Which Combinations Of New Venture Firms Resources Payoff? A Configurational Perspective

Baldauf, Artur; Schweiger, Simone A.; Wuethrich, Adrian

Firms, do you know your currency risk exposure? Survey results

This paper surveys the currency risk management practices of Swiss industrial corporations. We find tha industrials do not quantify their currency risk exposure and investigate possible reasons. One possibility is that firms do not think they need to know because they use on-balance-sheet instruments to protect themselves before and after currency rates reach troublesome levels. This is puzzling because a rough estimate of at least cash flow exposure is not a prohibitive task and could be helpful. It is also puzzling that firms use currency derivatives to hedge/insure individual short-term transactions, without apparently trying to estimate aggregate transaction exposure.

Postacquisition performance of acquiring firms

We investigate whether negative postacquisition stock-price performance of acquiring firms is a genuine phenomenon or a statistical artifact. Using a comprehensive sample of domestic acquisitions in the 1966-1986 period, we show that acquiring firms underperform a control portfolio only during the three years but not five years following the acquisition. There is evidence of negative performance in the second and third postacquisition years, but that performance occurs mainly in the 1960s and 1970s, and disappears in the 1980s. Thus, especially in the later years, the postacquisition years do not provide convincing evidence of wasteful corporate acquisitions, or strong evidence that contradicts market efficiency.

Corporate acquisitions by listed firms: the experience of a comprehensive sample

The sample used includes tender offers, mergers, acquisitions of privately held corporations, and comprehensive acquisitions of other firms' assets. According to the results, the majority of bid announcements prompt significant stock price increases, especially when controlling for partial anticipation problems and relative acquisition size. Furthermore, there is little evidence that firms that engage in "bad" acquisitions are more likely to be taken over.

Merger decisions and executive stock ownership in acquiring firms

This study supports the proposition that managerial welfare affects merger decisions. The abnormal stock returns experienced by bidder firms, from the time of the announcement of a merger bid through the stockholder approval date, are positively relaterd to the percentage of own-company stock held by the senior management of the bidder. The results suggest that substantial amounts of own-company share ownership help align the interests of stockholders and management.

New Product Portfolio Performance in Family Firms

This study investigates the relationship between top management team (TMT) innovation orientation and new product portfolio performance in small and medium-sized family firms by exploring two family firm-specific sources of TMT diversity as moderators: the number of generations involved in the TMT and the ratio of family members in the TMT. Results indicate that family-induced diversity in the TMT has opposing moderating effects. Although a positive relationship exists between TMT innovation orientation and new product portfolio performance when multiple generations are involved in the TMT, TMT innovation orientation and new product portfolio performance experience a negative relationship when the ratio of family members in the TMT is high. The study discusses theoretical and managerial implications of the findings and develops avenues for future research.

Systemic Determinants of the Information Systems Outsourcing Decision: A Comparative Study of German and United States Firms

The practice of information systems (IS) outsourcing is widely established among organizations. Nonetheless, evidence suggests that organizations differ considerably in the extent to which they deploy IS outsourcing. This variation has motivated research into the determinants of the IS outsourcing decision. Most of this research is based on the assumption that a decision on the outsourcing of a particular IS function is made independently of other IS functions. This modular view ignores the systemic nature of the IS function, which posits that IS effectiveness depends on how the various IS functions work together effectively. This study proposes that systemic influences are important criteria in evaluating the outsourcing option. It further proposes that the recognition of systemic influences in outsourcing decisions is culturally sensitive. Specifically, we provide evidence that systemic effects are factored into the IS outsourcing decision differently in more individualist cultures than in collectivist ones. Our results of a survey of United States and German firms indicate that perceived in-house advantages in the systemic impact of an IS function are, indeed, a significant determinant of IS outsourcing in a moderately individualist country (i.e., Germany), whereas insignificant in a strongly individualist country (i.e., the United States). The country differences are even stronger with regard to perceived in-house advantages in the systemic view of IS professionals. In fact, the direction of this impact is reversed in the United States sample. Other IS outsourcing determinants that were included as controls, such as cost efficiency, did not show significant country differences.

What Makes a Family Firm Innovative? CEO Risk-Taking Propensity and the Organizational Context of Family Firms

Investigating the new product portfolio innovativeness of family firms connects two important topics that have recently received considerable attention in innovation and family firm research. First, new product portfolio innovativeness has been identified as a critical determinant of firm performance. Second, research on family firms has focused on the questions of if and why family firms are more or less innovative than other organizational forms. Research investigating the innovativeness of family firms has often applied a risk-oriented perspective by identifying socioemotional wealth (SEW) as the main reference that determines firm behavior. Thus, prior research has mainly focused on the organizational context to predict innovation-related family firm behavior and neglected the impact of preferences and the behavior of the chief executive officer (CEO), which have both been shown to affect firm outcomes. Hence, this study aims to extend the previous research by introducing the CEO's disposition to organizational context variables to explain the new product portfolio innovativeness of small and medium-sized family firms. Specifically, this study explores how the organizational context (i.e., ownership by top management team [TMT] family members and generation in charge of the family firm) of family firms interacts with CEO risk-taking propensity to affect new product portfolio innovativeness. Using a sample of 114 German CEOs of small and medium-sized family firms operating in manufacturing industries, the results show that CEO risk-taking propensity has a positive effect on new product portfolio innovativeness. Moreover, the analyses show that the organizational context of family firms impacts the relationship between CEO risk-taking propensity and new product portfolio innovativeness. Specifically, the relationship between CEO risk-taking propensity and new product portfolio innovativeness is weaker if levels of ownership by TMT family members are high (high SEW). Additionally, the effect of CEO risk-taking propensity on new product portfolio innovativeness is stronger in family firms at earlier generational stages (high SEW). This result suggests that if SEW is a strong reference, family firm-specific characteristics can affect individual dispositions and, in turn, the behaviors of executives. Therefore, this study helps extend the knowledge on the determinants of new product portfolio innovativeness of family firms by considering an individual CEO preference and the organizational context variables of family firms simultaneously.

Innovations in Small and Medium-Sized Family Firms

Small and medium-sized firms are a prevalent organizational form in Germany. Their importance for the German economy is indisputable. Most of them are global market leaders in their niches and are considered to be a force for innovation in the German economy. The ability to be innovative in niche markets has been identified as the antecedent of their strong, or even dominant, competitive positions in their industries. The driver of this innovation success may well be the family, which distinguishes family firms from non-family firms. Nils Kraiczy analyzes if a family influences innovation in a family firm and if this influence has only positive effects. The dissertation focuses on the impact of top management teams on innovations interacting with family firm-specific characteristics. The author shows the complexity of family influence by presenting different effects of each investigated family firm-specific characteristic on the relationship between top management team behavior and innovation.

Ready for a crisis? How supervisory boards affect the formalized crisis procedures of small and medium-sized family firms in Germany

Overcoming a crisis situation in which the socioemotional wealth (SEW) of a family is at risk can be threatened by a lack of formal crisis procedures, which can increase the probability of organizational decline. Thus, not being prepared for a crisis situation may be a critical factor in the long-term survival of family firms. From a corporate governance perspective, supervisory boards may achieve higher levels of crisis readiness. Applying the resourced-based view and SEW theory, we analyze the relationship between family ownership and formalized crisis procedures in 150 small and medium-sized German firms. Our results show that formalized crisis procedures decrease as family ownership increases. Including supervisory boards in our analysis, we find a significant moderating effect of supervisory boards on the relationship between family ownership and formalized crisis procedures. Specifically, our results suggest that family firms with supervisory boards show similar levels of formalized crisis procedures as non-family firms with supervisory boards. In contrast, family firms without supervisory boards exhibit lower levels of formalized crisis procedures compared with non-family firms without supervisory boards. We also discuss managerial implications, limitations, and future research.