SelectedWorks @ Melbourne Business School (The University of Melbourne)
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Team Size, Noisy Signals, and the Career Prospects of Academic Scientists
No full textTeam production is increasingly common in bench science, because scientists specialize and then combine their skills in a team. We argue that team production makes it more difficult to identify the quality of a junior scientist, as her productivity cannot be perfectly distinguished from others in the team. We develop a model of promotions within academic science: funding organizations observe the output of academic teams, and decide how much funding to award to each scientist. An exogenous change in the size of teams implies noisier signals. In response, funding organizations rationally tilt more of the funding toward senior scientists. Junior scientists have reduced prospects of ever obtaining enough funding to run their own laboratory. Using data from academic science, we show that when the size of scientific teams increased, there is evidence of fewer promotions, more funding to senior scientists, and more mid-career exit. We apply the insights gained to thinking about teamwork and promotions in organizations
The Role of Psychic Distance in Entry Mode Decisions: Magnifying the Threat of Opportunism or Increasing the Need for Local Knowledge?
No full textWith respect to entry mode decisions, psychic distance may play two contradictory roles. On one hand, the Transaction Cost perspective is concerned with opportunism. Psychic distance magnifies the threat of opportunism, which encourages higher levels of control by foreign firms. Conversely, the New Internalization perspective emphasizes the role of complementary assets controlled by local entities. Distance increases the need to access local knowledge; which encourages firms to seek joint ventures. By adopting an experimental approach, and measuring managers’ a priori perceptions of distance, this paper contributes to the literature by providing a more sophisticated approach for discriminating between these effects. The results indicate that distance magnifies the need for firms to access complementary assets; however, distance does not appear to magnify the threat of opportunism
The Kogut and Singh national cultural distance index: Time to start using it as a springboard rather than a crutch
No full textThis Counterpoint investigates the continued relevance of the 30-year-old Kogut and Singh (KS) index of cultural distance. KS was a seminal contribution, highlighting the relevance of cultural differences in IB. However, since then, simplistic replications of the original arguments and index have prevented us from progressing towards a better understanding of how cross-national differences matter. We discuss the mechanisms underlying the construct and how they relate to the algorithm, data, and its critiques. We call for more theoretically informed approaches, highlighting the underlying mechanisms, and specifying which data and algorithms best capture those mechanisms in each research context
Is Microfinance Raising Village Income? The issue of Excess Entry
No full textThis paper provides new insight into the question of why we have not seen microfinance pro- grams lift beneficiary regions out of poverty. We suggest that the explanation may lie in the industry choice of microfinance participants: if borrowers tend to enter imperfectly competitive sectors, such as retail, there may be a “business-stealing” effect that reduces incomes of existing businesses. Our model shows that microfinance may lower total incomes at the village level. The result is related to the classic Mankiw and Whinston result on excess entry. The results imply that microfinance organizations may want to steer recipients away from the petty retail sector in some markets
Gone with the wind: The evolving influence of social movements and counter movements on entrepreneurial activity in the U.S. wind industry
No full textSocial movements can disrupt existing industries and inspire the emergence of new markets by drawing attention to problems with the status quo and promoting alternatives. We examine how the influence of social movements on entrepreneurial activity evolves as the markets they foster mature. Theoretically, we argue that the success of social movements in furthering market expansion leads to three related outcomes. First, the movement-encouraged development of market infrastructure reduces the need for continued social movement support. Second, social movements’ efforts on behalf of new markets increase the importance of resource availability for market entry. Third, market growth motivates countermovements that reduce the beneficial impact of initiator movements on entrepreneurial activity. We test these arguments by analyzing evolving social movement dynamics and entrepreneurial activity in the US wind power industry from 1992 to 2007. We discuss the implications of our findings for the study of social movements, stakeholder management, sustainability, and entrepreneurship
Toward a theory of entry in moral markets: The role of social movements and organizational identity
No full textA growing body of research on moral markets—sectors whose raison d’être is to offer market solutions to social and environmental issues—has offered critical insights into the emergence and growth of these sectors. Less is known, however, about why some firms enter moral markets while others do not. Drawing from research on market entry, organizational identity, and social movements, we develop a theory that highlights the potential of organizational identity to explain variation in entry into moral markets. We then expand our framework by theorizing about contingencies that alter the shape of the relationship between organizational identity and market entry: the type and orientation of the social movement supporting the moral market, the flexibility of organizational identity, and the mode of market entry (de novo vs. de alio). Finally, we discuss the contributions of our framework and opportunities for extension
Econometric Modeling of Regional Electricity Spot Prices in the Australian Market
No full textWholesale electricity markets are increasingly integrated via high voltage interconnectors, and inter-regionaltrade in electricity is growing. To model this, we consider a spatial equilibrium model of price formation, where constraints on inter-regional flows result in three distinct equilibria in prices. We use this to motivate an econometric model for the distribution of observed electricity spot prices that captures many of their unique empirical characteristics. The econometric model features supply and inter-regional trade cost functions, which are estimated using Bayesian monotonic regression smoothing methodology. A copula multivariate time series model is employed to capture additional dependence --- both cross-sectional and serial --- in regional prices. The marginal distributions are nonparametric, with means given by the regression means. The model has the advantage of preserving the heavy right-hand tail in the predictive densities of price. We fit the model to half-hourly spot price data in the five interconnected regions of the Australian national electricity market. The fitted model is then used to measure how both supply and price shocks in one region are transmitted to the distribution of prices in all regions in subsequent periods. Finally, to validate our econometric model, we show that prices forecast using the proposed model compare favorably with those from some benchmark alternatives
COLLECTIVE ACTION AND MARKET FORMATION: AN INTEGRATIVE FRAMEWORK
No full textWhile extant research places collective action at the heart of market formation, it provides little understanding about when and to what extent collective action is important. In this paper, we develop a novel theoretical framework detailing what collective action problems and solutions arise in market formation and under what conditions. Our framework centers on the development of market infrastructure with three key factors that influence the nature and extent of collective action problems: perceived returns to contributions, excludability, and contribution substitutability. We apply our framework to diverse market formation contexts and derive a fresh set of attendant propositions. Finally, we show how collective action problems and solutions evolve during market formation efforts and discuss how our framework contributes to strategic management, entrepreneurship, and organization literatures
Leader-Follower Guanxi: An Invisible Hand of Cronyism in Chinese Management
No full textGuanxi social networks are part of the fabric of Chinese society and central to every aspect of Chinese life including work. The relationship between guanxi and cronyism has been researched and discussed by scholars in Supervisor-Subordinate Guanxi (SSG) studies. However, SSG cannot explain the full extent of cronyism in Chinese management, which usually encompasses a network of actors including a supervisor, a subordinate, a third party (called “leader”) who has a higher ranking than a subordinate, and possibly an intermediary between a leader and a supervisor in the same organization. Consequently, this paper develops a new construct Leader-Follower Guanxi (LFG) to explain cronyism in Chinese management. LFG is defined as the existence of direct particularistic (in-group) ties associated with a particular set of differentiated behavioral obligations based on social norms between a leader and a follower in the same organization. We examine the relationship between LFG and cronyism in Chinese organizations, and propose that LFG will be positively associated with cronyism. We then use Chinese “face” theory (mianzi and lian) to illustrate how LFG engenders cronyism in Chinese management. We assert that LFG serves as an invisible hand of cronyism in Chinese organizations. Finally, we consider how to develop leadership and HR practices that prevent cronyism in Chinese organizations
Using theory on authentic leadership to build a strong human resource management system
No full textPrior work has questioned whether human resource management (HRM) lives up to the organizational benefits it espouses. The intentions underlying human resource (HR) practices often differ from how they are implemented by line managers or how they are ultimately perceived by followers, thus undermining the strength of the HR system in influencing organizational outcomes and with them the overall reputation of HRM. We argue that line managers, specifically those who display authentic leadership behaviors, can strengthen an HR system (i.e., aligning intended, actual, and perceived HR policies and practices) by implementing HR practices in a way that they are perceived as distinct, consistent, and reflecting consensus. Authentic leadership theory departs from more traditional, top-down fit perspectives in strategic HRM to consider the dynamic way in which individuals within an organizational context co-create felt and perceived authenticity in interaction with others. In other words, by providing a more dynamic approach to creating alignment in HRM, authentic leadership helps HRM attain more authenticity and credibility in the organization