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Article
Publication date: 29 March 2011

Daniela P. Blettner

The basic assumption in strategic management is that consistently high performing companies are able to adapt effectively to external shocks. While adaptation of allocation

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Abstract

Purpose

The basic assumption in strategic management is that consistently high performing companies are able to adapt effectively to external shocks. While adaptation of allocation of resources and its constraints have been investigated, it is important to also consider the allocation of attention. Therefore, this study seeks to examine the differences in the patterns in the allocation of resources and attention in a comparative case study with focus on Southwest Airlines. This study illustrates that the comparison of the patterns of allocation of resource and attention is very promising for the explanation of consistent superior performance.

Design/methodology/approach

This paper analyzes Federal Aviation Administration and American Transport Association data in order to determine actual resource allocation. Moreover, textual analysis of annual reports serves as basis for examining the patterns of allocation of attention.

Findings

The results of this paper reveal a striking divergence of allocation of resources and attention (particularly attention to differentiation) for Southwest Airlines – the consistently high performing firm in the US airline industry.

Research limitations/implications

The major limitation of the current study is the fact that it is a single industry study. It would be very interesting to replicate this study in other industries.

Practical implications

This study shows the importance of allocation of attention for firm performance. This is particularly relevant for resource intensive industries such as the airline industry where organizational inertia makes it hard to move resources fast. Yet, attention appears to have a great potential for firm performance and can be changed more easily.

Originality/value

Despite great interest in allocation of resources and attention in strategy research, authors rarely combine these two perspectives. Nadkarni and Barr present a notable exception. Yet, the latter authors focus on one specific aspect of adaptation of strategic actions, i.e. the timeliness of response. The present study takes a more comprehensive view of adaptation, e.g. the respective changes in slopes of adaptation.

Details

Management Research Review, vol. 34 no. 3
Type: Research Article
ISSN: 2040-8269

Keywords

Book part
Publication date: 7 July 2006

Matthew A. Halloran, James M. Walker and Arlington W. Williams

This paper examines binding multi-round commitments (MRCs) to the group account in a repeated voluntary contributions mechanism (VCM) game. Before each five-round…

Abstract

This paper examines binding multi-round commitments (MRCs) to the group account in a repeated voluntary contributions mechanism (VCM) game. Before each five-round interval, subjects in a four-person group are given the option to commit a portion of their endowments to the group account for each of the next five rounds. Decision rounds proceed, with each subject's commitment acting as the binding minimum of his group-account allocation for each round. The opportunity to make MRCs does not increase mean allocations to the group account relative to a control treatment. However, commitments do have implications for reciprocal behavior within groups, leading to higher outcome variances across groups in the MRCs treatment.

Details

Experiments Investigating Fundraising and Charitable Contributors
Type: Book
ISBN: 978-0-76231-301-3

Book part
Publication date: 16 January 2014

Martin Sefton and Ping Zhang

We compare allocation rules in uniform price divisible-good auctions. Theoretically, a “standard allocation rule (STANDARD)” and a “uniform allocation rule (UNIFORM)”…

Abstract

Purpose

We compare allocation rules in uniform price divisible-good auctions. Theoretically, a “standard allocation rule (STANDARD)” and a “uniform allocation rule (UNIFORM)” admit different types of low-price equilibria, which are eliminated by a “hybrid allocation rule (HYBRID).” We use a controlled laboratory experiment to compare the empirical performances of these allocation rules.

Design/methodology/approach

We conduct three-bidder uniform price divisible-good auctions varying the different allocation rules (standard, uniform, or hybrid) and whether or not explicit communication between bidders is allowed. For the case where explicit communication is allowed we also study six-bidder auctions.

Findings

We find that prices are similar across allocation rules. Under all three allocation rules, prices are competitive when bidders cannot explicitly communicate. With explicit communication, prices are collusive, and we observe collusive prices even when collusive agreements are broken. Collusive agreements are particularly fragile when the gain from a unilateral deviation is larger, and an implication of this is that collusive agreements are more robust under STANDARD.

Research limitations/implications

We do not find conclusive evidence of differences in performance among allocation rules. However, there is suggestive evidence that STANDARD may be more vulnerable to collusion.

Originality/value

Divisible-good uniform price auctions are used in financial markets, but it is not possible to use naturally occurring data to test how alternatives to the standard format would perform. Using laboratory methods we provide an initial test of alternative allocation rules.

Details

Experiments in Financial Economics
Type: Book
ISBN: 978-1-78350-141-0

Keywords

Book part
Publication date: 27 February 2009

Mukesh Bajaj, Sumon Mazumdar, Vikram Nanda and Rahul Surana

It is widely believed that contrary to standard asset allocation theory, employees irrationally hold concentrated investments in company stock in their 401(k) plans thus…

Abstract

It is widely believed that contrary to standard asset allocation theory, employees irrationally hold concentrated investments in company stock in their 401(k) plans thus bearing firm-specific risk that could otherwise have been diversified away (see e.g., Benartzi, 2001). However, in measuring any such lack of diversification costs, a unique tax benefit associated with such investments (available to those who choose the Net Unrealized Appreciation (NUA) strategy) has been hitherto ignored. We analyze an employee's optimal allocation of retirement assets among alternative investments, including company stock, in the presence of the NUA tax benefit. The employee has a standard power utility function and seeks to maximize expected utility from her after-tax wealth upon retirement. Based on simulations, we find that, even when company stock is stochastically dominated by investments in the market index, the employee will allocate a non-trivial part of her retirement funds to company stock for a wide range of parameter values. Consistent with empirical evidence, the allocation to company stock is greater for employees closer to retirement and when the company's stock has experienced substantial gain in value.

Details

Research in Finance
Type: Book
ISBN: 978-1-84855-447-4

Book part
Publication date: 12 August 2017

Lisa M. Dilks, Tucker S. McGrimmon and Shane R. Thye

To determine the role of status information conveyance in a negative reward allocation setting.

Abstract

Purpose

To determine the role of status information conveyance in a negative reward allocation setting.

Methodology

Using previously published experimental data, we test the relative effects of status information conveyed by expressive and indicative status cues on the allocation of a negative reward. Further, we construct an alternative graph theoretic model of expectation advantage which is also tested to determine its model fit relative to the classic model of Reward Expectations Theory.

Findings

Results provide strong support for the conclusion that status information conveyed by expressive status cues influences reward allocations more than information conveyed by indicative cues. We also find evidence that our alternative graph theoretic model of expectation advantage improves model fit.

Originality

This research is the first to test the relative impact of expressive versus indicative status cues on the allocation of negative rewards and shows that status characteristics can have differential impacts on these allocations contingent on how characteristics are conveyed. Furthermore, the research suggests a graph theoretic model that allows for this differentiation based on information conveyance and provides empirical support for its structure in a negative reward allocation environment.

Research limitations

Future research is required to validate the results in positive reward situations.

Social implications

The results show that an individual’s expectations are altered by varying the manner in which status information is presented, thereby influencing the construction and maintenance of status hierarchies and the inequalities those structures generate. Thus, this research has implications for any group or evaluative task where status processes are relevant.

Details

Advances in Group Processes
Type: Book
ISBN: 978-1-78743-192-8

Keywords

Book part
Publication date: 1 January 2014

Florian Kellner, Andreas Otto and Bernhard Lienland

Tooling is a common component of an industrial product’s manufacture. Specific tooling is devised to serve the fabrication of a particular product, while generic tooling…

Abstract

Purpose

Tooling is a common component of an industrial product’s manufacture. Specific tooling is devised to serve the fabrication of a particular product, while generic tooling can be used in the manufacture of multiple products. In the latter case, companies are confronted with the problem of fairly allocating the indirect costs of the tooling. This article studies how to allocate costs of generic tooling to single production orders.

Methodology

Ten allocation methods (AMs) are described that are in principle suited to the distribution of generic tooling costs to production orders. Since the presented methods have for the most part been discussed in differing contexts, we apply them to a specified generic tooling problem for comparison. Evaluation of the various methods is based on 16 criteria. Reasoning is supported by a computational Monte Carlo simulation. Furthermore, we suggest using the Analytical Hierarchy Process (AHP) to elaborate one final proposition concerning the most preferable allocation scheme.

Findings

The article reports the single allocation rules’ performances for different allocation scenarios. The described characteristics refer to fairness, efficiency, and simplicity as well as to empty-core performance. Using AHP analysis allows for the aggregation of the rules’ criteria ratings. Thus, especially suitable allocation schemes for the problem at hand are identified.

Practical implications

An allocation is required for budgeting reasons and also for the definition of projects’ bottom-up sales prices. Selecting the “right” AM is important, as a suboptimal AM can result in unfair allocation vectors, which will act as incentives to stop using the common resource, potentially leading to higher total costs.

Originality/value of the article

Research on the comparison of AMs is typically performed for certain purposes, such as enterprise networks, horizontal cooperative purchasing scenarios, or municipal service units. This article will augment the research evaluating AMs by introducing a novel set of evaluation criteria and by providing an in-depth comparison of AMs suited for the allocation of generic tooling costs.

Details

Advances in Management Accounting
Type: Book
ISBN: 978-1-78350-632-3

Keywords

Abstract

Details

The Savvy Investor's Guide to Building Wealth Through Traditional Investments
Type: Book
ISBN: 978-1-83909-608-2

Book part
Publication date: 11 August 2016

Karoll Gómez Portilla

This chapter focuses on examining how changes in the liquidity differential between nominal and TIPS yields influence optimal portfolio allocations in U.S. Treasury…

Abstract

This chapter focuses on examining how changes in the liquidity differential between nominal and TIPS yields influence optimal portfolio allocations in U.S. Treasury securities. Based on a nonparametric estimation technique and comparing the optimal allocation decisions of mean-variance and CRRA investor, when investment opportunities are time varying, I present evidence that liquidity risk premium is a significant risk-factor in a portfolio allocation context. In fact, I find that a conditional allocation strategy translates into improved in-sample and out-of-sample asset allocation and performance. The analysis of the portfolio allocation to U.S. government bonds is particularly important for central banks, specially in developing countries, given the fact that, collectively they have accumulate a large holdings of U.S. securities over the last 15 years.

Details

The Spread of Financial Sophistication through Emerging Markets Worldwide
Type: Book
ISBN: 978-1-78635-155-5

Keywords

Article
Publication date: 18 April 2022

Emilie Bonhoure

This study aims to present how a historical governance mechanism (a statutory rule of profit allocation) could answer the practical question of profit allocation, thereby…

Abstract

Purpose

This study aims to present how a historical governance mechanism (a statutory rule of profit allocation) could answer the practical question of profit allocation, thereby proposing a methodology to enhance future quantitative studies.

Design/methodology/approach

The rule sets profit allocations to a predetermined set of stakeholders in corporate charters. It could be seen as a tool used by historical organisations to enact corporate social responsibility (CSR). The authors propose a straightforward way to calculate the payout ratios promised by this rule to each stakeholder. This methodology was applied to shareholders and used to calculate the promised dividend payout ratios.

Findings

This rule constitutes a natural experiment from which modern organisations could learn to implement the most relevant profit-allocation schemes given their CSR strategy. The authors propose calculating a promised payout ratio that would allow scholars to empirically examine the rule and its effects and provide accurate recommendations to these organisations.

Research limitations/implications

This mechanism allows the study of profit allocations made to stakeholders (not limited to shareholders or employees like it is usually done). The promised payout ratio makes future quantitative investigations possible.

Practical implications

Modern organisations could use the CSR mechanism to allocate profits continuously in formats that would best fit their strategy and environment.

Originality/value

To the best of the author’s knowledge, this is the first article to examine the statutory rule of profit allocation per se, which proposes a new methodology to calculate payout ratios promised by the rule. The idea is to investigate their impact and provide recommendations for modern organisations to adapt.

Details

Journal of Management History, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1751-1348

Keywords

Open Access
Article
Publication date: 4 July 2022

Shiyu Wan, Yisheng Liu, Grace Ding, Goran Runeson and Michael Er

This article aims to establish a dynamic Energy Performance Contract (EPC) risk allocation model for commercial buildings based on the theory of Incomplete Contract. The…

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Abstract

Purpose

This article aims to establish a dynamic Energy Performance Contract (EPC) risk allocation model for commercial buildings based on the theory of Incomplete Contract. The purpose is to fill the policy vacuum and allow stakeholders to manage risks in energy conservation management by EPCs to better adapt to climate change in the building sector.

Design/methodology/approach

The article chooses a qualitative research approach to depict the whole risk allocation picture of EPC projects and establish a dynamic EPC risk allocation model for commercial buildings in China. It starts with a comprehensive literature review on risks of EPCs. By modifying the theory of Incomplete Contract and adopting the so-called bow-tie model, a theoretical EPC risk allocation model is developed and verified by interview results. By discussing its application in the commercial building sector in China, an operational EPC three-stage risk allocation model is developed.

Findings

This study points out the contract incompleteness of the risk allocation for EPC projects and offered an operational method to guide practice. The reasonable risk allocation between building owners and Energy Service Companies can realize their bilateral targets on commercial building energy-saving benefits, which makes EPC more attractive for energy conservation.

Originality/value

Existing research focused mainly on static risk allocation. Less research was directed to the phased and dynamic risk allocation. This study developed a theoretical three-stage EPC risk allocation model, which provided the theoretical support for dynamic EPC risk allocation of EPC projects. By addressing the contract incompleteness of the risk allocation, an operational method is developed. This is a new approach to allocate risks for EPC projects in a dynamic and staged way.

Details

International Journal of Climate Change Strategies and Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1756-8692

Keywords

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