Understanding Transient-Member Nonprofit Organizations

This paper reports on an examination of membership nonprofits whose members are committed for a relatively short period—“transient-member nonprofits.” These organizations are pressured to attend to the current membership and long-term projects are difficult to plan, execute, and finance. While a number of organizational types are transient-member nonprofits, youth sports organizations, are an archetype. This paper’s exploratory study sought to determine how such organizations’ transient characteristics appeared in their financial reports. It considered whether transient-member nonprofits report different profits, net assets, and liabilities when compared to more dedicated nonprofits. Transient-member nonprofits report lower net assets than do other nonprofits. An analysis of the degree to which organizations are transient found that the most transient organizations tend to have significantly lower net assets and liabilities. However, organizations that are relatively more transient do not report lower annual profits than other organizations

Use of precedent and antecedent information in strategic cost management

Integral to strategic cost management is the choice of procuring flexible versus committed resources conditioned on demand uncertainty. Prior research shows that costs respond less to decreases than increases in sales activity when firms invest in committed resources. We analyze asymmetry in cost behavior to investigate how resource procurement decisions between flexible and committed resources are related to precedent and antecedent information about demand uncertainty. We find that the asymmetry of cost responsiveness increases with historical sales growth and with the firm\u27s market-to-book ratio, and decreases with historical sales volatility. We find similar results for firm-specific deviations of sales growth, sales volatility and the market-to-book ratio from the industry averages. These results illustrate how managers might combine precedent and antecedent information in formulating a resource procurement plan as a means of strategic cost management

Understanding the Impact of Collaboration Software on Product Design and Development

Prior research suggests that supply chain collaboration has enabled companies to compete more efficiently in a global economy. We investigate a class of collaboration software for product design and development called collaborative product commerce (CPC). Drawing upon prior research in media richness theory and organizational science, we develop a theoretical framework to study the impact of CPC on product development. Based on data collected from 71 firms, we test our research hypotheses on the impact of CPC on product design quality, design cycle time and development cost. We find that CPC implementation is associated with greater collaboration among product design teams which, in turn, have a significant positive impact on product quality and a reduction in cycle time and product development cost. Further analyses reveals that CPC implementation is associated with substantial cost savings that can be attributed to improvements in product design quality, design turnaround time, greater design reuse, and lower product design documentation and rework costs

R&D Uncertainty in Future Benefits

This paper contributes to the current debate on accounting treatment of R&D expenditures. We considered two different measures of future benefits to a firm, sales revenue and operating cash flows. We provide evidence that R&D expenditures do not generate more uncertain future sales revenue or operating cash flows compared to capital expenditures. In terms of sales revenue, R&D expenditures generate significantly less uncertain future benefits compared to capital expenditures. And in terms of operating cash flows, our results do not provide conclusive evidence that whether R&D expenditures generate more uncertain future benefits than capital expenditures or not

VALUE RELEVANCE OF R&D SPENDING BY RIVALS

Firms make use of the external technology knowledge obtained from their rivals in order to improve their productivity and profitability. The positive impact of rivals’ R&D on a firm’s profits is known as knowledge spillovers. On the other hand, an innovating firm will not be able to price a new product to fully capture the value of its innovation due to competition. Furthermore, there are times when a rival\u27s innovation activities might make a firm\u27s products obsolete. This results in negative spillovers, in which case rivals’ R&D hurts a firm’s performance. The interplay of knowledge and negative spillovers together determines the direction of the overall impact of rivals\u27 R&D on the firm\u27s stock valuation. We provide evidence that rivals\u27 R&D is significantly and positively associated with stock valuation of firms. To our best knowledge, ours is the first study to show a positive association between R&D expenditures of rivals and firm\u27s stock market valuation. We further show that the impact of industry R&D on stock valuation is higher in industries where R&D expenditures are dispersed among several firms compared to industries where R&D is concentrated among a few firms. Finally, we show that investors differentiate firms based on their absorptive capacity of rivals\u27 R&D

An Empirical Analysis of the Market Perception of Firm Strategy

Porter (1980) and others (Hambrick, 1983, Kotha and Nair 1995) posit that firms pursuing either a cost leadership or a differentiation strategy are better able to gain competitive advantages over firms and accordingly achieve superior performance. Allen (2007) found that the lack of strategic emphasis, as defined by the generic strategies formulated in Porter (1980) to be the major reason for the downfall of several Japanese firms. In this paper, we investigate how capital markets perceive and reward the strategies pursued by firms. We find that markets place a high value on firms pursing either the cost leadership or the differentiation strategy. However the value placed on differentiation is higher than on cost leadership, highlighting the greater complexity of the differentiation strategy which would make replication of such a strategy difficult for competitors. Finally we show that firms that pursue higher levels of differentiation generate significant abnormal returns over the next three years

Impact of Strategy on Analyst Information

In this paper, we investigate the impact of firm strategy on the properties of analyst\u27 information. We argue that analysts\u27 total information (common and idiosyncratic information together) about a firm depends on how clearly evident the chosen strategy of a firm is. Second, we argue that financial analysts will see more opportunities for value addition in differentiators, and hence, will gravitate more towards such firms. Analysts add value by gathering private information and, thus, individual analyst\u27s private information will be a greater percentage of total information for a firm pursuing a differentiation strategy than for a firm pursuing a cost leadership strategy. Our results confirm our hypotheses