Publications

Cost Structure Patterns in the Asset Management Industry

Abstract

This chapter examines patterns in the cost structure of asset management firms and establishes two important trends in cost behavior. First, when revenues are growing, "indirect" costs related to sales, distribution, marketing, personnel, technology, and occupancy are far from fixed in this industry. In some cases they are "supervariable" or rising at a faster rate than sales. Second, and in contrast, such indirect costs appear relatively fixed in the face of sales declines in this industry. We discuss potential sources of these cost-structure patterns and their implications for cost management efforts as asset management firms move forward from the financial crisis of 2008.

Management Accounting and Control: Lessons for and from the World's Tiniest Businesses

Abstract

The article discusses skills microentrepreneurs need to manage and expand their businesses. After interviewing hundreds of microfinance clients around the globe, the authors were able to identify five tools drawn from management accounting where improved knowledge would have a substantial impact including cost management, throughput enhancement, risk management, budgeting, and opportunity identification.

Download the paper: http://www.imanet.org/pdf/11_09_epstein.pdf

Nameless + Harmless = Blameless: When Seemingly Irrelevant Factors Influence Judgment of (Un)ethical Behavior

Abstract

People often make judgments about the ethicality of others' behaviors and then decide how harshly to punish such behaviors. When they make these judgments and decisions, sometimes the victims of the unethical behavior are identifiable, and sometimes they are not. In addition, in our uncertain world, sometimes an unethical action causes harm, and sometimes it does not. We argue that a rational assessment of ethicality should not depend on the identifiability of the victim of wrongdoing or the actual harm caused if the judge and the decision maker have the same information. Yet in five laboratory studies, we show that these factors have a systematic effect on how people judge the ethicality of the perpetrator of an unethical action. Our studies show that people judge behavior as more unethical when (1) identifiable versus unidentifiable victims are involved and (2) the behavior leads to a negative rather than a positive outcome. We also find that people's willingness to punish wrongdoers is consistent with their judgments, and we offer preliminary evidence on how to reduce these biases.

Entry, Exit and Labour Productivity in U.K. Retailing: Evidence from Micro Data

Abstract

The paper investigates the U.K. retail sector using store and firm-level data between 1998 and 2003. First, we present the first exhaustive description of the U.K. retail sector using micro data sources. Second, in the spirit of Foster, Haltiwanger, and Krizan (2002), we look at the contributions of firm entry and exit for the productivity growth of the sector. Third, we provide some new evidence of the recent shift of large U.K. retailers toward smaller retail formats, which followed the introduction of new and more restrictive planning constraints for the opening of large retail stores. We suggest that this change in the store configurations of the major retailers might be one of the factors behind the recent TFP slowdown experienced by the industry in the U.K.

Negotiation Analysis: From Games to Inferences to Decisions to Deals

Abstract

Exemplified by the pioneering work of Howard Raiffa and often expressed in the pages of the Negotiation Journal, the emergent prescriptive field of "negotiation analysis" progressively developed from Raiffa's early contributions to game theory and to his later foundational work in statistical decision theory and decision analysis. Drawing from each of these fields but methodologically distinct from them, negotiation analysis has mainly adopted an "asymmetrically prescriptive/descriptive" orientation. It develops the best possible advice for what one or more parties should do conditional on empirically grounded assessment of what the other side(s) actually will do. An extensive negotiation analytic literature has developed, often making the traditional assumption of a well-specified and fixed situation for analysis. Relaxing this requirement, however, more recent work systematically puts the "setup" of a negotiation itself—its parties, their interests, their no-deal options, the sequence and basic process choices or design-into the realm of strategic and tactical choice.

Hiding the Evidence of Valid Theories: How Coupled Search Processes Obscure Performance Differences Among Organizations

Abstract

Theorists argue that an organization's high-level choices, such as its organizational design or the attributes of its top management team, should influence its performance, yet empirical researchers have struggled to detect such influence. The impact of high-level choices may appear weak, we theorize, because the choices are embedded in coupled search processes. A coupled search process exists in an organization when managers search for high-level choices that shape the search for low-level, operational choices, which in turn determine performance. Using a simulation model, we show that coupled search processes obscure the performance impact of high-level choices through two mechanisms: (1) a survivor effect, arising because firms that persist with poor high-level choices are those that luckily happened on good low-level choices despite their poor high-level choices and (2) a wanderer effect, arising when firms use good high-level choices to find good low-level choices and achieve strong performance, but then wander toward poor high-level choices. We show that these effects are particularly strong in stable environments, and we identify empirical strategies that can tease out the true performance impact of high-level choices.