external knowledge acquisition of senior management teams. We find that both internal and external knowledge acquisition are important and that a premium in terms of the entrepreneurial orientation of the firm may be obtained by simultaneously sourcing for both types of knowledge. Our second study presents a model for top management teams aiming to enhance the performance benefits of the entrepreneurial orientation of the firm. We investigate team attributes such as team heterogeneity and shared vision and find some compelling results with respect to their context specific applicability for leveraging the entrepreneurial orientation of the firm. Our final study, based within the European branch of a single firm operating at the intersection of hardware, software and IT consulting, examines the individual entrepreneurial orientation of middle managers and subsequent performance benefits. We find that strong network ties of relatively higher placed middle managers are instrumental for realizing the inherent value of entrepreneurial orientation. Together, our results emphasize the performance benefits that may be obtained if the entrepreneurial orientation of organizations and individuals is appropriately managed. Attention for knowledge acquisition, team composition, the environmental context as well as network ties and the hierarchical position of individual managers represent essential aspects of effective management of entrepreneurial orientations. Doorn, S., van http://repub.eur.nl/res/pub/32170/ 2012-05-01T00:00:00Z We study the inverse power index problem for weighted voting games: the problem of finding a weighted voting game in which the power of the players is as close as possible to a certain target distribution. Our goal is to find algorithms that solve this problem exactly. Thereto, we study various subclasses of simple games, and their associated representation methods. We survey algorithms and impossibility results for the synthesis problem, i.e., converting a representation of a simple game into another representation. We contribute to the synthesis problem by showing that it is impossible to compute in polynomial time the list of ceiling coalitions of a game from its list of roof coalitions, and vice versa. Then, we proceed by studying the problem of enumerating the set of weighted voting games. We present first a naive algorithm for this, running in doubly exponential time. Using our knowledge of the synthesis problem, we then improve on this naive algorithm, and we obtain an enumeration algorithm that runs in quadratic exponential time. Moreover, we show that this algorithm runs in output-polynomial time, making it the best possible enumeration algorithm up to a polynomial factor. Finally, we propose an exact anytime algorithm for the inverse power index problem that runs in exponential time. By the genericity of our approach, our algorithm can be used to find a weighted voting game that optimizes any exponential time computable function. We implement our algorithm for the case of the normalized Banzhaf index, and we perform experiments in order to study performance and error convergence. Keijzer, B. de Klos, T.B. Zhang, Y. http://repub.eur.nl/res/pub/23503/ 2012-04-01T00:00:00Z In the media role models are increasingly being acknowledged as an influential factor in explaining the reasons for the choice of occupation and career. Various conceptual studies have proposed links between role models and entrepreneurial intentions. However, empirical research aimed at establishing the importance of role models for (nascent) entrepreneurs is scarce. Knowledge of the presence of entrepreneurial role models, their specific functions and characteristics is therefore limited. Our explorative empirical study is a first step towards filling this gap. Our study is based on the outcomes of a questionnaire completed by a representative sample of 292 entrepreneurs in three major Dutch cities – entrepreneurs who have recently started up a business in the retail, hotel and restaurant sectors, business services and other services. We provide indications of the presence and importance of entrepreneurial role models, the function of these role models, the similarity between the entrepreneur and the role model, and the strength of their relationship. Highlights ► Role models emerge as influential factors in individual decision making. ► However, empirical knowledge of entrepreneurial role models is limited. ► We explore impacts, functions and characteristics of entrepreneurial role models. ► We find that role models often influence others in their decision to start a firm. ► Role models tend to be next-door examples and fulfill several functions. Bosma, N. Hessels, S.J.A. Schutjens, V. Praag, M. van Verheul, I. http://repub.eur.nl/res/pub/32038/ 2012-04-01T00:00:00Z Most inventory management systems at hospital departments are characterised by lost sales, periodic reviews with short lead times, and limited storage capacity. We develop two types of exact models that deal with all these characteristics. In a capacity model, the service level is maximised subject to a capacity restriction, and in a service model the required capacity is minimised subject to a service level restriction. We also formulate approximation models applicable for any lost-sales inventory system (cost objective, no lead time restrictions etc). For the capacity model, we develop a simple inventory rule to set the reorder levels and order quantities. Numerical results for this inventory rule show an average deviation of 1% from the optimal service levels. We also embed the single-item models in a multi-item system. Furthermore, we compare the performance of fixed order size replenishment policies and (R, s, S) policies. Bijvank, M. Vis, I.F.A. http://repub.eur.nl/res/pub/32048/ 2012-04-01T00:00:00Z Two experiments show that violations of expected utility due to ambiguity, found in general decision experiments, also affect belief aggregation. Hence we use modern ambiguity theories to analyze belief aggregation, thus obtaining more refined and empirically more valid results than traditional theories can provide. We can now confirm more reliably that conflicting (heterogeneous) beliefs where some agents express certainty are processed differently than informationally equivalent imprecise homogeneous beliefs. We can also investigate new phenomena related to ambiguity. For instance, agents who express certainty receive extra weight (a cognitive effect related to ambiguity-generated insensitivity) and generate extra preference value (source preference; a motivational effect related to ambiguity aversion). Hence, incentive compatible belief elicitations that prevent manipulation are especially warranted when agents express certainty. For multiple prior theories of ambiguity, our findings imply that the same prior probabilities can be treated differently in different contexts, suggesting an interest of corresponding generalizations. Baillon, A. Cabantous, L. http://repub.eur.nl/res/pub/31914/ 2012-03-29T00:00:00Z This study investigates to what extent extreme confidence of either management or security analysts may impact financial or operating performance. We construct a multidimensional degree of company confidence measure from a wide range of corporate decisions. We empirically test this measure for large US companies from 1980 -2008 and find significantly different company and performance characteristics between confidence extremes. Diffident firms tend to be smaller, more distressed, less conservatively financed and, except for the new millennium, yield a lower return on invested capital with higher variability. When adjusting stock returns for risk, the performance differences prior to moving to extreme confidence become even more pronounced. Extreme confidence could also distort earnings forecasts as analyst may overly rely on an anchor or make insufficient adjustments. Innate bias, anchoring to prior year earnings, risk attitude and responses to recent news are conditional on the level of analysis. Innate optimism prevails on the industry and analyst level. We find no support for anchoring by analysts with a long track record or across industries, which suggests a bottom-up approach. Long-term risk is considered as upside and short-term risk as downside potential. There is also a tendency to underreact to news, the extent of which seems conditional on the direction. Douwens-Zonneveld, M.G. http://repub.eur.nl/res/pub/31913/ 2012-03-20T00:00:00Z With the growth of online shopping, a new era of market communication is administered. Internet as a combined communication- and sales-channel has blurred the borders between persuasive communications to activate goals (i.e., abstract messages that are traditionally communicated via advertisements, commercials and billboards) and concrete recommendations to activate choices (i.e., concrete messages that are traditionally communicated by promotions on the shop floor). The blurring borders between abstract persuasive communications and concrete recommendations call for new research to gain insight in the interplay between abstract and concrete product messages. In the first essay we investigate the differential impact of abstract benefit messages and concrete product examples on goal activation and choice behavior. In the second essay we further unravel the cognitive structure in consumers’ minds that underlies the behavior we observed in essay 1. In essay 3 we broaden the applicability of our findings, by investigating the impact of abstract benefit messages versus concrete product messages on consumer behavior outside the focal product category mentioned in the messages. Our findings are based on consumer data gathered in lab-experiments and from a panel survey. All of our essays discuss applications to health related products. In summary, this dissertation shows some interesting theoretical findings about the relative impact of abstract versus concrete product messages. It is also of particular interest to commercial companies and public policy makers, because it provides suggestions on how to steer consumer decision-making processes with product messages to promote healthier consumer choices. Ginkel-Bieshaar, M.N.G., van http://repub.eur.nl/res/pub/32031/ 2012-03-20T00:00:00Z The application of the classical "linear" model of incentive pay to the case when the noise is multiplicative to effort generates two predictions for a given strength of incentives: 1) more risk-averse workers will put in less effort, and 2) setting a performance target will weaken the negative risk aversion--effort link. The data from a real-effort laboratory experiment involving 85 student participants support both these predictions. Implications of the model and empirical findings to the literature on, and practice of, personnel management are discussed. Zubanov, N.V. http://repub.eur.nl/res/pub/32040/ 2012-03-06T00:00:00Z Competitive retail environments are characterized by service levels and lost sales in case of excess demand. We contribute to research on lost-sales models with a service level criterion in multiple ways. First, we study the optimal replenishment policy for this type of inventory system as well as base-stock policies and (R, s, S) policies. Furthermore, we derive lower and upper bounds on the order-up-to level, and we propose efficient approximation procedures to determine the order-up-to level. The procedures find values of the inventory control variables that are close to the best (R, s, S) policy and comply to the service level restriction for most of the instances, with an average cost increase of 2.3% and 1.2% for the case without and with fixed order costs, respectively. Bijvank, M. Vis, I.F.A. http://repub.eur.nl/res/pub/32021/ 2012-03-05T00:00:00Z We examine the performance of passively managed exchange-traded funds (ETFs) that provide exposure to global emerging markets equities. We find that the tracking errors of these funds are substantially higher than previously reported levels for developed markets ETFs. ETFs that use statistical index replication techniques turn out to be especially prone to high tracking errors, and particularly so during periods of high cross-sectional dispersion in stock returns. At the same time, we find no convincing evidence that these funds earn higher returns than ETFs that rely on full-replication techniques. Blitz, D.C. Huij, J.J. http://repub.eur.nl/res/pub/31780/ 2012-03-02T00:00:00Z We conduct an explorative study to investigate the effect of subjectivity in performance evaluation practices on managerial motivation in public sector organisations. Increased subjectivity can enhance motivation if supervisors are able to provide better informational feedback. However, subjectivity is likely to reduce motivation if it reduces perceived mission clarity or negatively affects relations between supervisors and subordinates. Our analysis is based on a survey among 94 public sector managers in the Netherlands. We predict and find that subjectivity in performance evaluation practices reduces perceived mission clarity, which in turn decreases motivation. We also find that subjectivity negatively affects subordinate managers’ trust in their supervisor, which also reduces motivation. Jointly, these results indicate that the negative effects of subjectivity in performance evaluation practices outweigh its potential positive consequences, suggesting that New Public Management's focus on more objective performance measures can indeed be beneficial. By itself, however, this does not automatically imply that more objective systems in general are optimal in all public sector organisations as such systems may have dysfunctional side effects such as distortion of performance measures, gaming or manipulation. In addition, we find that the effects of subjectivity are moderated by organisational characteristics. Rinsum, M. van Verbeeten, F.H.M. http://repub.eur.nl/res/pub/30686/ 2012-03-01T00:00:00Z Abstract: Regulatory framework conditions have been identified as important factors influencing the innovation activities of companies, industries and whole economies. However, in the empirical literature, the impacts of regulation have been assessed as rather ambivalent for innovation. Different types of regulations generate various impacts and even a single type of regulation can influence innovation in various ways depending on how the regulation is implemented. The endogenous growth approach developed by Carlin and Soskice, 2006 W. Carlin and D. Soskice, Macroeconomics: Imperfections, Institutions & Policies, Oxford University Press, Oxford (2006). Carlin and Soskice (2006) and empirically applied by Crafts (2006), which determines endogenously the rate of technological progress and therefore innovation, allows a conceptual analysis of the influence of different types of regulation on innovation. In general, the negative effect of compliance costs should be compared with the more dynamic effect of regulations generating additional incentives for innovative activities. Based on this approach, we derive hypotheses on the impact of different specific regulations on innovation. We differentiate between economic, social and institutional regulations following the OECD taxonomy on regulations. Existing economic analyses are surveyed, which are characterised by rather heterogeneous approaches, data bases and results. The paper aims to apply a comprehensive and comparative approach to investigate quantitatively the innovation impacts in 21 OECD countries using panel data for the period between 1998 and 2004. In summary, the empirical results confirm the hypotheses derived from the conceptual theoretical framework determining technical progress and innovation endogenously and allowing a distinction between short-term and long-term effects. Consequently, the theoretical approach is an appropriate starting point for the empirical analysis of the influence of different regulations on innovation. Highlights: ► Modifications in regulatory and legal framework conditions have a significant influence on the dynamics of innovations OECD countries. ► Positive influence of general legal and regulatory framework conditions, of an efficient IPR regime and of unrestricted price setting. ► Also positive impact of product and service legislation deterring business activities and environmental laws hindering competitiveness. Blind, K. http://repub.eur.nl/res/pub/31265/ 2012-03-01T00:00:00Z An extensive body of literature documents that positioning is a central success factor for the launch and overall performance of new products in the marketplace. Under certain circumstances, however, the measurement of positioning success can be problematic. Specifically, the application of attribute‐based measurement methods, which are frequently used in practice for this purpose, is subject to limitations in certain situations. For example, these methods can be problematic in product categories where products are evaluated as a whole or where they even lack attributes that create valuable differentiation. Their application can also be difficult in product markets in which the importance of product attributes is constantly shifting or in a cross‐national context where the importance of various attributes is likely to differ across countries. This paper introduces a new approach for measuring positioning effectiveness that helps overcome some key limitations of extant approaches and serves as a support tool for positioning‐related decisions. Positioning effectiveness is modeled as a customer‐based multidimensional construct capturing conceptually relevant dimensions of positioning success (namely dissimilarity, uniqueness, favorability, and credibility) at the holistic product level rather than the individual attribute level. Altogether seven studies show that the proposed positioning effectiveness measure is reliable, valid, and viable to be used across various types of branded products and distinct product categories. The results of the studies indicate the measure's ability to successfully predict important consumer behavior variables such as overall superiority or purchase intentions and demonstrate superior predictive performance compared with common attribute‐based approaches. The recognition of the relevance of different dimensions of positioning effectiveness should also enable new product managers to detect strengths and weaknesses of a product's current positioning, and thus serve as a tool to develop more effective product strategies. The general nature of the measurement instrument makes it particularly suitable for application in (1) longitudinal product‐tracking studies; (2) cross‐national studies involving comparisons of positioning effectiveness between products in different countries; (3) product categories characterized by technological turbulence (and hence attribute instability); and (4) studies aimed at comparing the positioning effectiveness of different products in a portfolio. Boundary conditions for the application of the measure and potential areas for further study are finally considered. http://repub.eur.nl/res/pub/31322/ 2012-03-01T00:00:00Z This paper examines the relationship between a firm's strategic framework and business environment and the probability of becoming the target of "copying", differentiated into (i) unauthorized reproduction of its technological product elements or insignia, and (ii) patent and trademark infringement. Based on bivariate and multivariate analyses of survey data, we show patterns of the links between being (legally or illegally) imitated and IP protection (e.g., defensive publishing), general strategy (e.g., selling products abroad or off-shoring R&D activities) and organizational factors (e.g., firm size). Management implications for successful strategies against the different types of being copied are derived. Berger, F. Blind, K. Cuntz, A.N.