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Article
Publication date: 23 September 2022

Minyoung Noh, Jimi Park and Shijin Yoo

The authors examine how a firm's strategic emphasis (SE) on value appropriation (VA) over value creation (VC) is associated with accounting conservatism.

Abstract

Purpose

The authors examine how a firm's strategic emphasis (SE) on value appropriation (VA) over value creation (VC) is associated with accounting conservatism.

Design/methodology/approach

To examine the effect of SE on a firm's adoption of conservative accounting practice, the authors measure SE as advertising expenses minus research and development (R&D) expenses scaled by total assets. The authors rely on the asymmetric timeliness of earnings from Basu (1997) to measure conditional conservatism and investigate how the incremental sensitivity of earnings to negative stock returns varies with the SE.

Findings

SE on VA over VC is found to be positively related to accounting conservatism since they want to deter entrants (i.e. competition adjustment) and to accommodate the tighter monitoring over the financial reporting system from stakeholders (i.e. risk adjustment). This argument is also supported by the additional cross-sectional tests based on the different level of market competition and external monitoring environment. In addition, the positive association between SE on VA over VC and accounting conservatism is less pronounced when managerial overconfidence is high.

Research limitations/implications

Implication is that two important decisions (i.e. SE and accounting conservatism) are related with each other since both are to create competitive advantage and to maintain financial stability for a firm, and the relation differs by managerial characteristics.

Originality/value

This study highlights the differential roles of SE in shaping the conservatism in financial reporting and the importance of overconfidence in driving conservative accounting.

Details

Managerial Finance, vol. 49 no. 3
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 18 April 2016

Jimi Park and Shijin Yoo

The purpose of this paper is to answer why the predominant competitive reaction (CR) is non-reactive one in the previous literature by showing that some fluctuations of CR may…

Abstract

Purpose

The purpose of this paper is to answer why the predominant competitive reaction (CR) is non-reactive one in the previous literature by showing that some fluctuations of CR may average out to zero.

Design/methodology/approach

This research proposes a model for measuring CR volatility to examine whether a firm’s CR differs over time. A rolling-windows time series approach is applied to three different data sets.

Findings

The results show that firms indeed react to each other, but the types of reactions vary over time, thereby creating a misunderstood “no-reaction” in the literature.

Practical implications

This study may help understand the gap between academic findings (i.e. no-reaction) and managerial reality (i.e. marketing wars).

Originality/value

Although a firm’s CR should be understood as a series of managerial actions that may change over time, the extant literature has not considered this temporal variation of CR. This paper provides a systematic review of the empirically based literature and provides insights into the importance of strategic variation in competitive dynamics.

Details

Management Decision, vol. 54 no. 3
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 20 April 2015

Hyun Shin, Jongtae Shin, Shijin Yoo, Joon Song and Alex Kim

– The purpose of this paper is to present a new perspective on the marketing-R & D interface by modelling firms that develop new products in a duopolistic market.

1383

Abstract

Purpose

The purpose of this paper is to present a new perspective on the marketing-R & D interface by modelling firms that develop new products in a duopolistic market.

Design/methodology/approach

By using a game-theoretic modelling approach, this study examines strategic delegation, through which the marketing and R & D managers of each firm are given authority over pricing and new products’ quality levels.

Findings

Interestingly, the study finds that the case where two managers with conflicting incentives negotiate (the horizontal coordination case) might produce a better financial outcome than when the managers’ decisions are perfectly coordinated by a profit-maximizing CEO (the vertical control case). In addition, the study identifies several conditions that guarantee horizontal coordination’s generation of higher profit, such as high (or low) sensitivity to the quality (or price) of a new product. The paper further shows that two competing firms may select horizontal coordination as a Nash equilibrium.

Practical implications

These findings provide new insights into the role of marketing-R & D interaction under strategic delegation, which may allow rival firms to “spend smart” on R & D, avoid excessive (and unnecessary) quality competition, and thus enhance the profitability of new products. Such insights would be useful for any firms under budget constraints.

Originality/value

To the authors’ knowledge, this paper represents the first attempt to analyze how delegation interacts with the conflicting incentives of marketing and R & D managers, which in turn affects the quality investment decisions, competitive intensity, and, ultimately, the financial outcomes of new products developed competing firms.

Details

Management Decision, vol. 53 no. 3
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 12 October 2012

Sungil Lee and Shijin Yoo

The purpose of this paper is twofold – the first is to explore the key actions that enabled Pizza Hut Korea (PHK) to come out of a nine‐year decline in sales and profits. The…

4451

Abstract

Purpose

The purpose of this paper is twofold – the first is to explore the key actions that enabled Pizza Hut Korea (PHK) to come out of a nine‐year decline in sales and profits. The second purpose is to delve deeper into the concept of return on marketing as applied to the turnaround of Pizza Hut Korea, using customer lifetime value (LTV) and the related return on marketing investment (ROMI) principles that were instrumental in turning around the business.

Design/methodology/approach

The main method used is interviews with company senior management, reviews of internal company data as well as external data and literature reviews of existing theories on return on marketing. The case uses a specific promotional decision that senior management must make to review the decision methodologies using return on marketing. This quantified return estimate is then combined with marketing and business strategic considerations to review the decision that management should make regarding the promotion. In addition, the detailed executive interviews shed light on the approaches taken by the senior management to effect a change in culture as well as the disciplined business reviews that were put in place to improve the financial performance. Finally the case describes the marketing insights that led the firm to implement their consumer promotions to help turn the business around.

Findings

Turning around a business that has been in decline for a long time requires not just keen consumer insight and excellent marketing tactics, it is a combination of changing the culture of the company and mindset of the leaders along with instilling disciplined financial processes and driving consumer insight driven strategies. In particular, this study focuses on the role of quantified marketing investment return model that helped to drive a fact‐based, data‐driven decision‐making process that, combined with strategic insight, helped to turn the business around. The lifetime value and return on marketing investment model employed by Pizza Hut Korea provides a starting framework for analyzing marketing investment returns that can be adapted by many other companies.

Originality/value

Though there has been research conducted in many turnaround situations, there has been virtually no work done to examine the turnaround strategies employed using key marketing return metrics. In addition, the study provides value in that it examines the totality of management principles employed (cultural, organizational, financial, marketing) to drive innovation and change. This study will be useful for those that seek to better understand the key principles involved in turning around a business but with particular emphasis on quantified marketing returns analysis using return on marketing investment method.

Details

Management Decision, vol. 50 no. 9
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 11 January 2013

This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting‐edge research and case studies.

Abstract

Purpose

This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting‐edge research and case studies.

Design/methodology/approach

This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.

Findings

Marketing is one of several key operations that play a fundamental part in the success of any company. Those closely involved in its activities will no doubt claim it is the most critical of them all. Regardless of its place in the pecking order of importance, marketing is not immune when the financial well‐being of the firm needs protecting. Indeed, the department will often be first in line when budgets are slashed. In comparison to other functions within an organization, marketing is something of an easy target. Why? Because its returns on spending are notoriously difficult to quantify. That the predictable objections tend to fall on deaf ears is therefore hardly surprising.

Practical implications

The paper provides strategic insights and practical thinking that have influenced some of the world's leading organizations.

Originality/value

The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy‐to digest format.

Details

Strategic Direction, vol. 29 no. 2
Type: Research Article
ISSN: 0258-0543

Keywords

Article
Publication date: 8 July 2021

Huifeng Bai, Weijing He, Jin Shi, Julie McColl and Christopher Moore

This empirical research, adopting an international retailing perspective, aims to examine the parenting advantages offered by emerging market multinationals (EMNCs) in luxury…

1066

Abstract

Purpose

This empirical research, adopting an international retailing perspective, aims to examine the parenting advantages offered by emerging market multinationals (EMNCs) in luxury fashion retail sector.

Design/methodology/approach

The researchers adopted a qualitative case study, and the qualitative data were collected through ten semi-structured interviews with senior managers.

Findings

It is a win–win situation for the EMNCs as parent groups of Western luxury fashion brands, as the EMNCs can access critical assets including advanced brand management expertise, retailing know-how, and the services skills needed for higher income consumers. Meanwhile, the subsidiary brands benefit from a high degree of autonomy, intra-group resource utilisation, a competitive brand portfolio and most importantly economies of scales in the value chain, particularly in production. The perceived risks of EMNCs ownership include potentially restricted autonomy and the uncertainty over corporate development activities in the future, as well as the risks of diluting brand image caused by the inconsistency between country of origin and country of ownership.

Research limitations/implications

Very few EMNCs have moved into luxury fashion retailing to date, which means that the sampling frame was small. The findings were generated from China, which is perceived to be of considerable psychic distance in terms of culture and policies compared to other emerging markets that have been heavily influenced by colonialism.

Practical implications

This paper suggests that practitioners, particularly EMNCs, support their subsidiary luxury fashion brands through parenting advantages and develop their own high-end fashion brands through internationalisation.

Originality/value

This empirical study contributes to the current international retailing literature by offering in depth insights of parenting advantages offered by EMNCs in luxury fashion retailing. It also enriches the EMNC literature, which has mainly adopted an international business scope, by extending this understanding into luxury fashion retailing.

Details

International Journal of Retail & Distribution Management, vol. 50 no. 1
Type: Research Article
ISSN: 0959-0552

Keywords

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