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This study aims to examine the extent to which external auditors (EAs) use the work of the internal audit function (IAF) based on the purpose of its primary activities. The authors rely on attribution theory, which suggests that individuals search for meaning when an event occurs. In this setting, the authors explore how the overall (assurance vs advisory) or specific (e.g. risk management and evaluating internal controls) focus of IAF activities influences perceived EA reliance on the IAF’s work.

The authors first explore the research question with data extracted from a broad, longitudinal survey conducted triennially by the national chapters of the Institute of Internal Auditors in Austria, Germany and Switzerland. The data includes responses from 2014, 2017 and 2020 administrations of the survey. The authors conduct a parallel survey with practicing EAs attending two training sessions of a European office of a global network firm. Hypotheses were tested using ordered logistic regression.

Among the chief audit executive (CAE) participants, the authors observe that a balanced or primarily assurance-related purpose of the IAF, relative to a primarily advisory-related purpose, is associated with higher perceived EA reliance. The authors observe similar perceptions of the extent of reliance among the EA participants.

With a unique data set of practicing internal auditors from three countries, coupled with a sample of EAs, to the best of the authors’ knowledge, this study is the first to examine differences in EA reliance across the IAF’s primary roles. The study relies on data from three European countries, which differs from prior EA reliance literature with a largely North American focus. Further, comparison between perceptions of EAs and CAEs is a novel approach and this paper’s findings suggest that perceptions of CAEs could be a reliable proxy for EA-intended behavior.

Guided by the social exchange theory, this study aims to examine the mediating relationship among trust in employee, felt trust, and trust in supervisor, and these trust-related factors’ direct and indirect effects on frontline hotel employees’ customer-focused voice and silence.

Survey questionnaires were distributed to collect 307 valid paired supervisor–employee responses from 32 hotels in Taiwan. Structured equation modeling was used to test the hypotheses.

First, treating trust-related variables as two-dimensional constructs (reliance and disclosure), the results confirmed that reliance-based trust in employee increases trust in supervisor through felt trust. Second, supervisor trust in employee was generally stronger than employee felt trust. Third, while felt reliance and disclosure-based trust in supervisor were found to promote customer-focused voice and discourage silence, such opposite effects on voice and silence were not observed for reliance-based trust in employee, felt disclosure and reliance-based trust in supervisor. Fourth, indirect effects of trust in employee and felt trust on voice and silence through trust in supervisor received partial support.

This study provides business insights into managing frontline hotel employees’ voice/silence behaviors through trusting relationships.

This study verified employee felt trust as a mediating mechanism in their trusting relationships with supervisors as well as supervisors’ roles in initiating trust in vertical dyads. Using a two-dimensional trust measure, our analysis illustrated the differential effects of trust-related variables on customer-focused voice and silence, shedding light on the double-edged effects of felt trust and trust in supervisor as well as the conceptual distinction between voice and silence.

The purpose of this paper is to examine how over-reliance on buyer-supplier relational capital (created through the interconnected supply chain and social network) impacts firm performance in the context of the emerging market, i.e. India.

The study uses the Prowess database (on Indian firms) to identify the firms that rely heavily on relational capital and employs panel data regression analyses to test the effect of relational capital on firm performance (supply chain performance and financial performance).

The results show that over-reliance on relational capital leads to lower supply chain performance (proxied by supply chain cycle) and financial performance (proxied by Tobin's Q). The results also reveal that supply chain performance mediates the relationship between over-reliance on relational capital and financial performance. Together, these results indicate that over-reliance on relational capital created through the interconnected supply chain and social network for supply chain management may negatively affect a firm's competitive advantage, which in turn can significantly impede its financial performance.

In light of the supply chain literature and relevant theories, the study develops an objective understanding of over-reliance relational capital created through the interconnected supply chain and social network, by relying on a large panel dataset of manufacturing firms and hence contributes to the supply chain literature. Also, it presents a novel idea to operationalize the measure for relational capital using the Prowess database.

Contemporary focus on infections and deaths in the event of pandemics may distract health institutions and medical practitioners from the psychosocial consequences of the outbreak in individuals. In light of the devastation, persistency and scarcity of pandemics, it is imperative to delve into individuals' psychological state and self-preservation instincts when confronted with the environmental danger arising from pandemic conditions and the environmental restrictions being imposed.

Guided by the self-preservation theory, the authors advance a research model to elucidate the moderated mediation effect of secondary traumatic stress on an individual's reactions when faced with environmental danger and restriction. The authors also consider the moderating influence of environmental restriction and media use diversity. The authors subsequently validated the research model via a survey with 2,016 respondents in China. The authors employed PLS-SEM to analyze the data and assess the hypothesized paths.

Analytical results revealed that secondary traumatic stress fully mediated the impact of environmental danger on external reliance but suppresses the mediating effects on internal reliance. The authors further confirmed that environmental restriction moderated the relationship between environmental danger and reliance. Furthermore, the authors attest to the moderating influence of media use diversity on the relationship between secondary traumatic stress and external reliance.

This study not only extends the theoretical lens of self-preservation to public health emergencies but also yields practical guidelines for coping with pandemics. Insights from this study can be harnessed to aid populations worldwide in coping and recovering from pandemics.

This research focuses on the role of product acquisition cues in positive word-of-mouth (PWOM) content on social media, comparing the characteristics of different sources of product acquisition (purchased vs. gifted) and exploring whether and how they affect consumers' reliance on word-of-mouth (WOM).

The research model was developed based on the mental imagery theory. Two offline experiments and two online experiments were used to test the proposed hypotheses.

The results show that, compared to the purchased source, the gifted source evokes more positive mental imagery and greater emotional attachment to the product, resulting in greater consumer reliance on PWOM. In addition, the effect of the source of product acquisition on reliance on PWOM was stronger for experiential (vs. material) products and for consumers with higher interdependent (vs. independent) self-construal.

This research highlights the role of product acquisition cues in PWOM in influencing consumers' evaluation of WOM, while also revealing the processes inherent in how consumers process information through mental imagery. The findings provide a more comprehensive understanding of the antecedents of reliance on WOM and offer new insights and recommendations for management practitioners.

This study aims to explore the effectiveness and reliability of the performance of internal auditor by the stakeholders for their decision making. The absence of rules and regulations generates the debate that the non-standard reporting of the assessment of the internal controls system’s assessment by internal auditor and reliance by the external auditor.

The study used the mixed-method (triangulation) for the analysis quantitative data was used for regression with Smart PLS 3.2.8, and the qualitative data was used to prove and strengthen the results. The data is collected for five IVs (Objectivity of IAF, Work Performance, Competence, Internal Control System’s Assessment and Sourcing of IAF) and their impact on two DVs (Effectiveness and Reliance). This study used five areas as the target audience (Internal Auditor, External Auditor, Professional bodies, Shareholders, SECP and SBP). A total of 150 respondents were approached and received a valid response of 98 respondents.

The study explores the positive relationship between Objectivity of IAF, Work Performance, Competence, Sourcing of IAF on Effectiveness and Reliance. Internal Control System’s Assessment having significant relation with Effectiveness and non-significant with reliance because the absence of rules makes it unreliable for stakeholders.

The study found that the system for reporting the internal control needs rules and regulations advancement on the immediate basis for the betterment and safeguard of stakeholders to avoid the events like WorldCom and ENRON.

Due to the current volatile environment and fierce competition, manufacturing firms (MFs) must improve their performance to survive. In this regard, checking and monitoring the suppliers' risk should significantly improve the performance of MFs. In addition, a relation based on not being an opportunist, confidence and reliance are influential factors in reducing the supplier defaults on his/her supply obligations and improving supply chain performance (SCP). Besides, the moderator function of supplier involvement (SI) in the relationship between quality of the relationship (QoR) and supply risk mitigation (SRM) is undeniable.

Based on the survey of 148 samples from small to large-sized MFs in Jordan, Turkey and Egypt, empirical evidence has been conducted to support a majority of the authors’ hypotheses. This paper provides a theoretical review of buyer–supplier relationships and supply risk. Hypotheses were tested by using structural equation modeling (SEM)/Smart PLS-4.

According to the results, confidence and reliance have statistically significant and positive impacts on SRM, resulting in better SCP. Moreover, the findings show that SI positively affects and moderates the relationship between confidence (C) and SRM, while it has no statistically significant influence on the relationship between reliance (R) and SRM.

This study provides necessary material for managers and decision-makers in MFs to confirm the importance and understanding of the QoR in building relationships and business dealings with partners in the SC, in addition to limiting and mitigating the risks of an interruption in supply in particular. Therefore, building a high-quality relationship as a practice based on trust and reliability with suppliers positively affects the performance of the SCs of MFs.

This research paper offers empirical evidence for using QoR within SRM resources of MFs' context for enhancing their supply chain performance. This study is one of few studies that examine the QoR and SRM that contribute to enhancing SCP in MFs in developing countries, which also can serve as a reference for many SC managers and practitioners.

After completion of the case study, the students would be able to comprehend the crisis at hand for Milkbasket, why did it resist Reliance’s takeover in the first place, then to evaluate the pros-cons and future prospects for the organization post-acquisition; to evaluate from an ethical standpoint the process of mergers and acquisitions using ethical frameworks to understand how, when, to whom and through what processes do mergers and acquisitions qualify the test of being ethical; and to analyse different hostile takeovers, especially through tender offers, proxy contests and toehold bidding strategy in this case.

Founded in 2015, Milkbasket was a micro-delivery start-up based in Gurugram (near New Delhi), India. Milkbasket would let its subscribers order till midnight and deliver groceries, milk and other everyday essentials to its subscribers before 7 a.m. next day. It had burnt a lot of cash and was facing difficulty in getting investors; as such they were engaged in discussions with many companies. Two of them – Reliance Retail Venture Limited and BigBasket – were not accepting the proposed valuation, but Milkbasket got term sheets from other two companies.

This case study can be used for graduate courses on strategic management, business ethics and corporate governance. This case study can also be used in corporate finance course to highlight the importance of making ethical/responsible judgements to protect stakeholder interests.

Teaching notes are available for educators only.

CSS 3: Entrepreneurship.

Social media (SM) platforms have become major sources for generating, sharing and gathering political and election news. Although there appears to be an assumption that reliance on SM for political news consumption will continue to gain in popularity, there are reasons to believe that many Americans are retreating from using SM for political news. The purpose of this study is to examine if Americans are reducing reliance on SM for political news and to analyze why retreat may be happening.

Using longitudinal panel data from Pew’s American Trends Panel study, the authors tracked 993 respondents from February of 2016 to November of 2019 to monitor their reliance on SM for political news leading up to the 2020 US presidential election.

The results of this study indicate that a sizeable percentage of people (about a third) are retreating from SM platforms for political news consumption and some are abandoning it altogether – people we refer to as new SM “nones.” The authors find that retreat from SM is associated with increased distrust of the information found on the platforms. Concerns about fake news, incivility on SM and information overload were unrelated to retreat from use of SM for political news consumption.

The findings of this study are novel and suggest that reliance on SM for political news by the public may have waxed, seen its zenith and may now be waning largely because of distrust in the information found on SM platforms.

The purpose of this paper is to investigate the potential link between Sweden’s high reliance on equity capital financing among small and medium-sized enterprises (SMEs) and its recognition as the most innovative economy in Europe according to the European Innovation Scoreboard (EIS). This paper examines the idea that the high levels of trust within Swedish society can explain why private equity financing is more prevalent among Swedish SMEs.

To test these ideas, the authors use data from the Survey on Access to Finance for Enterprises to measure the private equity reliance of firms. The authors also use the EIS to measure the innovation capacity of nations and various aspects of SMEs’ innovation activities. Finally, societal levels of trust are measured through the World Value Survey.

First, the authors find that European countries with a higher proportion of SMEs relying on equity financing tend to be ranked as more innovative by the EIS. Second, the authors find that the correlation between a nation’s share of SMEs relying on equity financing and their level of innovation activities is marginally stronger for product innovations than for business process innovations. Third, the authors find that countries with higher levels of trust tend to have higher equity capital reliance among SMEs.

This study builds upon previous research on equity capital and SMEs’ innovation activity while introducing new insights into the relationship between societal trust and equity financing.