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Article
Publication date: 23 February 2010

Peter Navarro, Philip Bromiley and Pedro Sottile

Business cycles strongly influence corporate sales and profits, yet strategy research largely ignores the possibility that corporate management practices related to the…

Abstract

Purpose

Business cycles strongly influence corporate sales and profits, yet strategy research largely ignores the possibility that corporate management practices related to the business cycle influence profitability. This paper aims to offer initial empirical support for the view that high peformance firms use a variety of business cycle management (BCM) practices that low performance firms do not.

Design/methodology/approach

This exploratory study examines the association of firm performance with business cycle management behaviors identified in the prescriptive literature and further developed from a set of case analyses. The empirical analysis uses a matched sample of 35 pairs of high vs low performers from the S&P 500.

Findings

Discriminant and conditional logit analyses provide preliminary evidence that business cycle‐sensitive behaviors such as countercyclical hiring and investment associate positively with firm performance.

Research limitations/implications

Future research should use larger data sets and strictly archival data to overcome the limitations of the small sample size and data coding with some subjective elements.

Practical implications

This research suggests a variety of business cycle related practices dealing with staffing, capital investment, acquisitions and divestitures, capital financing, credit policy, pricing, and advertising may improve firm performance.

Originality/value

This is the first paper to offer evidence of the impact of business cycle related practices across a range of practices and industries.

Details

Journal of Strategy and Management, vol. 3 no. 1
Type: Research Article
ISSN: 1755-425X

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Article
Publication date: 1 July 2006

Paul Dettwiler, Peter Lindelöf and Hans Löfsten

What effect do different business environments, caused primarily by changes in GDP, have on property management of growth firms?

Abstract

Purpose

What effect do different business environments, caused primarily by changes in GDP, have on property management of growth firms?

Design/methodology/approach

This paper investigates the dynamic effects of two successive periods on property management variables with data from 387 Swedish growth firms during the six year period of 1998‐2003. The variables cover two three‐year time periods: 1998‐2000 (high growth of GDP) and 2001‐2003 (low growth of GDP). The empery originates from a quantitative survey with variables related to: office areas; affiliation changes (events of M&A, outsourcing of core business has occurred) and if those events have changed the total use of office space; use of temporary staff and staff that works in office area; flexibility of contracts; propensity to rent office space and location events. Dramatic changes of GDP are here associated to the dynamic effects of the business environment that have implications on property management variables of the two periods.

Findings

The two periods themselves correlate strongly to each other. The results reveal correlations between down turn‐business period and variables that describe the hiring temporary staff; propensity to rent office spaces; significance of flexible contracts; office location in rural area and relocation frequency.

Research limitations/implications

The survey is limited geographically to Sweden with strict growth criteria. The findings argue for a behaviour among growth firms that responds to changes in business environment into property management decisions.

Practical implications

Dramatic changes in GDP influence growth firms behaviour of renting office spaces; down turn of GDP is likely related in particular to increase of rented offices space.

Originality/value

Empery from an extensive survey of growth firms of an entire country with focus on property management variables during two distinct periods regarding GDP.

Details

Journal of Corporate Real Estate, vol. 8 no. 3
Type: Research Article
ISSN: 1463-001X

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Article
Publication date: 1 July 2005

Michael S.H. Heng, Yu Chung William Wang and Xianghua He

The purpose of this research note is to investigate the implications of supply chain management of e‐business for the macroeconomic phenomenon of business cycles.

Abstract

Purpose

The purpose of this research note is to investigate the implications of supply chain management of e‐business for the macroeconomic phenomenon of business cycles.

Design/methodology/approach

The paper provides a list of propositions, which form the broad basis of an empirical research agenda, to explore and investigate the mechanisms through which supply chain innovations can influence business cycle.

Findings

Economic research literature has pointed out that there are linkages between inventory investment and business cycle fluctuation. Given that the e‐business supply chain management drastically alters inventory investment across a range of industries, it is likely to affect the behaviour of economic fluctuation.

Originality/value

This research has the potential to contribute to a better‐informed formulation of economic policies at national and global level.

Details

Supply Chain Management: An International Journal, vol. 10 no. 3
Type: Research Article
ISSN: 1359-8546

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Article
Publication date: 20 January 2012

Göran Svensson and Beverly Wagner

The objective of this paper is to describe a corporate implementation and application of a “sustainable business cycle”.

Abstract

Purpose

The objective of this paper is to describe a corporate implementation and application of a “sustainable business cycle”.

Design/methodology/approach

The study is based on a single case study of a regional producer of dairy products in Sweden. The data were collected from non‐structured interviews with managers and available corporate documentation.

Findings

The company's “sustainable business cycle” may be divided into nine stages beginning with the arable land through to the dairy and transportation of products to market, where the final two stages involve external retailers and consumers, all of which is important to fulfilment of the earlier seven internal stages.

Research limitations/implications

The findings stress the importance of connecting and reconnecting not just to immediate environmental concerns of business, but also to planet Earth, which is under non‐sustainable pressure and evidently faces an unpleasant destiny.

Practical implications

The case highlights advantages and challenges facing a small to medium‐sized enterprise (SME) tasked with implementing a sustainable business cycle for a commodity product in a highly competitive market, dominated by powerful retailers.

Social implications

Changing consumer behaviours and purchasing patterns, as well as state interventions imposed at top political levels worldwide, will gradually increase the necessity to create sustainable business cycles.

Originality/value

The main contribution of this article is to present a rare detailed case study of a sustainable, organic milk supply chain. It highlights the areas where sustainability is effective. It also illustrates the challenge for an SME trying to extend the reach and to create awareness of added value to the consumer. Hopefully some lessons will be learned and emphasized in this case study.

Details

Supply Chain Management: An International Journal, vol. 17 no. 1
Type: Research Article
ISSN: 1359-8546

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Article
Publication date: 8 January 2019

Bartosz Marcinkowski and Bartlomiej Gawin

Process-oriented organizations are compelled to be innovative and continuously implement changes to meet customer requirements and gain a competitive advantage in…

Abstract

Purpose

Process-oriented organizations are compelled to be innovative and continuously implement changes to meet customer requirements and gain a competitive advantage in accordance with the business process management approach. In the digital age, organizations develop business process support systems using agile methods and introduce adaptation skills in order to support their core business. Seamlessly integrating both practices into a coherent and practically applicable solution supporting multi-scenario processes infallibly remains a challenge. The paper aims to discuss these issues.

Design/methodology/approach

The workshops identifying the key issues in an international capital group that consolidates facility management companies, as well as a related research review, have fueled a two-cycled Canonical Action Research (CAR) study.

Findings

The paper extends the current understanding of IT-enabled agility, proposing an adaptively improved infrastructure with a catalog of digital options that facilitates the composition of multi-scenario business processes.

Research limitations/implications

The CAR was limited to the members of management board and the managers constituting the focus groups. The agile business process management (ABPM) model proposed focuses on adding novel functionalities/building new processes, leaving functionality lifecycle out-of-scope. ABPM empirical validation is limited to a single business/technical case.

Practical implications

Real-life solution for supporting dynamic business processes was delivered, as rigid IT solutions do not support quick assembly of customized business processes with abundant number of scenarios. The infrastructure enables composition of customer-tailored services based on re-usable digital options directory as well as enhances business process discrepancies/software bugs detection, reducing the cost of maintaining IT infrastructure for entire customer portfolio. A number of issues resulting from building IT solutions within a series of isolated projects with no coherent overall development strategy are mitigated.

Originality/value

The ABPM acts as a reference model for focusing on developing critical functionalities and limiting resources consumed by redundant features.

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Article
Publication date: 2 May 2017

Sandeep Goel

It is largely believed that stock pricing is influenced by disclosure of earnings. This motivates the corporate to exercise earnings management practices. This paper aims…

Abstract

Purpose

It is largely believed that stock pricing is influenced by disclosure of earnings. This motivates the corporate to exercise earnings management practices. This paper aims to analyse and detect the earnings management practices of Indian firms over earnings cycles. The earnings behaviour of the firms has been analysed at three levels of earnings cycles for the pricing effect: complete, incomplete and prospective. In India, the corporate ownership model is promoter-dominated shareholders’model (PDSHM) which highlights the relevance of the study for earnings-management motivation. This paper contributes by examining earnings management of the units at three levels of earnings cycle with regard to stock pricing. Earnings cycles have been decomposed into three components: complete, incomplete and prospective. While earnings management has been studied extensively, virtually all studies have focused on firm-specific effects. This study relates earnings management to the cycle of the earnings for stock-price effect.

Design/methodology/approach

The cash-flow model has been used for the computation of accruals (Collins and Hribar, 1999), and D’Angelo model (for calculating discretionary accruals) has been used for detecting earnings management in the present study, being comprehensive in nature and detailed in approach. The results of the “complete earnings cycle”are measured by net income. The results of the “incomplete earnings cycle” are measured by the ratio of gross margin over sales multiplied by inventory. It yields an approximate measure of the unrealized holding gains and losses. The “prospective earnings cycle” stems from the management decision to choose a rate of income growth. Statistical tools have been used for testing the results. These include regression analysis and descriptive statistics like arithmetic mean, median and standard deviation.

Findings

An examination of the units shows that firms report more discretionary accruals (DACC) at complete cycle, i.e. when financial markets are more certain about their future prospects which influence their securities’ pricing. It verified that unrealized income and growth prospects have very little role to play in determining returns. The results indicated that each of the components of the earnings cycle has a relevance factor for returns. In complete earnings cycle, DACC had the highest significance on returns than operating cash flows (OCF) and non-discretionary accruals (NDACC). Its determination content is the highest. So, the firms report more negative DACC when financial markets are less certain about their future prospects. Stock-price responses to earnings surprises are moderated when firm-level uncertainty is high, consistent with performance being attributed more to chance rather than performance.

Research limitations/implications

The present study could be confined to only top 12 profit-making corporate enterprises in the private sector in India, leaving all other enterprises due to data non-availability. Of 25 enterprises, there were public sector undertakings too which had to be excluded. The period in the study is of five years (from 2003-2004 to 2007-2008) to highlight earnings management motivation. This period is best suited to identify the effects of global recession on the practice of earnings management in India. Researchers may like to select a different time-period based on their perspective.

Practical implications

It is hoped that the study would improve the understanding of the manner in which the capital markets process the publicly available earnings and its components for global firms. The findings of this study are significant not only for organisations that function in India but also for other companies that are based in economies with relatively mature corporate governance mechanisms. So, the authors’ findings have important policy implications for the Western world, as the sample companies are multinationals and operate globally. Similar efforts in other countries would be rewarding in controlling the management of reported earnings and enhance the reliability and transparency of reported earnings to promote economic efficiency.

Social implications

Evidence on this issue could bring a new dimension to how the capital markets interpret these reported earnings and its components (cash flows, DACC and NDACC) at different levels of earnings cycles for minority shareholders in particular. Further, the evidence could also provide insights into the economic incentives for discretionary accounting choice and disclosure of the results of these earnings cycles.

Originality/value

It is an original paper which highlights the earnings behaviour and its motivation in Indian corporate enterprises for earnings cycles with regard to stock pricing.

Details

Journal of Money Laundering Control, vol. 20 no. 2
Type: Research Article
ISSN: 1368-5201

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Article
Publication date: 30 September 2011

Michael Braun, Larry Zacharias and Scott Latham

The purpose of this paper is to compare the governance structures of two distinctive governance forms: the family firm and the leveraged buyout (LBO). The paper also…

Abstract

Purpose

The purpose of this paper is to compare the governance structures of two distinctive governance forms: the family firm and the leveraged buyout (LBO). The paper also explores the relative performance of these two organizational forms over the course of the economic business cycle.

Design/methodology/approach

The paper provides a theoretical treatment of the family firm and the LBO using the stewardship perspective and agency theory. The analysis anticipates the board structure for each organizational form and relates family firm and LBO governance to performance over the business cycle.

Findings

From a conceptual treatment, the family‐owned concern exhibits board characteristics reflecting the longer‐term orientation of the firm, with boards empowered to include non‐economic, as well as economic, goals. LBOs are structured to maximize shareholder value over a shorter time horizon. LBOs may take advantage of expansionary environments whereas family firms may be better prepared for economic down‐cycles.

Research limitations/implications

The paper takes a holistic approach to contrasting two organizational forms that fit their respective theoretical frames and compares some of their more salient governance characteristics and performance over the business cycle.

Practical implications

Managers and boards can structure governance to manage the business cycle. Stakeholders can selectively engage firms that portray vital governance characteristics for their benefit and may also pressure boards and top management to make necessary governance improvements.

Originality/value

The paper offers an introductory comparison between family firms and LBOs in terms of governance and managing the firm over the business cycle. This paper makes the case that some organizational forms are better suited to certain types of economic climates.

Details

Journal of Family Business Management, vol. 1 no. 2
Type: Research Article
ISSN: 2043-6238

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Article
Publication date: 14 January 2014

Peter Lorange and Edwin Datson

How can one better manage risk in situations with a lot of business cycles exposure? This article offers practical approaches to this.

Abstract

Purpose

How can one better manage risk in situations with a lot of business cycles exposure? This article offers practical approaches to this.

Design/methodology/approach

The article is derived from field studies that lead to the authors' prescriptives.

Findings

The paper presents several concrete ways to better cope with risk exposure, for example optionality, in/out, long/short.

Originality/value

This piece is original. The authors have not seen similar documentations/articles elsewhere.

Details

Journal of Business Strategy, vol. 35 no. 1
Type: Research Article
ISSN: 0275-6668

Keywords

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Article
Publication date: 1 March 1993

In this special marketing abstracts issue of Marketing Intelligence & Planning a variety of topics of interest to the marketer are highlighted from the international…

Abstract

In this special marketing abstracts issue of Marketing Intelligence & Planning a variety of topics of interest to the marketer are highlighted from the international selection of journals which feature on the Anbar coverage list. The value of a forum such as this is that quality material can be brought to the attention of the reader to which they would not otherwise be exposed. For example, would you normally take Datamation, Industrial Engineering, or The Ohio CPA?

Details

Marketing Intelligence & Planning, vol. 11 no. 3
Type: Research Article
ISSN: 0263-4503

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Article
Publication date: 2 March 2012

Kimmo Alajoutsijärvi, Tuija Mainela, Pauliina Ulkuniemi and Emma Montell

The aim of this paper is to identify the effects of business cycles on industrial business‐to‐business relationships within extremely volatile industries.

Abstract

Purpose

The aim of this paper is to identify the effects of business cycles on industrial business‐to‐business relationships within extremely volatile industries.

Design/methodology/approach

The paper is an in‐depth case study on Outotec plc, a leading provider of technologies for the mining and metal industries.

Findings

The study identifies the changes in a business relationship during a business cycle as the dominance between the parties and the cooperative and the competitive nature of the relationship alternate.

Practical implications

The study identifies ways to smooth the effects of business cycles in extremely volatile industries from the viewpoint of a project‐based technology provider.

Originality/value

While a significant amount of macroeconomic research on cycles and a few studies on industry‐specific business cycles can be found, this study is a rare example of company‐specific research on surviving business cycles.

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