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The purpose of this paper is to investigate whether CEO compensation scheme may induce some agency conflicts in the foreign exchange risk hedging policy.

Residual exposure is a post-hedging variable computed as the ratio of unrealized foreign exchange risk gains/losses to international sales. The authors follow the optimal hedging theory developed by Smith and Stulz (1985). The residual foreign exchange risk exposure is a way to capture some consequences of the managerial risk aversion, whereas the compensation scheme granted to CEO reveals that of the shareholders. The authors interpret any deviation to the predictions of this theory as a mark that some agency conflicts exist.

CEO compensation (stock-options, shares and so) significantly influence the level of the residual foreign exchange risk exposure. Both in-the-money exercisable options and shares are negatively related to the residual exposure of foreign exchange risk. The authors also document that the effect of agency problems is rather contingent because shares and options have especially a negative impact when the level of foreign exchange risk is relatively high.

The residual FX risk exposure variable the authors promote in this paper completes the traditional proxies used to depict the corporate hedging policy such as the nominal or total fair value of currency derivatives (Davies et al., 2006), use of nominal values (Spanò, 2007), use of fair values of derivatives and the fraction of production hedged (Wang and Fan, 2011). The information that it conveys differs significantly from the one provided by traditional proxies because it captures the year-end post hedging firm’s risk profile.

Why do some retail networks operate shop-in-shops along with stand-alone units while others do not? Drawing on a resource-based and intellectual capital (IC) perspective as a broad theoretical lens, the purpose of this paper is to focus on retailer-run shop-in-shops and examine the determinants of their adoption.

To gain a comprehensive understanding of shop-in-shop adoption by retail branded networks, a research design mixing a quantitative study (n = 170) and a qualitative study (n = 19) was adopted to test nine hypotheses regarding these determinants of the adoption of retailer-run shop-in-shops and explore in greater depth the processes whereby they actually occur.

The main findings show that intangible resources are major determinants of the choice to operate shop-in-shops while tangible resources are minor determinants. The more robust results of the analysis lie in the positive effect of own-label merchandise range, premium pricing strategy, positioning based on symbols, retail concept fast renewal and high sector specialisation on the choice to operate a shop-in-shop. The effect of financial constraints on the decision to expand via shop-in-shops is limited.

The authors emphasise the importance of marketing-related and company-related characteristics in differentiating the likelihood of retail networks to expand via shop-in-shops. These results lend support to the relevance of a resource-based and IC perspective in explaining the propensity of retailers to develop via shop-in-shops.

The decision to operate shop-in-shops should depend on the extent to which intangible resources – the most important being retail positioning grounded in symbols, an own-label merchandise range, and a high retail branded network reputation – can be valued and enhanced. Expanding a retail network via shop-in-shops does not appear to be a financially constrained expansion strategy: it must be considered as a relevant first best strategy when an independent and young retail company has intangible resources to value but limited tangible resources.

The study contributes to channel management and retailing research in four ways. First, it precisely delineates the specific characteristics of shop-in-shops. Second, it provides theoretical explanations – based on a resource and IC perspective – of determinants that influence the choice of shop-in-shops. Third, it empirically tests the influence of marketing-related and company-related characteristics when adopting shop-in-shops. Fourth, it provides insights into how adopting shop-in-shops. To the authors’ knowledge, the research is on the first to analyse theoretically and test the determinants for the choice of retailer-run shop-in-shops.

Researchers into entrepreneurial strategy have overlooked the impact of small vs big investments on a venture's return on investment (ROI). The purpose of this paper is to investigate to what extent does entrepreneurial behavior impact initial investment size and the return on that investment?

This investigation summarizes research into entrepreneurial leadership behavior and uses data from longitudinal case studies of four innovative start‐up wine businesses in California, India, and Italy.

Investment size and ROI appear to be related to entrepreneurial behavior.

Lead entrepreneurs must develop both technical competence and social networking skills to achieve small wins, i.e. early if only modest ROI.

This paper develops a model consisting of several testable propositions to measure the impact of entrepreneurial behavior on ROI.

The purpose of this paper is to investigate the competitive strategies adopted by French wine producing firms in a crisis context.

First, two case studies have been developed through interviews with wine producers. They show that many strategies, corresponding to different levels of performance, are possible in a crisis industry. Second, an empirical study has been conducted applying a questionnaire survey addressed in June 2008 to wine producing firms from the Languedoc‐Roussillon region, south of France. Third, ordinal regression is operated in order to link financial performance and strategic choices of the investigated 160 respondent firms.

The findings indicated some interesting trends concerning wine producers' perception regarding the effect of the crisis and the strategies adopted by firms. The preferred strategic choice of the majority of investigated firms is the combination of “niche + differentiation” strategies. On the other hand, the strategic choice of firms is influenced by their experience; many less experienced firms prefer to adopt a differentiation strategy or a combination of the “niche + differentiation” strategies. Moreover, statistical analysis shows that no implementation of niche, differentiation or relational marketing lead toward decreasing turnover.

This research is focused only on wine producing firms from Languedoc‐Roussillon region in France. A second limitation is the fact that firms' performance was not systematically measured. The performance is evaluated mainly indirectly, considering that the investigated firms have survived the crisis.

Very few studies have been conducted on this particular topic.

Working from the example of two of the main players in the Aquitaine wine sector; the co‐operatives and the wine merchants, the aim of this paper is to analyse the nature of strategic operations from the point of view of the concentration process taking place in the Bordeaux‐Aquitaine region.

After providing a theoretical framework about the industrial cluster and its strategic operations in the area of consolidation, the paper provides descriptive and quantitative data, collected from in‐depth interviews; surveys conducted by the authors; and secondary sources.

This paper provides both qualitative and quantitative evidence to prove that a number of collaborative approaches have been adopted in the region. It highlights the fact that these players are now more willing to respond to the conditions of a new competitive environment, and consequently to consider new strategic approaches.

The present paper, contrary to these received ideas, demonstrates that the Aquitaine wine value chain is undergoing deep restructuring process. With the spotlight focused on producing a size effect on the sector through concentration, the paper examines in greater detail what this process really is. It is not limited to size objectives as it commits the players to thorough production and market changes. This led to concentration operations being analysed in terms of strategic changes, notably with regard to the margin for manoeuvre that the players are meant to design and develop.

Agricultural risks will tend to increase in the future, but risk management instruments and techniques at the disposal of wine companies are relatively limited. This paper aims to present an original risk protection mechanism implemented by the federation of Côte du Rhône (Inter‐Rhône) wine producers to build up a wine stock, or “reserve”, so as to protect their incomes against fluctuation in prices and production.

Using the VaR (value‐at‐risk) methodology, the stock level that will protect producers against a fall in their incomes is determined. More specifically, the probability that a given producer's current income falls lower than a target minimum income must be inferior or equal to a given (small) wine stock level. An agricultural income depends on price and production, so the reserve amount is expressed according to price and production quantity risk (measured by standard deviation), and the correlation between the two. The wine stock reserve is compared with a reserve invested in financial assets.

A static comparative analysis is made using simulations of the two types of reserves (wine stock and financial assets) according to the various explanatory variables. Empirical study makes it possible to calculate reserve amounts for each category of wine managed by Inter‐Rhône. The study reveals a strong disparity in the amount of reserves of each wine.

The reserve system is considered by some to give to the producer federation the power to control supply below the equilibrium level in order to receive monopoly rents. To avoid this occurring the constitution of a mutual fund is recommended. This solution allows producers to profit from diversification gains and greater managerial flexibility.

The purpose of this paper is to examine the direct and interaction effects of brand name (BN) of wine and country‐of‐origin (COO) on perceptions of the personality image of the wine, expected price, and willingness to engage with the wine.

A field experiment in which label information for a fictitious wine was presented to wine consumers with a questionnaire on wine perceptions and response measures. The label information was manipulated across subjects using four BNs and three COOs.

The study confirms BN and COO effects on perceived wine personality and responses to the wine. Findings also indicate the effects of BN and COO as well as a BN‐COO interaction effect on price expectations.

Findings link different personality dimensions to the two different cues, suggesting greater independence of the cues than originally expected. However, some BN‐COO incongruity effects are found particularly regarding price perceptions. A small set of wine BNs and COOs are tested and sample size/treatments are limited. With larger sample sizes, some weak effects might prove more significant. For more substantive support of these findings, the study could be repeated in different locations with different BN and COO examples.

The results suggest consumers are open to some fluidity in brand name use across wine‐producing countries with appropriate pricing strategies. They also highlight the importance of understanding consumer perceptions of wine personality in assessing consumer responses and price expectations.

The research addresses BN and COO direct and interaction effects on many aspects of wine evaluation and the central role of personality dimensions in wine assessments. The paper provides evidence of value in a rapidly evolving marketplace for wine and insights into the ongoing strategic changes in the wine market. It also contributes to theory and research on information cue use and cue incongruity effects.

The purpose of this paper is to present a model and simulation results for the corporate financial value of an industry in a cobweb economy. Production‐consumption cycles affect profit and financial needs in terms of equity and debt capital, and thus corporate value over time. The model is applied to the Champagne industry.

The paper simulates the financial value of Champagne makers by taking into account developments on the Champagne market and the short‐ and long‐term responses by input suppliers and Champagne makers. Financial modeling is combined with a vertical coordination model of production and consumption in a cobweb economy.

This paper makes theoretical advances in modeling the impact of short‐ and long‐run temporal tensions in production decisions on the financial value of processors. Temporal tensions are central to the decisions made by input suppliers (grape growers) and processors (Champagne makers) as they negotiate in a context of vertical coordination in a cobweb economy. Financial aggregates are forecast by the model and used as market multiples for estimating corporate financial value. Furthermore, this research strengthens previously published simulation studies in agriculture and food markets since system dynamics (SD) is applied in modeling both input production and consumption and the processor's financial value. SD modeling is well suited to simulation in a critical context, and Champagne makers find themselves in such a context: the Champagne protected designation of origin (PDO) area has reached its legally authorized size limit, while world demand continues to grow.

The market for corporate control of Champagne makers is active. The model presented is a useful guide for decision makers because it improves the anticipation of corporate value and improves understanding of the future of value creation in a legal framework currently considering revision of both authorized annual yield (short‐run decision) and the size of the appellation area (long‐run decision).

Two original features of this paper add specific value to the existing research: first, the theory is enlarged to capture the temporal tensions affecting decision making by input suppliers and processors operating in a cobweb economy, and deduce processors' financial value using financial aggregates forecast by the model. Second, the SD simulation method is applied in modeling input production and consumption and processors' financial value.

The purpose of this paper is to explain the leverage of French wine companies (410 companies) in the wine industry during the period 2000‐2004.

Different classical capital structure theories are reviewed (trade‐off theory (TOT), pecking order theory (POT) and dynamic TOT) in order to formulate testable propositions concerning the determinants of debt levels of the French wine companies. A number of regression models (classical and panel techniques) are developed to test the static theory of trade‐off against the POT.

The results suggest that POT seems to better explain leverage of French wine companies. Significant differences in debt ratio were found between cooperatives and other legal structures. Debt ratios are also different between sub‐sectors (wholesalers, wine growers, wine makers, etc.).

Cost of capital is one of the pillars of competitive advantage (or disadvantage) of companies. With the objective to minimize the cost of capital, it seems very important to know the potential determinants of an optimal capital structure.

This is a first study of capital structure determinants in the French wine industry which contributes to the current debate between competitive capital structure theories.

The wine industry is very sensitive to climate risk, mainly due to the grape crop. The aim of this paper is to understand whether weather derivatives (WDs), mainly developed for the energy industry, can also be useful to cover climate risk for the wine industry.

The work is based on both literature review and the development of a suitable hedging strategy, using WDs, to reduce volatility affecting crop economic results.

A WD discovered to be useful for this task is similar to a cooling degree day (CDD) contract in the energy industry, and a possible hedging strategy is a strangle consisting of combination of a call and a put on a suitable climate index. In the case history presented, relating to the Bourgogne Côte de Nuits Pinot Noir red grape, the strangle covers the climate risk effectively, because it is able to reduce volatility related to the crop economic value.

Even if single fields are not still enough to evaluate whether a WD's hedging strategy is effective or not, implications affect both supply and demand for hedging instruments. On the demand side, the wine industry could rely on hedging strategies different from insurance policies. In particular, WDs offer to wine makers more flexibility and transparency in selling climate risks to counterparts. On the supply side, the financial industry could overcome limits related to insurance policies which pose many problems of efficiency, as pointed out in the literature, and do not usually cover the temperature risk.

The paper is a comprehensive work about the possibility of developing WDs for the wine industry.