The impact of switching costs on the decision to retain or replace IT outsourcing vendors

While the IT outsourcing market is growing, outsourcing vendors are being replaced more frequently by firms. Since replacing vendors can affect the stability and quality of the IT services a firm receives, it is important to understand the drivers behind the decision to replace/retain vendors. This paper examines the impact of switching costs on this decision. We classify the various examples of switching costs into three categories (relational, financial and procedural) and develop a model to explain their role in the decision to replace or retain a vendor. The model also includes possible moderators of the relationship between switching costs and the vendor replacement decision. This model will be evaluated through a series of case studies of firms who have made this decision, and the refined model will be tested with a survey of IT outsourcing managers.

The direct costs of raising external equity capital for US REIT IPOs

Purpose – The purpose of this paper is to investigate the total direct costs of raising external equity capital for US real estate investment trust (REIT) initial public offerings (IPOs).

Design/methodology/approach – The study provides recent evidence on total direct costs for a comprehensive dataset of 125 US REIT IPOs from 1996 until June 2010. A multivariate OLS regression is performed to determine significant factors influencing the level of total direct costs and also underwriting fees and non-underwriting direct expenses.

Findings – The study finds economies of scale in total direct costs, underwriting fees and non-underwriting expenses. The equally (value) weighted average total direct costs are 8.33 percent (7.52 percent), consisting of 6.49 percent (6.30 percent) underwriting fees and 1.87 percent (1.22 percent) non-underwriting direct expenses. The study finds a declining trend of total direct costs for post 2000 IPOs which is attributed to the declining trend in both underwriting fees and non-underwriting direct expenses. Offer size is a critical determinant for both total direct costs and their individual components and inversely affects these costs. The total direct costs are found significantly higher for equity REITs than for mortgage REITs and are also significantly higher for offers listed in New York Stock Exchange (NYSE). Underwriting fees appear to be negatively influenced by the offer price, the number of representative underwriters involved in the issue, industry return volatility and the number of potential specific risk factors but positively influenced by prior quarter industry dividend yield and ownership limit identified in the prospectus. After controlling for time trend, the paper finds REIT IPOs incur higher non-underwriting direct expenses in response to higher industry return volatility prior to the offer.

Originality/value – This paper adds to the international REIT IPO literature by exploring a number of new influencing factors behind total direct costs, underwriting fees and non-underwriting direct expenses. The study includes data during the recent GFC period.

Another opportunity lost? Victorian Labor's enactment of sustainability, 1999-2010

‘Sustainability’ provides the dominant frame for environmental policy debate, even though there is considerable debate to as to what sustainability is, why is it needed, and how can it be progressed. From 1999 through to 2010, Victoria was governed by Australian Labor Party (ALP) led governments that, at times, actively pursued the goal of sustainable development. This culminated in the stated ambition for Victoria to be ‘world leaders in environmental sustainability debate and practice’. This paper explores the way in which sustainability was enacted by Victorian Labor while in government. The evidence indicates that the potential of Victorian Labor's vision was never realized, and that it failed to significantly reform the neoliberal policy settings it inherited.

Health care and lost productivity costs of overweight and obesity in New Zealand

Objective: To estimate the costs of health care and lost productivity attributable to overweight and obesity in New Zealand (NZ) in 2006.

Methods: A prevalence-based approach to costing was used in which costs were calculated for all cases of disease in the year 2006. Population attributable fractions (PAFs) were calculated based on the relative risks obtained from large cohort studies and the prevalence of overweight and obesity. For each disease, the PAF was multiplied by the total health care cost. The costs of lost productivity associated with premature mortality were estimated using both the Human Capital approach (HCA) and Friction Cost approach (FCA).

Results: Health care costs attributable to overweight and obesity were estimated to be NZ$686m or 4.5% of New Zealand's total health care expenditure in 2006. The costs of lost productivity using the FCA were estimated to be NZ$98m and NZ$225m using the HCA. The combined costs of health care and lost productivity using the FCA were $784m and $911m using the HCA.

Conclusion: The cost burden of overweight and obesity in NZ is considerable.

Implications: Policies and interventions are urgently needed to reduce the prevalence of obesity thereby decreasing these substantial costs.

Judicial valuation of the social costs of crime

The true economic functions of the criminal courts are, first, to deter potential prospective offenders from committing offences, and in so doing reduce the total social costs of crime in the future; and secondly, to force the convicted offender to bear some of the costs, which the crime has externalised onto the victim(s) and wider society through retributive justice. These objectives are achieved through the sentencing function. Critics have lamented that too many extraneous factors are taken into account when setting penalties but the authors argue in this article that nevertheless these sentences are optimal because of the judges' comparative advantage. What is of great interest, and the focus of this article, are the implicit valuations of the social costs of crime that these sentences imply. Using the South Australia higher criminal courts as a case study, the authors estimate and utilise these judicial valuations to suggest a methodology for measuring the true economic value of the criminal courts. The analysis helps put into perspective the courts' very valuable contribution to social welfare.

Promoting obesity prevention together with environmental sustainability

There is mounting evidence that current food production, transport, land use and urban design negatively impact both climate change and obesity outcomes. Recommendations to prevent climate change provide an opportunity to improve environmental outcomes and alter our food and physical activity environments in favour of a ‘healthier’ energy balance. Hence, setting goals to achieve a more sustainable society offers a unique opportunity to reduce levels of obesity. In the case of children, this approach is supported with evidence that even from a young age they show emerging understandings of complex environmental issues and are capable of both internalizing positive environmental values and influencing their own environmental outcomes. Given young children's high levels of environmental awareness, it is easy to see how environmental sustainability messages may help educate and motivate children to make ‘healthier’ choices. The purpose of this paper is to highlight a new approach to tackling childhood obesity by tapping into existing social movements, such as environmental sustainability, in order to increase children's motivation for healthy eating and physical activity behaviours and thus foster more wholesome communities. We contend that a social marketing framework may be a particularly useful tool to foster behaviour change beneficial to both personal and environmental health by increasing perceived benefits and reducing perceived costs of behaviour change. Consequently, we propose a new framework which highlights suggested pathways for helping children initiate and sustain ‘healthier’ behaviours in order to inform future research and potentially childhood obesity intervention strategies.

Organisational memory and the propensity to mentor

In many countries, people are retiring earlier than ever before and the retirement of the baby boom generation over the next two decades further intensifies this trend. Accompanying this phenomenon is the potential loss of organisational knowledge and memory and with it, potential loss of the organisation's competitive advantage. Organisations, while recognising that older workers possess valuable organisational memory, seem to assume these same workers will readily divest themselves of their knowledge, if given the opportunity. Furthermore, offering experienced workers the opportunity to act as a mentor to pass on their knowledge is often mentioned in the management and related literature as a way of attracting and retaining these workers. While the relationships between age and the possession of organisational memory has been supported through age's positive relationship with organisational tenure and rank, past research on mentoring reveals a negative relationship between age and willingness to mentor. Employees, especially older workers in the possession of considerable organisational memory may, or may not be willing to divulge that information to others for a number of reasons. Their willingness to act as a mentor may be constrained by awareness of possible costs involved in the mentoring relationship. This paper investigates the relationship between an individual's estimated level of organisational knowledge and memory, and their inclination to mentor others. In doing so, it considers the expected costs and benefits of mentoring. It also investigates the role of mentoring in the psychological adjustment to retirement for older individuals, and discusses the rationale for a research agenda to address these issues and the likely variables of interest. The proposed research aims to go beyond the prescription of "mentoring others" as a general panacea for utilising the skills and experience of workers while ensuring the transfer of potentially threatened knowledge within organisations, by suggesting other motivations that may be operating when employees are invited to share or volunteer their prized knowledge.