Search results

The purpose of this study was to extend the understanding of restaurant firms’ overall debt and equity financing practices by considering what drives equity financing. More importantly, this study attempted to identify whether an optimal financial leverage point exists in the relationship between debt financing and equity financing for restaurant firms.

This study used fixed-effects regression models with a sample of 1,549 unbalanced firm-year panel data to identify restaurant firms’ financial practices and the impacts of financial constraints.

First, restaurant firms tend to issue long-term debt to pay back existing debt. However, the amount of debt does not exactly match the debt’s maturity. Second, small restaurant firms’ net debt financing, as well as net equity financing, has an inverted-U-shaped relationship with financial leverage. Finally, the effect of financial leverage on external financing significantly differs between small and large restaurant firms.

Restaurant firms routinely use both debt and equity financing interchangeably to manage their financial constraints and target debt ratio. Further, firm size is an important indicator of financial constraints, while equity financing plays an important role in managing an optimal target debt ratio.

This study is unique in that it considers determinants of restaurant firms’ long-term debt financing as well as equity financing. This study also examines differences in long-term debt and equity financing practices between financially constrained and unconstrained firms.

This chapter suggests a robust Hausman and Taylor (1981), hereafter HT, estimator that deals with the possible presence of outliers. This entails two modifications of the classical HT estimator. The first modification uses the Bramati and Croux (2007) robust Within MS estimator instead of the Within estimator in the first stage of the HT estimator. The second modification uses the robust Wagenvoort and Waldmann (2002) two-stage generalized MS estimator instead of the 2SLS estimator in the second step of the HT estimator. Monte Carlo simulations show that, in the presence of vertical outliers or bad leverage points, the robust HT estimator yields large gains in MSE as compared to its classical Hausman–Taylor counterpart. We illustrate this robust version of the HT estimator using an empirical application.

This paper presents a conceptualization of brand extension attributes that emerge when consumers evaluate brand extensions. These emergent attributes are unique in the extension product category and thus represent potential points of leverage for the brand. An empirical study was conducted to show the utility of these attributes in influencing consumers’ responses. Consumers were allowed to write their thoughts as they evaluated fictitious extensions of four actual brands. The results indicate that when emergent attributes are formed, they appear to influence consumers’ attitudes toward brand extensions. Unlike previous findings that have suggested that good fit is necessary to ensure extension success, the results indicate that the influence of emergent attributes on consumer attitudes increases as the brand’s fit with the extension decreases.

In the finance literature, fitting a cross-sectional regression with (estimated) abnormal returns as the dependent variable and firm-specific variables (e.g. financial ratios) as independent variables has become de rigueur for a publishable event study. In the absence of skewness and/or kurtosis the explanatory variable, the regression design does not exhibit leverage – an issue that has been addressed in the econometrics literature on the finite sample properties of heteroskedastic-consistent (HC) standard errors, but not in the finance literature on event studies. The paper aims to discuss this issue.

In this paper, simulations are designed to evaluate the potential bias in the standard error of the regression coefficient when the regression design includes “points of high leverage” (Chesher and Jewitt, 1987) and heteroskedasticity. The empirical distributions of test statistics are tabulated from ordinary least squares, weighted least squares, and HC standard errors.

None of the test statistics examined in these simulations are uniformly robust with regard to conditional heteroskedasticity when the regression includes “points of high leverage.” In some cases the bias can be quite large: an empirical rejection rate as high as 25 percent for a 5 percent nominal significance level. Further, the bias in OLS HC standard errors may be attenuated but not fully corrected with a “wild bootstrap.”

If the researcher suspects an event-induced increase in return variances, tests for conditional heteroskedasticity should be conducted and the regressor matrix should be evaluated for observations that exhibit a high degree of leverage.

This paper is a modest step toward filling a gap on the finite sample properties of HC standard errors in the event methodology literature.

The service environment is becoming increasingly turbulent, leading to calls for a systemic understanding of it as a set of dynamic service ecosystems. This paper advances this understanding by developing a typology of service ecosystem dynamics that explains the varying interplay between change and stability within the service environment through distinct behavioral patterns exhibited by service ecosystems over time.

This study builds upon a systematic literature review of service ecosystems literature and uses system dynamics as a method theory to abductively analyze extant literature and develop a typology of service ecosystem dynamics.

The paper identifies three types of service ecosystem dynamics—behavioral patterns of service ecosystems—and explains how they unfold through self-adjustment processes and changes within different systemic leverage points. The typology of service ecosystem dynamics consists of (1) reproduction (i.e. stable behavioral pattern), (2) reconfiguration (i.e. unstable behavioral pattern) and (3) transition (i.e. disrupting, shifting behavioral pattern).

The typology enables practitioners to gain a deeper understanding of their service environment by discerning the behavioral patterns exhibited by the constituent service ecosystems. This, in turn, supports them in devising more effective strategies for navigating through it.

The paper provides a precise definition of service ecosystem dynamics and shows how the identified three types of dynamics can be used as a lens to empirically examine change and stability in the service environment. It also offers a set of research directions for tackling service research challenges.

This chapter considers the provocative yet unexplored idea that a relationship exists between the nature by which a union wins recognition from an employer and the collective bargaining outcomes that are produced. Since at least the Ronald Reagan Administration, many trade, service and industrial unions in the United States have deployed alterative means to win recognition. Unions have negotiated a host of neutrality and card-check agreements as alternatives to petitioning for elections under the auspices of the National Labor Relations Board. The use of these diverse organizing mechanisms has been well documented by numerous authors writing in the “union revitalization” genre, but what has not been done is the evaluation of the bargaining outcomes – effects – of different organizing tactics. The critical questions that have not been answered until now are, “What difference does it make how a union wins recognition?” Are the fortunes of newly organized union workers influenced by the way that they are brought into the labor movement? Based on a ten-year review of several successful union organizing cases, the findings from this chapter suggest that the key variable in gaining certification and ultimately a first contract is the ability of the union to leverage power and to do so in a timely manner.

In this response to Day and Tate (this volume) and Markham, Groesbeck, and Swan (this volume), we clarify the concept of continuous learning from a living system's perspective and address the evolution of adaptive, generative, and transformative learning. Further, we assert that a system's drive for homeostasis is actually a fluid, continuous learning process that may vary in the rate and direction of change. Environmental triggers, readiness for learning, and feedback provide leverage points for change and learning within and across individual, group, and organizational systems. Future research is needed to identify and study the effects of these leverage points on systems’ adaptive, generative, and transformative learning.

The data employed to measure income inequality usually come from household surveys, which commonly suffer from atypical observations such as outliers and contamination points. This is of importance since a single atypical observation can make classical inequality indices totally uninformative. To deal with this problem, robust univariate parametric or ad hoc procedures are commonly used; however, neither is fully satisfactory. The purpose of this paper is to propose a methodology to deal with this problem.

The author propose two robust procedures to estimate inequality indices that can use all the information from a data set, and neither of them rely on a parametric distributional assumption. The methodology performs well irrespectively of the size and quality of the data set.

Applying these methods to household data for UK (1979) and Mexico (2006 and 2011), the author find that for UK data the Gini, Coefficient of Variation and Theil Inequality Indices are over estimated by between 0.02 and 0.04, while in the case of Mexico the same indices are over estimated more deeply, between 0.1 and almost 0.4. The relevance of including atypical observations that follow the linear pattern of the data are shown using the data from Mexico (2011).

The methodology has two main limitations: the procedures are not able to identify a bad leverage outlier from a contamination point; and in the case that the data has no atypical observations, the procedures will tag as atypical a very small fraction of observations.

A reduction in the estimate of inequality has important consequences from a policy maker perspective. First, ceteris paribus, the optimal amount of resources destinated to directly address inequality/poverty. Those “extra” resources can be destinated to promote growth. Notice that this is a direct consequence of having a more egalitarian economy than previously thought, this is due to the fact that poor people will actually enjoy a bigger share of any national income increment. This also implies that, in order to reduce poverty, public policies should focus more on economic growth.

To the knowledge, in the inequality literature this is the first methodology that is able to identify outliers and contamination points in more than one direction. That is, not only at the tails of the distribution, but on the whole marginal distribution of income. This is possible via the use of other variables related to income.

The growing force of disruptive change is creating whitewater work environments across the profit and not-for-profit world. To help leaders overcome the challenge of achieving improvements in leadership performance, this study aims to outline research and case examples that illustrate a four-point roadmap for improving this performance at scale.

The study summarizes new research on leadership and organizational high performance and practices that drive high performance today. It relates these finding to trends evidenced in the work being done by HR organizations and the consulting firms that serve them. It then outlines an evidence-based roadmap for achieving improvements in leadership performance that HR organizations can adopt to achieve improvements in leadership performance.

Successful organizations intervene at four leverage points to meet the challenge achieving the shifts in leadership behavior needed for success in today’s permanent whitewater environments. These organizations are focusing on two types of leadership, leveraging two approaches to its development and are leveraging critical enablers that benefit from strong alignments within HR and between HR and their business leader colleagues.

The study highlights new research finding and research-based models of leadership performance that meet the demands of today’s workplace. It synthesizes a new four-point roadmap to success from trends discovered in recent research on leadership, technology-assisted behavior change and organizational effectiveness, as well as in the example of in high-performing organizations.

Systems thinking calls for a shift of our mindset from seeing just parts to seeing the whole reality in its structured dynamic unity and interconnectedness. Systems thinking fosters a sensibility to see subtle connections between components and parts of reality, especially the free enterprise capitalist system (FECS). It enables us to see ourselves as active participants or partners of FECS and not mere induced factors of its production–distribution–consumption processes. Systems thinking seeks to identify the economic “structures” that underlie complex situations in FECS that bring about high versus low leveraged changes. A system is strengthened and reinforced by feedback of reciprocal exchanges that makes the system alive, transparent, human, and humanizing.

In Part I, we explore basic laws or patterns of behaviors as understood by systems thinking; in Part II we examine the basic archetypes or structured behaviors of systems thinking; in both parts we strive to see reality through the lens of critical thinking to help us understand patterns and structures of behavior among systems and their component parts. In conclusion, we argue for compatibility and complementarity of critical thinking and systems thinking to identify and resolve management problems created by our flawed thinking, and sedimented by our wanton assumptions, presumptions, suppositions and presuppositions, biases, and prejudices. Such thinking will also identify unnecessary economic and political structures of the self-serving policies we create, which imprison us.