Following the chain of command? How managers balance benefits and risks in granting autonomy to employees

We investigate how managers trade off the benefits of delegating authority to their employees with the risk of loss of control. Organizational economics theory identifies specific knowledge of subordinates and monitoring possibilities for the manager as determinants of delegation. Social learning theory predicts that when unit managers are themselves granted more authority, they will pass this on to their employees. This cascading of authority reduces the fear of loss of control associated with delegation. Using a survey among 215 unit managers in professional services firms, we find that managers delegate more authority to employees in their unit when those employees have more specific knowledge, when there are more exceptions in employee tasks, and when monitoring costs are lower. We also find support for the cascading effect: decentralization to the manager is positively related to autonomy granted to employees, while it moderates the effects of specific knowledge and monitoring costs

The impact of customer-specific marketing expenses on customer retention and customer profitability

We study the effects of customer-specific marketing expenses on customer retention and customer profitability in a business-to-business setting. Using data from a company providing hygiene services, we look at the impact of a hitherto unstudied type of expense targeted at individual customer relationships: the offering of free equipment to customers. The data allow tracking the activities performed in more than 4,500 customer relationships over a period of 4 years. Retention rates are higher for customers targeted with free equipment, but this effect results from an interaction with customer size. First-order dynamic panel data analyses show that the impact of targeted marketing expenses on customer dollar profit is positive for large customers, but there is no effect for smaller customers. Thus, targeted marketing expenses seem to be a tool for relationship maintenance rather than customer development: they help in retaining large customers that generate more profit, but they do not seem to work in developing new customers into larger, more profitable ones

Valuing patents on cost-reducing technology: A case study

We present an approach for valuing patents on production process improvements. Specifically, we focus on valuing a patent on cost-reducing process improvements from the viewpoint of the patent holding firm. We do this by considering the relevant cash flows that result from owning the patent. The patent value is determined by (1) licensing fees and royalty income, (2) competitive advantage resulting from the patent, (3) patent maintenance costs. We discuss a case study that presents the difficulties and challenges in finding the relevant information that is needed to estimate the cash flows. We show that valuation of patents on production process improvements cannot be done without good knowledge of technology, markets and competitors

Understanding Performance in Professional Services for Innovation Intermediation: Technology Consultants vs. Management Consultants

The innovation intermediation (II) literature can be enriched by the professional service firm (PSF) literature when it comes to understanding the determinants of performance for different types of consultants that fulfil an II function in this era of digital transformation. The present study (1) contrasts two classic types of private-sector consultancy that have been shown to act as IIs amidst digital transformation (technology consultants vs. management consultants), and (2) shows how both II and the PSF literature point to three factors: the consultant’s client focus, the level of innovativeness within the consultant’s own firm, and extent to which the consultant’s own firm can learn. Analysis of the effects of these factors is based on a dataset of 122 observations at PSF practice level divided between technology consultants and management consultants. We find for technology consultants’ innovativeness and learning are beneficial for performance, while for management consultants these factors do not matter and that client focus is key. We discuss implications for II research and practice

Do fair value adjustments influence dividend policy?

We examine the impact of positive fair value adjustments on dividend policy. If fair value adjustments are transitory in nature and managers are able to assess their implications for future earnings, fair value adjustments in net income is expected to have no distribution consequences. However, positive fair value adjustments may lead to higher dividends when management incorrectly assesses their persistence. This can have a procyclical impact because higher dividends increase leverage, and thus risk. We use a Russian setting that mandates fair value accounting for financial instruments and requires disclosure of unrealised fair value adjustments in income. We find no empirical support for the concern that dividends increase in response to positive fair value adjustments. Rather, there is a negative relationship between positive fair value adjustments and dividend changes, which holds after controlling for dividend policy determinants and any endogenous nature of the revaluation decision. We discuss several possible explanations for this finding

Verbetert de operationele prestatie van ondernemingen als gevolg van een fusie of overname?

In dit artikel presenteren we de resultaten van een onderzoek naar veranderingen in de operationele prestaties van ondernemingen na een fusie of overname, teneinde het optreden van synergievoordelen te beoordelen. We gebruiken hiervoor een steekproef van veertien overnames van Nederlandse beursgenoteerde ondernemingen. De veranderingen in de operationele prestaties worden geanalyseerd aan de hand van een cashflowgebaseerd model, waarbij het cashflowrendement op de marktwaarde van de activa en op de netto-omzet vóór en ná het samengaan met elkaar worden vergeleken. De resultaten van dit onderzoek duiden niet op verbeteringen in de operationele prestaties na de fusie of overname