Publication database

This paper provides a descriptive analysis of where the Greek bailout money went since 2010 and finds that, contrary to widely held beliefs, less than €10 billion or a fraction of less than 5% of the overall programme went to the Greek fiscal budget. In contrast, the vast majority of the money went to existing creditors in the form of debt repayments and interest payments. The resulting risk transfer from the private to the public sector and the subsequent risk transfer within the public sector from international organizations such as the ECB and the IMF to European rescue mechanisms such as the ESM still constitute the most important challenge for the goal to achieve a sustainable fiscal situation in Greece.

We study the alliance formation strategy among suppliers in a framework with one downstream firm and n upstream suppliers. Each supplier faces an exogenous random shock that may result in an order default. Each of them also has access to a recourse fund that can mitigate this risk. The suppliers can share the fund resources within an alliance, but they need to equitably allocate the profits of the alliance among the partners. In this context, suppliers need to decide whether to join larger alliances that have better chances of order fulfillment or smaller ones that may grant them higher profit allocations. We first analytically characterize the exact coalition-proof Nash-stable coalition structures that would arise for symmetric complementary or substitutable suppliers. Our analysis reveals that it is the appeal of default risk mitigation, rather than competition reduction, that motivates cooperation. In general, a riskier and/or less fragmented supply base favors larger alliances, whereas substitutable suppliers and customer demands with lower pass-through rates result in smaller ones. We then characterize the stable coalition structures for an asymmetric supplier base. We establish that grand coalition is more stable when the supplier base is more homogeneous in terms of their risk levels, rather than divided among a few highly risky suppliers and other low-risk ones. Going one step further, our investigation of endogenous recourse fund levels for the suppliers demonstrates how financing costs affect suppliers’ investments in risk-reducing resources and, consequently, their coalition formation strategy. Last, we discuss model generalizations and show that, in general, our insights are quite robust.

© 2016 INFORMS

CSR activities such as charitable giving, environmental programs and ethical practices can motivate frontline employees. One of the key variables is organizational identification. CSR communicates values, and, if these values are consistent with a person’s own value system, it results in higher identification with the company. Employees who notice that consumers are fond of the company’s CSR activities will identify even more with the company. If CSR ranks high in their own personal value system and the value system of the consumer as well, they find common ground for conversations beyond immediate business talk. CSR can be an icebreaker in conversations with customers. Once service employees find out that customers share their passion for social or environmental causes, it creates a bond that is highly motivating. They become more confident that they know what the customers want. They are more motivated to serve those customers when they see that both of them care about the same sorts of things.

This paper examines the effect of status loss on organizations’ price-setting behavior. We predict, counter to current status theory and aligned with performance feedback theory, that a status decline prompts certain organizations to charge higher prices and that there are two kinds of organizations most prone to make such price increases: those with broad appeal across disconnected types of customers and those whose most strategically similar rivals have charged high prices previously. Using panel data from U.S. News & World Report’s annual rankings of private colleges and universities from 2005 to 2012, we model the effect of drops in rank that take a school below an aspiration level. We find that schools set tuition higher after a sharp decline in rank, particularly those that appeal widely to college applicants and whose rivals are relatively more expensive. This study presents a dynamic conception of status that differs from the prevailing view of status as a stable asset that yields concrete benefits. In contrast to past work that has assumed that organizations passively experience negative effects when their status falls, our results show that organizations actively respond to status loss. Status is a performance related goal for such producers, who may increase prices as they work to recover lost ground after a status decline.

With permission of Sage

A comprehensively updated revision of a book regarded by many as one the leading and authoritative titles for practitioners, academics and students in the domain of information systems and technology (IS/IT) strategy. Presents a structured framework with tools, techniques and ways of thinking which provide a practical approach to building a digital strategy, expressed primarily in the language of business and management. Brings together the implications of the significant advances in IT and the most useful current thinking, research, and experiences concerning the business impact and strategic opportunities created by IS/IT. Peppard and Ward discuss the key questions that managers have to grapple with of where, when and how to invest in IS/IT, which is why a IS/IT (or digital) strategy is required.

This paper studies the design of voluntary disclosure regulations for a firm that faces a stochastic environmental hazard. The occurrence of such a hazard is known only to the firm. The regulator, if finding a hazard, collects a fine and mandates the firm to perform costly remediation that reduces the environmental damage. The regulator may inspect the firm at any time to uncover the hazard. However, because inspections are costly, the regulator also offers a reward to the firm for voluntarily disclosing the hazard. The reward corresponds to either a subsidy or a reduced fine, depending on whether it is positive or negative. Thus, the regulator needs to dynamically determine the reward and inspection policy that minimizes expected societal cost in the long run. We model this problem as a dynamic adverse selection problem with costly state verification in continuous time. Despite the complexity and generality of this setup, we show that the optimal regulation policy follows a very simple cyclic structure, which we fully characterize in closed form. Specifically, the regulator runs scheduled inspections periodically. After each inspection, the reward level decreases over time until a subsequent inspection takes place. If a hazard is not revealed, the reward level is reset to a high level, restarting the cycle. In contrast to the reward level, the mandated remediation level is constant over time. Nonetheless, when subsidies are not allowed in the industry, we show that the regulator should dynamically adjust this remediation level, which then acts as a substitute for a subsidy. Our analysis further reveals that optimal inspection frequency increases not only when the inspection accuracy decreases, but also when the penalty for not disclosing the hazard increases.

© 2016 INFORMS