Competitive Fee Research Articles

Managerial representations of achieving a competitive advantage in architectural practices: a UK perspective

PurposeThis study aims to uncover managerial representations of achieving competitive advantage in architectural practices operating within the United Kingdom (UK).Design/methodology/approachA sequential qualitative methodology is applied, underpinned by nine managerial interviews in five architectural practices, which are analysed using computer-assisted qualitative data analysis software.FindingsIn all, 108 representations are identified, with highly rated concepts including reputation, client satisfaction, fees and staff resources discussed in detail. The need for architectural practices to develop a competitive advantage within their sector is increasingly apparent, particularly during times of market turbulence. A total of 20 themes identified are clustered into four main groups focused on People (including Calibre of Staff, Attract Graduates; Qualified Staff); Product (including Emphasis on design, Specialisation, Competitive Fees): Process (including Low Overheads, Office Efficiency) and Potential (Reputation, Ability to Undertake Large Projects, Repeat clients, Ability to expand, Parent Company, Market Understanding and New Offices).Originality/valueDespite numerous studies conducted on this subject, there has been no research to date documenting managerial representation on achieving competitive advantage in the context of architectural practices in the UK. This paper closes this gap in knowledge by contributing to underlying research on competitive advantage, focusing on the managerial representations within UK architectural practices.

The Active World of Passive Investing

Abstract We investigate the new reality of exchange-traded funds (ETFs). We show that most ETFs are active investments in form (designed to generate alpha) or function (serve as building blocks of active portfolios). We define a new activeness index to capture these dimensions, finding that the cross-section of ETFs is now increasingly characterized by highly active investment vehicles. Active-in-form ETFs have positive flow-performance sensitivity, charge the highest fees among ETFs, and have high within-portfolio turnover. Active-in-function ETFs have more concentrated holdings, less within-portfolio turnover, but higher turnover in the secondary market. We show how more active ETFs are gaining market share over less active ETFs, leading to competitive fee pressure both within the ETF space and across the investment management industry. We suggest that the growing activeness of ETFs may assuage concerns about ETFs harming price discovery.

Students’ Perspectives on Satisfaction with Distance Education in Ghana: A Cluster Analysis

This study sought to categorise students based on the preferences that influenced their choice of distance education program in Ghana. Questionnaires were used to collect data from 120 students taking part in the University of Education, Winneba (UEW) distance education (DE) programme at the Kumasi Girls Senior High School [SHS] Study Center. Respondents were segmented into three clusters (highly, moderately, and least satisfied) based on four preferences (price, quality, packaging, and social boding) that influenced their satisfaction with the distance education programme. Results from both hierarchical and non-hierarchical cluster analysis with squared Euclidean distance and Ward’s method showed that the highly satisfied cluster was driven by the quality of service and the competitive fees structure of the UEW distance education programme. Further analysis of the differences between the clusters indicated that satisfaction with the UEW distance programme significantly differs across the three segments.

The Active World of Passive Investing

We investigate the new reality of exchange-traded funds (ETFs). We show that most ETFs are active investments in form (designed to generate alpha) or function (serve as building blocks of active portfolios). We define a new activeness index to capture these dimensions, finding that the cross-section of ETFs is now increasingly characterized by highly active investment vehicles. Active-in-form ETFs have positive flow-performance sensitivity, charge the highest fees among ETFs, and have high within-portfolio turnover. Active-in-function ETFs have more concentrated holdings, less within-portfolio turnover, but higher turnover in the secondary market. We show how more active ETFs are gaining market share over less active ETFs, leading to competitive fee pressure both within the ETF space and across the investment management industry. We suggest that the growing activeness of ETFs may assuage concerns about ETFs harming price discovery.

Distributed Ledgers and Secure Multi-Party Computation for Financial Reporting and Auditing

To understand the implications of decentralized ledger technology for financial reporting and auditing, we analyze auditor competition, audit quality, client misstatements, and regulatory policy all in a unified framework. We demonstrate how collaborative auditing using a federated blockchain can improve verification efficiency for not only transactions recorded on auditors or clients' proprietary databases, but also cross-auditor verifications through zero-knowledge protocols that preserve data privacy. Consequently, the technology disrupts conventional audit pricing and effort focus: Auditors' competitive fees depend on clients' counter-parties’ characteristics and corresponding transaction volume instead of client size. Blockchains also reduces clients' incentives to misreport and auditors' sampling costs, allowing auditors to reallocate effort from transaction-based auditing to discretionary account auditing. Importantly, auditors’ technology adoption is costly and exhibits strategic complementarity, hence a regulator can help select an equilibrium with lower endogenous misstatements, audit sampling, and regulatory costs.

Robo-Advisors and Wealth Management

The recent rise of robo-advisors (RAs) has threatened the traditional fund and wealth management industry. RAs’ assets under management (AUM) have risen manyfold through competitiveness on pricing, transparency and services and better expected returns linked to the use of quantitative finance and technology with less subjective human intervention. This article examines the postulation that RAs have an edge over traditional wealth managers. RAs can combine the judgement and computing resources of both human and machine, or bionic power, to provide alternative wealth management services to meet the diverse needs of private wealth clients. However, the authors expect traditional wealth managers to respond by providing new and improved customized and integrated services at competitive fees.

Why Marketers Should Be More Transparent with the Ad Agencies They Hire

The agency–client relationship is like a marriage: Without nurturing, it falls apart. Agency–client relationships, in fact, have a much shorter life span than they used to, and the authors of the current article surveyed media planners across the United States to find out why. Beyond competitive fees, one reason offered by these agency staffers was prevalent: Marketers need to do a better job communicating with the agencies they hire—not only about their needs but also about their other marketing tools and resources. Such increased sharing, the planners noted, would make agencies more engaged with marketers9 businesses and brands and give the agencies the tools they need to produce appropriate outcomes.

Competition Before Sunset: The Case of the Finnish ATM Market

AbstractWe study service fee and network size competition in an ATM market between an incumbent and an independent deployer, and its optimal regulation. We also analyze an actual regulation of such a market by competition authorities in Finland. Compared with the first-best regulation, we find unregulated foreign and interchange fees too high and an unregulated size of the incumbent’s ATM network too small. However, if network sizes cannot be directly regulated, then competitive fees may also be too low from the welfare point of view. The Finnish regulation caps the incumbent’s foreign fee which, according to our model, results in an increased interchange fee and a larger ATM network. In contrast with the actual regulation, it would also be essential to regulate the interchange fee.

The fee tendering and service quality issue revisited

PurposeIt is a little over 20 years since mandatory fee scales were abolished by UK professional bodies. During this period fee levels have fluctuated with economic demand, and new procurement strategies such as partnering have been developed, but there is still a widespread view in industry that fee levels are too low. This view is shared by many professionals, and perhaps more surprisingly by clients, even in the current construction and property boom. The purpose of this paper is to report research on the link between competitive fee tendering and clients' perceptions of service quality in the UK property industry. The main hypothesis is that there is a causal relationship between service quality and the method of appointment of the professional.Design/methodology/approachThe research involved unstructured interviews with clients and professionals and a postal questionnaire study of one 133 UK based clients. The questionnaire study was a repeat of a similar survey conducted eight years previously in very different economic conditions. The public and private sector clients each assessed the service quality received from a professional using a measurement scale developed from the generic service industry instrument SERVQUAL. The scale is used to test the main hypothesis and four sub‐hypotheses. There were twice as many private sector clients completing the questionnaires as there were public sector clients and the largest group of professionals assessed were General Practice Chartered Surveyors.FindingsThe results of the recent study are similar to the earlier one (in that evidence of the predicted relationship is not provided by the data) but there are some interesting differences in the results of both studies – fee tendering has declined in popularity, direct appointment has increased, but less than 5 per cent of the commissions were let on a partnered basis.Practical implicationsProperty managers and other professionals may wish to make use of the service quality measurement scale in order assess the service they provide to clients.Originality/valueThe research provides confirmation that clients do not perceive that a lower standard of service quality is provided for fee‐tendered commissions. It also extends the already substantial body of research based upon the SERVQUAL measurement technique.

An experimental market analysis of auditor work-level reduction decisions

Abstract In this paper, we use an experimental market to test the link between competitive fee pressure and its alleged downstream consequences: time pressure and audit quality reduction. To induce fee pressure, transaction (auditor switching) costs, which have been found to be associated with fee lowballing in prior research, are manipulated in a competitive bidding environment. Our results show that (after controlling for subject skill level) the presence of transactions costs induces lower audit fees in first year engagements which result in significantly lower time budget levels selected and then, in turn, significantly higher levels of audit work-level reductions. Also, confirming prior survey results on the causes of audit quality reduction acts, we find that subjects encountering lower perceived misstatement rates select significantly lower time budgets and then, in turn, evidence significantly higher audit work-level reductions. These findings lend support to regulators' assertions about the link between fee competition and the potential for reductions in audit quality.

Purchasing UK public sector property and construction professional services: competition v quality

The procurement of UK public services has seen considerable changes during the final 20 years of the millennium. Successive governments have legislated to impose firstly compulsion to compete on price, followed by a duty to achieve best value. Property and construction professional consultants were under an obligation to their professional bodies not to compete on price less than 20 years ago. The first part of this paper chronicles the main stages in this period of great change. Many commentators in the public and private sectors have predicted a decline in service quality as firms have been forced to cut costs in order to survive in highly competitive markets. The second part of the paper reports an empirical study that has investigated whether there is any substance to these predictions. One hundred and eighty nine public sector clients have assessed private sector consultants with a view to establishing whether those consultants appointed by competitive fee tendering perform less well than those appointed by other methods. The development of SURVEYQUAL, a 25 item service quality assessment scale is described briefly. Service quality is not significantly lower for those consultants appointed by competition. However the data suggest that public service clients can positively influence service quality by taking great care with the pre-selection of tenderers.

Are competitive fee tendering and construction professional service quality mutually exclusive?

It is a little more than 15 years since the associations representing construction professionals in the UK surrendered to government pressure and abolished mandatory fee scales, predicting as they did so that inevitably abolition would lead to a decline in the standard of service provided to clients. Initially the abolition of fee scales had little impact on fee levels - in the UK economic and property boom of the late 1980s demand from clients in all sectors was high and fee levels remained at, or close to, pre-abolition levels. However, in the recession that followed, fee levels fell to unprecedentedly low levels, causing many commentators to be concerned that the quality of service provided to clients would fall. The main aim of this research is to establish whether clients' perceptions of service quality have declined as a result of lower fee scales. Following a literature search five hypotheses are presented namely, that clients' perceptions of service quality are: lower for fee tendered commissions; lower when the fee bid is particularly competitive; higher when the service is adequately specified by the client; higher when care has been taken with preselection of tenderers; and higher when adequate weighting to ability is given in the final selection process. The hypotheses have been tested by collecting data from 244 clients who anonymously assessed consultants, 60% of whom were chartered surveyors (just over half of these were quantity surveyors). Over half of the consultants were appointed by competitive fee tender, and although the service quality scores were lower for these consultants this result was not statistically significant. Therefore, the main hypothesis is not supported by the data but the fourth and fifth hypotheses are both supported by the study.