Publication records

The case describes a critical external incident that will have fundamental consequences for a small but very successful family business: In 2010, Konnopke’s Imbiss was considered to be one of the, if not the, most famous snack bars in Berlin. This family-owned business was especially famous for the legendary “currywurst,” a Berlin invention that consists of a sausage fried in hot oil and served with ketchup, chili sauce, curry powder, and French fries. The main branch of Konnopke’s Imbiss was located in the Berlin district of Prenzlauer Berg, which was considered to be one of the “coolest” districts of Berlin. Konnopke’s had become a Berlin fast food icon, winning critical acclaim in almost all major Berlin travel guides. But in 2010, the snack bar no longer seemed to fit to its environment, which had changed from a working class district to a posh neighborhood mainly consisting of young freelancers and tourist.

The case describes how an external event (construction work) will have fundamental consequences for a small but very successful family business. This critical incident forces the owner family to rethink its business.

Two competing predictions about the effect of status on performance appear in the organizational theory and sociological literatures. On the one hand, various researchers have posited that status elevates levels of performance. This line of work emphasizes tangible and intangible resources that accrue to occupants of high-status positions and thus pictures status as an asset. On the other hand, a second line of work emphasizes complacency and distraction as deleterious processes that plague occupants of high-status positions and thus portrays status as a liability. Which of these two approaches best characterizes the actual performance of individuals in a market setting? And are these views in any way reconcilable? In this article, we summarize the two views and test them in two empirical settings: the Professional Golf Association (PGA) and the National Association for Stock Car Racing (NASCAR). Using panel data on the PGA Tour, we model golfers' strokes from par in each competition as a function of their status in the sport. Using similar data on NASCAR's Winston Cup Series, we model drivers' speed in the qualifying round as a function of their status in the sport. We find curvilinear effects of status in both empirical settings. Performance improves with status-until a very high level of status is reached, after which performance wanes. This result not only concurs with the view that status brings tangible and intangible resources, but also provides empirical support for the contention that status fosters dispositions and behaviors that undermine performance.

© 2012 INFORMS

We study the effects of competition on loan rates and portfolio-at-risk in microcredit markets using a new database from rating agencies, covering 379 microbanks located in 67 countries between 2002 and 2008. Our study reveals different competitive effects in nonprofit and for-profit microbanks. We find that for-profit microbanks charge significantly lower rates and exhibit improved portfolio-at-risk in less concentrated markets. In particular, the effect of concentration on loan rates is nearly three times the one reported in previous studies in banking. In contrast, nonprofit microbanks are relatively insensitive to changes in concentration. We control for interest rate ceilings, which very significantly reduce rates in for-profit microbanks. However, our study also uncovers a competitive interplay between for-profit and nonprofit microbanks. In particular, the PAR of nonprofit microbanks deteriorates when the proportion of profit-oriented microbanks increases. Finally, we find evidence consistent with dispersion of borrower-specific information among competing microbanks in the for-profit sector, even after controlling for the presence of credit registries.

 

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