Business Commons^™

Where Do Resources Come From? A Model Of Resource Generation, Paul C. Godfrey, Hal B. Gregersen

Faculty Publications

Although the Resource-Based View of the firm (RBV) continues to gain centrality in the conversation of strategic management, several unanswered questions remain within the emerging paradigm. This article focuses on one of those questions. We propose a causal model of resource generation built around three central constructs: entrepreneurial ability, market context, and organizational context. Entrepreneurial ability generates new asset combinations that are valuable and unique, while market and organizational contexts preserve the value in these new asset combinations by providing barriers to imitation. We build a model and then consider three separate paths for generating idiosyncratic resources within a firm. …

A Rejoinder To Kenworthy-U'Ren Enlarging The Tent Of Service-Learning, Paul C. Godfrey

Faculty Publications

The Old Testament prophet/poet Isaiah speaks of the eventual redemption of the children of Abraham and uses a powerful metaphor to invite his followers to action: "Enlarge thy tent, and let them stretch forth the curtains of thy habitations: spare not, lengthen thy cords, and strengthen thy stakes" (Isaiah 54:2, King James Version). In the spirit of enlarging the tent and strengthening the stakes of the service-learning movement, Kenworthy-U'Ren's (1999, this issue) commentary to my article, "Service-Learning and Management Education: A Call to Action" (1999, this issue), proves a valuable and wonderful contribution. The strength of her commentary comes from …

Health, Health Insurance And The Labor Market, Janet Currie, Brigitte C. Madrian

Faculty Publications

This chapter provides an overview of the literature linking health, health insurance and labor market outcomes such as wages, earnings, employment, hours, occupational choice, job turnover, retirement, and the structure of employment. The ®rst part of the paper focuses on the relationship between health and labor market outcomes. The empirical literature surveyed suggests that poor health reduces the capacity to work and has substantive effects on wages, labor force participation and job choice. The exact magnitudes, however, are sensitive to both the choice of health measures and to identi®cation assumptions. The second part of the paper considers the link between …

Nebraska’S Lodging Tax, Brian J. Hill

Faculty Publications

Like many states, Nebraska charges a tax on overnight lodging accommodations. Sometimes called a bed tax or occupancy tax, this levy is available on a county by county basis as desired by county commissioners or supervisors. As of 1996, 45 Nebraska counties opted to impose a lodging tax on their guests. That same year, total government revenues from the lodging tax were over $6 million. The funds gathered in this manner provide the funding for the Nebraska Division of Travel and Tourism and for county marketing efforts.

Characteristics Of A Full Disclosure, Transaction-Based Index Of Commercial Real Estate, David H. Downs, Barrett A. Slade

Faculty Publications

This study addresses the characteristics of a transaction-based index of commercial real estate as reported in a full-disclosure market. Prior research on transaction-based indices has enumerated various shortcomings for commercial real estate markets. This study circumvents many of these problems by using a large data set of commercial property transactions obtained for the Phoenix, Arizona metropolitan statistical area. The empirical analysis demonstrates that investors stand to gain considerable insight by comparing fulldisclosure, transaction-based indices with voluntarydisclosure, appraisal-based indices. The results suggest that full-disclosure indices avoid some of the institutional biases associated with other benchmarks of commercial real estate performance. In …

Price And Non-Price Influences On Water Conservation: An Econometric Model Of Aggregate Demand Under Nonlinear Budget Constraints, Leonardo Corral, Anthony C. Fisher, Nile W. Hatch

Faculty Publications

This paper develops a model of residential water demand under a nonlinear budget constraint. The theoretical model for an individual consumer is adapted to yield an aggregate model that preserves the structure of the individual demand function, and that can be used with aggregate (water district level) data. The model is used to study the influence of pricing and non-price conservation programs on consumption and conservation behavior in three water districts in the San Francisco Bay Area, over a 10-year period that includes both drought and normal years. Empirical results show that pricing can be effective in reducing water consumption, …

Race, Redlining, And Automobile Insurance Prices, Scott E. Harrington, Gregory R. Niehaus

Faculty Publications

Following Becker's (1993) suggestion that tests for discrimination should attempt to infer whether profits differ for products sold to minorities and nonminorities, this article tests the hypothesis that racial discrimination affects market prices of auto insurance in Missouri. Compared with tests for discrimination in lending markets, our results are less susceptible to bias from omitted variables.Controlling for available demographic and coverage- related factors, we do not find that loss ratios at the zip-code level are negatively related to percent minority population. This finding is inconsistent with the hypothesis that racial discrimination increases premiums relative to expected claim costs for minorities.

Generating Needed Modernization Funds: Streamlining The Bureaucracy--Not Outsourcing And Privatizing--Is The Best Solution, Jan P. Muczyk

Faculty Publications

The Department of Defense (DoD) budget, in real dollars, has decreased for a dozen years or so, and will likely continue to do so. Since all the funds necessary for warfighting asset modernization will not come from Congress, DoD must free up existing funds for reallocation to its modernization program. So far, much reliance has been placed on privatization and outsourcing as ways of releasing large sums of money. But it is highly unlikely that these instrumentalities are up to the task, and other sources must shoulder a large part of the load. Although eliminating duplication of mission and roles …

Retention Of Administrators In Nursing Homes: What Can Management Do?, Douglas A. Singh, Robert C. Schwab

Faculty Publications

Annual turnover among nursing home administrators may be 40% or higher. To investigate the factors that could lead to greater administrator retention, responses to a survey (53% response rate) were analyzed using factor analysis and multiple regression models. Results show that higher retention is observed when administrators are allowed to function independently, are involved in decision making, are treated fairly, and are given reasonable goals to achieve. Organizations must hire administrators whose values match theirs. Multifacility chain organizations and for-profit facilities appear to have a greater need to embrace organizational principles that lead to greater job satisfaction.

Bureaucracy In The Postmodern World: Problems And Solutions, Paul C. Godfrey, Grant C. Madsen

Faculty Publications

This paper considers the problems presented by modern bureaucratic organizations within the framework of postmodern philosophy. Bureaucracy represents the logical outcome of the rational tradition in western philosophy. Because of their efficiency properties, individuals are both the beneficiaries and victims of bureaucratic behavior. We suggest that a solution to these problems will not be found by using existing philosophical frameworks. The French philosopher Jean-Francois Lyotard presents a model of postmodern relationships based on language games. We explore the concept of language games within bureaucratic settings.

Does Medicare Eligibility Affect Retirement?, Brigitte C. Madrian, Nancy Dean Beaulieu

Faculty Publications

Concern over the lack of portability associated with employer-provided health insurance has precipitated a recent flurry of research activity on the effects of health insurance on labor market outcomes. Several estimates suggest that the costs associated with changing doctors and losing coverage for preexisting conditions are sufficient to deter individuals from changing jobs. These costs may be particularly important for older individuals contemplating retirement because a departure from the labor force may involve not only a change in doctors or lack of coverage for preexisting conditions but a complete loss of access to employer-provided group health insurance.

Economic Valuation Models For Insurers, David F. Babbel, Craig B. Merrill

Faculty Publications

Recently much attention has been given to the approaches insurers undertake in valuing their liabilities and assets. For example, in 1994 the American Academy of Actuaries created a Fair Valuation of Liabilities Task Force to address the issue [see Doll et al. (1998), Reitano (1997), Babbel (1997, 1998b), Babbel and Merrill (1996), and Merrill (1997)]. In 1997, the Academy established a Valuation Law Task Force and a Valuation Tools Working Group to investigate the various valuation approaches extant and to recommend the models best suited to the task.

Much of the literature on valuation has focused on the strengths and …

Is Sound Just Noise, Joshua D. Coval, Tyler Shumway

Faculty Publications

This paper analyzes the information content of the ambient noise level in the Chicago Board of Trade's 30-year Treasury Bond futures trading pit. Controlling for a variety of other variables, including lagged price changes, trading volumes, and news announcements, we find that the sound level conveys information which is highly economically and statistically significant. In particular, we find increases in the sound level precede periods of high price volatility and increased trading volumes. Increases in the sound level also presage the placement of block trades and relative increases in customer-driven trading. Our results add to our understanding of the market …

Labor Market Responses To Rising Health Insurance Costs: Evidence On Hours Worked, David M. Cutler, Brigitte C. Madrian

Faculty Publications

Increases in the cost of providing health insurance must have some effect on labor markets, either in lower wages, changes in the composition of employment, or both. Despite a presumption that most of this effect will be in the fonn of lower wages, we document in this paper a significant effect on work hours as well. Using data from the CPS and the SIPP, we show that rising health insurance costs over the 1980s increased the hours worked of those with health insurance by up to 3 percent. We argue that this occurs because health insurance is a fixed cost, …

Health Insurance Portability: The Consequences Of Cobra, Brigitte C. Madrian

Faculty Publications

THE RESPONSE OF THE CLINTON ADMINISTRATION and Congress to the failed attempt at fundamental health care reform in 1993 has been a series of incremental measures that expand the government’s role in the health care system. One recent initiative, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), restricts the ability of insurers to exclude preexisting medical conditions from insurance coverage. It also requires insurance companies to issue or renew coverage for individuals who have been insured but who no longer have access to group health insurance coverage. Those provisions are intended to address the issue of health insurance …

Efficacy Of A Tr Self-Esteem Program For Emotionally Disturbed Adolescents In A Treatment Setting, Ramon B. Zabriskie

Faculty Publications

The purpose of this study was to determine the effectiveness of a modularized therapeutic recreation self-esteem program (that included outdoor adventure based components) provided for adolescents in a residential treatment center. Data were also collected on demographic variables including age, gender, and ethnicity. Subjects consisted of 112 adolescent patients ranging from ages 12 to 17, with an average length of stay of nine months to one year.

The Coexistence Of Multiple Distribution Systems For Financial Services: The Case Of Property-Liability Insurance, Allen N. Berger, J. David Cummins, Mary A. Weiss

Faculty Publications

Property-liability insurance is distributed through a direct-writer system, where agents represent one insurer, and an independent- agency system, where agents represent several insurers. Independent-agency insurers have higher costs than direct writers. The market- imperfections hypothesis attributes the coexistence of the two types of insurers to impediments to competition, while the product-quality hypothesis holds that independent-agency insurers provide higher-quality services. We measure cost efficiency and profit efficiency for property-liability insurers and find strong support for the product-quality hypothesis, implying that independent-agency insurers produce higher-quality outputs and are compensated by higher revenues.

Focused Graduate Education: An Invisible But Real Competitive Edge, Roland D. Kankey, Jan P. Muczyk, Neal M. Ely

Faculty Publications

The future mission of the Air Force will be diverse and complex. Advanced technology will play an increasingly prominent role; a smaller force must accomplish more. To support this mission, our acquisition corps must be intellectually capable, well educated and trained. Focused graduate education will be essential to sustain this effort.

Finding Auditors Liable For Fraud: What The Jury Heard In The Phar Mor Case, David M. Cottrell, Steven M. Glover

Faculty Publications

The Phar Mor case involved a massive collusive fraud by management. Although there were no claims the auditors participated in the fraud, plaintiffs' attorneys were able to convince the jury that the firm was liable for fraud on the grounds it made representations recklessly with regard to GAAS and GAAP.

Organizational Configurations And Performance: A Meta-Analysis, David J. Ketchen Jr., James G. Combs, Craig J. Russell, Chris Shook, Michelle A. Dean, Janet Runge, Franz T. Lohrke, Stefanie E. Naumann, Dawn Ebe Haptonstahl, Robert Baker, Brendon Beckstein, Charles Handler, Heather Honig, Stephen Lamoureux

Faculty Publications

The link between organizational configurations and performance has become a central and somewhat controversial focus of research in the strategic management literature, We statistically aggregated results from 40 original tests of the configurations-performance relationship. In contrast to previous qualitative reviews, this meta-analysis demonstrated that an organization's performance is partially explained by its configuration. Tests of four potential moderators showed that organizations' configurations contributed more to performance explanation to the extent that studies used (1) broad definitions of configurations, (2) single-industry samples, and (3) longitudinal designs, Results highlight the need for programmatic research.

Manufacturing Upholstered Furniture In The Southeastern U.S.: A Comparative Cost Assessment, Joshua O. Idassi, Steven H. Bullard

Faculty Publications

The upholstered household furniture industry (SIC 25 12) is extremely important in the economies of Alabama, Mississippi, North Carolina, and Tennessee. This study uses a comparative cost approach to assess the differences that exist in the manufacturing and distribution of upholstered wood household furniture among southeast U.S. states. Secondary data for raw material, labor, and transportation costs were obtained from the U.S. Department of Commerce, Bureau of the Census, for 1982, 1987, and 1992. Total costs were estimated for raw material, labor, and transportation of the finished products. A simple cost index was constructed for each cost component. Analysis of …

Logging - One Of Mississippi’S Most Important Industries, Ian A. Munn, Steven H. Bullard

Faculty Publications

Logging is extremely important to Mississippi's economy for two reasons. First, the industry is essential in providing wood-based raw materials necessary for many thousands of jobs throughout the state. The industry is the ·:first link in a manufacturing chain that reaches through the state and touches the pulp and paper industry, the sawmill industry. the furniture industry, the building/construction industry. and many others. " The industry is also important because of the economic contributions it makes through its own employment and income created. In 1993, the industry contributed an estimated $1.-1-5 billion to Mississippi's economy. and over 11 thousand jobs …

Employment Separation And Health Insurance Coverage, Jonathan Gruber, Brigitte C. Madrian

Faculty Publications

We study the interrelationship between employment separation and insurance coverage. We first document that employment separation is associated with large reductions in insurance coverage, even conditioning on underlying tastes for insurance.We then show that reducing the cost of insurance through state laws mandating continued access to employerprovided health insurance for the non-employed increases the likelihood of having insurance after separating from a job by 6.7%. These mandates also increase the number of individuals who separate and the total amount of time spent jobless. Finally, at least some of this increased non-employment appears to be spent in productive job search as …

The Influence Of Decision Aids On User Behavior: Implications For Knowledge Acquisition And Inappropriate Reliance, Steven M. Glover, Douglas F. Prawitt, Brian C. Spilker

Faculty Publications

Structured decision aids are widely used in many organizational settings, and their influence on judgment consistency and accuracy have received considerable attention in the literature. While two benefits commonly associated with decision aid use are improved judgment and enhanced expertise development, relatively little attention has been directed toward the potential influence of decision aids on decision maker behavior. In particular, we argue that the use of structured aids may influence relatively inexperienced decision makers to approach aided tasks mechanistically, without becoming actively involved in the task or judgment. Such passive decision behavior may, in some situations, threaten gains in performance …

Pitfalls In Tests For Changes In Correlations, Brian H. Boyer, Michael S. Gibson, Mico Loretan

Faculty Publications

Correlations are crucial for pricing and hedging derivatives whose payoff depends on more than one asset. Typically, correlations computed separately for ordinary and stressful market conditions differ considerably, a pattern widely termed "correlation breakdown." As a result, risk managers worry that their hedges will be useless when they are most needed, namely during "stressful" market situations. We show that such worries may not be justified since "correlation breakdowns" can easily be generated by data whose distribution is stationary and, in particular, whose correlation coefficient is constant. We make this point analytically, by way of several numerical examples, and via an …

Two Paradigms For The Market Value Of Liabilities, Robert R. Reitano, Craig B. Merrill

Faculty Publications

Financial valuation models can be applied to insurance- related claims. In particular, these models are being employed to calculate the market value of insurance liabilities. The goal of this paper is to introduce the various approaches to valuation that are used in the finance literature and show how the valuation of insurance liabilities fits into the financial valuation framework. The theory suggests that securitization of insurance liabilities may lead to better market value calculations.

The Delisting Bias In Crsp Data, Tyler Shumway

Faculty Publications

I document a delisting bias in the stock return data base maintained by the Center for Research in Security Prices (CRSP). I find that delists for bankruptcy and other negative reasons are generally surprises and that correct delisting returns are not available for most of the stocks that have been delisted for negative reasons since 1962. Using over-the-counter price data, I show that the omitted delisting returns are large. Implications of the bias are discussed.

Evaluating Forecasts Of Correlation Using Option Pricing, Michael S. Gibson, Brian H. Boyer

Faculty Publications

A forecast of the correlation between two asset prices is required to price or hedge an option whose payoff depends on both asset prices or to measure the risk of a portfolio whose return depends on both asset prices. However, a number of factors make it difficult to evaluate forecasts of correlation. We develop a forecast evaluation methodology based on option pricing, extending a technique that Engle et al (1993) introduced to evaluate volatility forecasts. A forecast of the variance-covariance matrix of joint asset returns is used to generate a trading strategy for a package of simulated options. The most …

Truth Or Consequences: A Study Of Critical Issues And Decision Making In Accounting, Annetta M. Gibson, Albert H. Frakes

Faculty Publications

This study applies a theoretical framework, the theory of reasoned action, to the examination of unethical decision making in job-related situations encountered by CPAs. A survey methodology was employed in which respondents were asked to use both self-reported and randomized response techniques for reporting unethical behavior. The results indicate that individuals are unwilling to accurately report either unethical behavior or intention, particularly in situations where there is no question as to the unacceptability of the action or the potential penalty as presented in the AICPA Code of Professional Conduct. Implications for the accounting profession and research are discussed.

Formation Of Risk Beliefs, Joint Production And Willingness To Pay To Avoid Skin Cancer, Mark Dickie, Shelby Gerking

Faculty Publications

No abstract provided.