For-profit Firms Research Articles

Alternative Pharmaceutical Innovation Models in Competitive Markets: A Collaborative Approach to Develop a Novel Drug for Hepatitis C.

Alternative innovation models have emerged to address failures of the traditional pharmaceutical system, particularly for diseases where market incentives do not attract sufficient research and development efforts. However, the feasibility of such models for diseases with significant markets is not well-established. This article analyses the development of a novel drug (ravidasvir) for the treatment of hepatitis C, a highly profitable market. Data from qualitative research methods, including literature reviews and semi-structured interviews, was analyzed using a novel conceptual framework focusing on actors, resources, organizational practices, and outcomes. Dissimilar to other projects, ravidasvir did not involve any major pharmaceutical companies. Rather, it leveraged the capacities of actors less traditionally involved in the development of novel medicines by constructing a collaborative network of private and public partners from low- and middle-income countries with a shared goal. The collaboration was successful in developing a highly effective, easy-to-use, and affordable medicine and contributed significantly to capacity-strengthening. However, the case also highlighted that strategic behavior by competing for-profit firms could pose significant challenges and that changing external conditions reduced the potential public health impact of the drug. Lessons from ravidasvir can inform future efforts to develop alternative innovation models for therapeutic areas with significant commercial interest.

Digitalization and management accountants’ role conflict and ambiguity: A double-edged sword for the profession

This study investigates the relationship between the anticipated digitalization of the finance and control function and management accountants' (MAs') role conflict and ambiguity. Drawing on role theory, we argue that digitalization is associated with increases in MAs' role conflict and ambiguity because digitalization leads to adaptations in the established role templates of MAs and also introduces new templates for the digital age. We further argue that digitalization is associated with a stronger (weaker) increase in role conflict and ambiguity the more MAs have a watchdog (business partner) orientation. The reason is that the role templates for the digital age are less coherent and clear for watchdog-oriented MAs than for their business partner counterparts. We test our predictions using survey data from 242 MAs in Dutch for-profit firms. While we do not find that digitalization is associated with MAs’ role conflict and ambiguity per se, it is associated with more (less) role ambiguity and conflict for MAs with a relatively stronger watchdog (business partner) orientation. Digitalization may thus act as a double-edged sword for the management accounting profession. MAs focusing on the watchdog role may struggle in the digital age, while their business partner counterparts are set to benefit from digitalization.

Experience design: Creating value for non-profits

In today’s hypercompetitive markets, most sectors are saturated with competitors making it more important than ever for companies to generate unique value for stakeholders. Customer experiences are being increasingly and purposefully crafted as a means to create such value and establish competitive advantage. Although for-profits have been quick to adopt the practice of experience design (XD) to develop meaningful experiences and interactions, non-profit entities have been slow to follow. XD is an integrated and strategic operational approach that creates relevant value for stakeholders of an organization by designing customizable yet consistent brand experiences. The failure to embrace and adopt XD is a missed opportunity for non-profits. While a well-crafted experience offers a supplemental value for the products and services of for-profit firms, experiences provide a fundamental and exceptional source of value for non-profit organizations. Thoughtful XD offers the potential to establish trust, improve connectivity, build loyalty, and boost relevance with a diverse set of stakeholders, including donors, employees, and strategic partners. Successful outcomes of well-executed XD at non-profit organizations include increased donor retention rates, larger financial resource pools, and enhanced societal impact. Our work outlines key principles for implementing XD and equips resource-constrained non-profits in implementing XD in a low-cost manner.

Strategies of For-Profit Firms in Social Services: Insights From Brazilian Higher Education

Strategies of For-Profit Firms in Social Services: Insights From Brazilian Higher Education

Digitalization attempts in higher education: the role of imprinting and the effect of business departments

ABSTRACT In recent decades, higher education institutions (HEIs) have increasingly been exposed to a market logic that has led them to adopt structures and practices that are common in for-profit firms. In our study, we analyze how HEIs react to the increasing demands of digitalization and which factors explain the adoption of relevant structures. Based on 379 HEIs in Germany, our findings show that imprinting is of great importance for the implementation of a position for digitalization – that is, HEIs founded in a more recent phase of higher education in Germany are more likely to create a leadership position for digitalization. At the same time, we find that imprinting has no effect on the creation of more operational positions for digitalization but that the existence of a business department in HEIs has a positive effect. We discuss these findings in the context of higher education research and questions about factors influencing the adoption of practices and structures in HEIs.

Intellectual capital in Galician common forests

Forest communities around the world are becoming increasingly involved in sustainable forest management and intellectual capital view can orient the outcome. This paper aims to identify the principal components of intellectual capital, in its three dimensions; human, structural and relational (internal and external) capital, and their relationships in the governance of communal forests. Focusing on Galician communal forests, in north-west Spain, a survey was conducted among community representatives, analysing using principal components how they structure their intellectual capital, and based on these, through an oblimin (0.5) rotation. Linear correlations among these components were assessed to determine the relationship of the components with each other. Galician communal forests present a composition of intellectual capital components which differ from those of for-profit firms and are closer to those of other social entities. The complex interrelations between the different elements of intellectual capital suggest different typologies of forest communities.

Expectations Meet Reality: Leader Sensemaking and Enactment of Stakeholder Engagement in Multistakeholder Social Enterprises

Given the urgency of global crises, interest abounds in alternative organizational forms (e.g., multistakeholder social enterprises, MSEs), promising structural solutions to engage diverse stakeholders in the creation of joint social, economic, and democratic values. Yet, studies of the who, how, and why of stakeholder engagement are predominantly rooted in for-profit contexts, assuming objective boundaries between insider/outsider stakeholders and engagement as a means to an end. The context of MSEs challenges both of these assumptions. Based on interviews with leaders of 28 French MSEs, I show how the latter made sense of their expectations versus the reality of stakeholder engagement. Leader sensemaking strategies informed the enactment of (revised) stakeholder engagement strategies to maintain coherence, or address misalignment, between expectations and reality. The article contributes to the literature by challenging assumptions of stakeholder engagement in for-profit firms. It also cautions against an overreliance on designated organizational forms to enable substantive stakeholder engagement.

Do social cooperatives stimulate social change? An investigation on Italian firms based on DEA-Malmquist approach

The cooperative system and especially social cooperatives are increasingly regarded as a fundamental tool in the transition from the welfare state to the welfare society. In Italy, different types of social cooperatives exist (i.e., Type A and Type B), and in particular, Type B social cooperatives have been recognized as playing a major role in active labour policies. Even if a portion of the literature still attributes a sort of entrepreneurial “adolescence” to social cooperatives, some argue that cooperatives have an anti-cyclical role. In the present paper, we discuss the role of Type B social cooperatives in social change and social innovation, suggesting their impact in labour market, productivity and national growth. In order to explore managerial gap compared to for-profit firms, we looked at three composite indicators of balance sheet items, commonly used in the analysis of for-profit companies (i.e., solvency, efficiency, and productivity) before the Covid-19 pandemic. Results suggest that differences exist and social change can be affected by policies for social cooperatives.

Reaching beyond low-hanging fruit: Basic research and innovativeness

In this paper we examine the relationship between basic research and the innovativeness of innovations and how this relationship varies between internally- and externally-sourced innovations. In addition, building on Nelson's argument on the economics of basic research, we examine how the relation between basic research and innovativeness is conditioned by whether or not the firm is diversified and whether arguments about basic research and diversification built from Nelson (1959) hold for differently-sourced innovations. Using data from a large-scale survey of U.S. manufacturing firms, we provide some empirical evidence showing that basic research is associated with more innovative innovations. Furthermore, we show that for internally-generated innovations, this relation is moderated by whether or not the firm is diversified, consistent with Nelson's argument. However, for externally-sourced innovations, basic research has a direct association with more innovative innovations, consistent with the absorptive capacity argument regarding superior technical evaluation, with the moderation of diversification not observed. The results contribute to a better understanding of the different mechanisms through which basic research is related to the type of innovations commercialized by for-profit firms.

Retailer information strategies with a dual-purpose manufacturer

While the information issues among for-profit firms are well known, the extent to which the presence in the market of dual-purpose manufacturers, defined as companies that focus on social welfare as well as their own interests, affects the information strategies of retailers is unclear. A better understanding of this relationship could shift the thinking on the disadvantages of the dual-purpose firm model. This study investigates how a retailer’s information strategy may differ for a for-profit manufacturer compared with a dual-purpose one. By analyzing an established mathematical model, the results indicate that by sharing information, a retailer can make a dual-purpose manufacturer more profitable than a for-profit manufacturer. This may occur when the retailer proactively shares market information with the dual-purpose manufacturer and when the dual-purpose manufacturer uses an information compensation fee lower than that for the for-profit manufacturer to incentivize the retailer to share such information. Further, both social welfare and the consumer surplus are higher in the former case than in the latter, implying that the presence of a dual-purpose manufacturer in the market can promote win/win results by benefiting both itself and society. This study’s findings enrich theories of information sharing and dual-purpose enterprises as well as suggest that information sharing is a useful management tool for practitioners to fully realize the development potential of dual-purpose enterprises.

Specialization in the marketplace for ideas.

Organizations that compete for attention in the marketplace face a strategic decision: whether to target a specialized niche or diversify to reach a broader market. Previous research has extensively analyzed the specialization dilemma faced by for-profit firms. We extend the analysis to knowledge-sharing groups in the marketplace of ideas. Using data on over 1,500 technology groups collected from an online event-organizing platform over a fifteen-year period, we measure the effect of topical focus, rarity, novelty, and technical exclusivity on audience growth, retention, and sustained engagement. We find that knowledge-sharing groups benefit marginally by specializing in rare topics but not in new topics. The strongest predictor of growth and survival is whether the group is associated with technically sophisticated topics, regardless of the breadth of focus, even though technical topics are less widely accessible. We conclude that what matters is not how specialized the organization, but how the organization is specialized.

Misleading Motives: Incentives for Accounting Bias in Not-for-Profit Pension Plans

In this study, we examine whether not-for-profit organizations actively manage their pension accounting assumptions and whether their assumptions are, as prior research suggests, more aggressive than those of for-profit organizations. Using a 17-year panel dataset collected from audited financial statements, we compare the accounting assumptions (the expected rate of return and the discount rate) of not-for-profit and for-profit firms. We also examine the not-for-profit sample alone to test for accounting bias motivated by various financial incentives. We model accounting assumptions as levels (between-firms) as well as changes over time (within-firms). Contrary to prior research, we find no evidence that not-for-profits use more aggressive assumptions than for-profits. Furthermore, we find that most of the accounting biases of not-for-profits are explained by between-firm variation rather than within-firm variation, suggesting that although not-for-profits use biased assumptions, they may not actively adjust them to target financial benchmarks.

In the aftermath: Craft beer, neolocalism, and community resilience

In disaster recovery, community resilience researchers continue to find social capital and place attachment play critical roles. Gaps remain, however, regarding the role of for-profit firms, which are normally viewed as “extending” organizations. Meanwhile, craft beer scholarship often centers on breweries' capacities to foster place attachment and social capital, often signaled by neolocalism, or intentionality in constructing communal identity. This study leverages a unique research opportunity to observe the before and after processes of place construction in the context of craft beer breweries and disaster recovery in coastal communities. We find the breweries’ neolocalism to be characterized by “liminality,” or the in-between of juxtaposing themes. The sense of place fostered spaces for social capital, aiding brewery patrons' recovery following Hurricane Florence. Rather than extending organizations, these findings suggest neolocalist for-profit firms may help community resilience through their regular tasks of constructing space for communal identity.

Training Initiatives in a Cooperative Network: A Polish Case Study

Paper applies an in-depth example to knowledge-development decisions made at the top levels of firms and their consistency with specific training initiatives arranged with third party educational providers. The unique access provided by the network in Poland at the core of this study yields insights at both levels, an opportunity not often available to academic researchers. Case study is employed. The cooperative training network includes multiple firms (five included here), thirty-eight vocational schools, and a technical university overseeing the program. Data collection including preparatory communication, periodic surveys, and additional in-depth interviews with companies as well as data provided by participating schools though only the quantitative survey results are included in this paper. Both firms and schools, as a proxy for participants, are pleased with training initiatives. Moreover, specific results on training initiatives varying by degree of company control and location (in-house, on-campus) provide insights on how firms can gain more control over the nature of the training (firm-specific knowledge) while still maintaining participant interest (often based on obtaining more industry-specific or occupational knowledge). The research is a case study and so not statistically extendable. The case study also takes place in Poland and describes a unique cooperative network including for-profit firms, vocational secondary schools, and a university. Results should be interpreted with some care, but at the same time provide unique depth and insight. Results provide useful guidance for firms participating in training partnerships as well as for schools joining in such partnerships. Specific feedback on the perception and acceptance of specific initiatives (e.g. internships) has been obtained. Brings together several streams of literature often not discussed in one place. Uses this perspective to analyze a unique cooperative network and provide unique depth to the discussion.

Exploring Variables Impacting on Employee Willingness to Accept Lower Pay for a Preferred Employer Attribute: Generation, Gender, Race, and Salary

We explore the trade-off between “preferred employer attribute” (PEA) and “willingness to accept less pay” (WTALP), finding salary, generational and for-profit versus nonprofit effects on WTALP. Study 1 reports on interviews with 23 professionals about the employer attributes they found most attractive. Three PEAs emerged: people, organizational purpose (purpose), and opportunity for growth and development. Unprompted, interviewees also mentioned willingness to accept lower pay (WTALP) in exchange for attractive job qualities. Study 2 surveyed 129 employees to explore further the PEA-WTALP tradeoff, controlling for gender, race, and salary level before testing for the impact on Generation (Z, Y, X, Baby Boomers) on WTALP, and separately comparing WTALP for-profit versus nonprofit employees. Growth and development PEA was most preferred by 67% (n=86), while 42 respondents selected purpose (n = 34) or people (n =8) PEAs. Regression analysis for the growth and development PEA-WTALP group showed that higher salary level, and Generation Z were associated with higher WTALP. In addition, surprisingly, employment at for-profit firms was associated with higher WTALP. This is the first empirical study measuring scaled levels of WTALP and testing for specific PEA-WTALP combinations. We conclude with future managerial and research implications.

Adopting a social purpose in for-profit firms: the role of the board of directors

AbstractThe debate on the purpose of corporations has intensified over the past decade, compelling businesses to reassess their societal roles. To effectively integrate sustainability into corporate strategies, for-profit firms are increasingly encouraged to adopt a pro-social purpose (SP).However, adopting and integrating an SP is a substantial shift that necessitates an internal push from corporate actors. In particular, due to its function of strategic decision-making, the board of directors represents a pivotal player in promoting the adoption of an SP.This research delves into the impact of board characteristics on the likelihood of adopting an SP in for-profit firms. We examined 580 European firms employing propensity score matching and logistic regression methodologies. Our findings offer initial insights on the effect of the board composition on adopting an SP. In particular, we found that cultivating the directors’ network with employees, fostering gender and age diversity, and welcoming highly qualified directors on board are key factors in facilitating the adoption and implementation of an SP in EU for-profit firms.Our study represents the first attempt to quantitatively examine the relationship between the board and SP. By doing so, we contribute to the theoretical advancement of the complementarity of corporate governance and corporate purpose. Moreover, we encourage practitioners to accrue awareness of the board characteristics that facilitate the adoption of an SP within their firms.

The COVID-19 pandemic and repurchase intention in building brand engagement in the airline industry

PurposeGripped by the COVID-19 pandemic, the airline industry has faced many restrictions. Based on the determining factor of repurchase intention, this research paper addresses the roles of brand engagement (BE) and consumer trust during the pandemic.Design/methodology/approachA number of 439 out of 500 questionnaires, which were distributed among the Iranian airlines' customers, were completed and returned (an 87% response rate). SmartPLS 3 was used to carry out the confirmatory factor analysis (CFA) and exploratory factor analysis (EFA) in order to validate the research hypotheses.FindingsThe results show that during the COVID-19 pandemic, BE had a significant effect on customer purchase intention. In addition, BE boosted customer trust and thereby increased repurchase intention. Perceived risks of COVID-19 moderated these relationships. The findings also show that airline customers are highly sensitive to various perceived risks and were especially so during the COVID-19 pandemic. These perceived risks have major impacts on customers' intention to reuse the services of airline companies. High levels of perceived risk decrease customer trust, BE and repurchase intention rates, and vice versa.Practical implicationsThis paper provides authorities and decision-makers of the air transport industry with several practical recommendations based on the research findings. As the results confirmed, there is a worthwhile relationship between BE and customer trust; regarding the both direct and indirect benefits of customer trust for for-profit firms and the huge importance of trust in creating competitive advantages, different airline companies need to implement various strategies to engage customers with their brand names, and thereby institutionalize trust in their customers' minds during the pandemic. Since customer trust was also found to improve repurchase intention rates significantly, authorities of the airline industry must take actions to reduce feelings of mistrust and risk among consumers and increase customer trust during COVID-19.Originality/valueThis paper is the first to explore the effect of BE on airline customers' repurchase intentions during the COVID-19 pandemic. It has produced practical suggestions to employees and activists of the air transport industry regarding the use of BE as a tool to restore customer trust during and after the COVID-19 epidemic. This research focuses on the airline industry, which is particularly interesting given the industry's intensely competitive environment and the dramatic effect of COVID-19 on the industry.

Rebecca K. Marchiel. After Redlining: The Urban Reinvestment Movement in the Era of Financial Deregulation.

After Redlining is an important contribution to the robust literature on twentieth century US housing policy and divestment from America’s cities. Focusing on the period between the late 1960s and mid-1980s—between the urban uprisings and the triumph of financial deregulation—Rebecca K. Marchiel explores how the National People’s Action (NPA), a loose federation of neighborhood organizations composed of white, Black, and Latinx working- and middle-class residents, sought “better versions” of federal housing programs (89), first through base-building, power-mapping, and social movement campaigns, and later by lobbying their allies in Congress. The book is also about the changing banking landscape in post-1970s America. Marchiel traces the development of “financial common sense,” the belief that because banks were different from “typical for-profit firms” (5), they had an obligation to extend credit to communities in which they did business. Inculcated by the New Deal and reinforced by postwar popular culture, by the late 1960s, this financial common sense ran up against the vanishing act of local banks and their unwillingness to issue new mortgages. As neighborhoods began to “transition,” a euphemism for the arrival of Black and brown residents in white urban enclaves, local savings and loan associations either reneged on their obligation or decided that since access to “their services … hinged on whiteness,” the compact had been broken by the settlement of clients they were never intended to serve (42, 45).

A For-Profit Model of Microcredit

Microcredit is a proven means of poverty alleviation. However, its implementation in India is flawed. High interest rates, incompetent use of credit, and insufficient loan-sizes are just some of the problems well-documented in literature. This paper seeks to assess if these problems can be alleviated by a for-profit model of microcredit, and hence if this model can sustainably improve financial inclusion in India. The role of profit-motives in Indian microcredit has only been analyzed from a theoretical perspective thus far, so this paper adds to existing research by bringing in an empirical perspective through data from Microfinance Institutions from the MIX Markets database. A baseline binary Logistic Classifier is trained, alongside proposed models of a Decision Tree Classifier and a Gradient-boosted Tree Classifier. Feature analysis is conducted on the models, and the results are used to devise profit-maximizing strategies. These strategies are then analyzed to assess if profit-driven companies can improve financial inclusion in a socially desirable manner. The study finds that for-profit incentives can increase the spread, efficiency, and accessibility of microcredit while potentially fostering competent use of credit and reducing the cost of borrowing. However, the study also notes the requirement for regulation in the growth and means of enforcing repayment in such for-profit models. Further, the study observes that a for-profit model may increase credit risk and will fail to allocate credit to the lowest strata of the poor. As such, for-profit firms must be complemented by not-for-profit MFIs to improve financial inclusion across the board.

The Relation Between Cash Reserves, Governance, and Donations in Nonprofit Organizations

Cash reserves enable nonprofit organizations to absorb financial shocks and meet unexpected demand for charitable services. Large cash holdings, however, provide managers with an opportunity to use funds to accrue private benefits, and excessive cash levels may negatively influence donors’ contribution decisions. Although an extensive literature examines cash holdings in for-profit firms, few accounting studies address the determinants and consequences of cash reserves in nonprofits (Core et al., 2006). This study investigates whether corporate governance mechanisms, which are designed to limit managers’ opportunistic behavior, are associated with nonprofit managers’ ability to build cash reserves. It also examines how excessive cash reserves influence donors’ decisions to contribute to a charity. Results indicate that cash reserves are positively associated with three proxies for corporate governance (board size, board independence, and board monitoring activities). We also find that excessive cash holdings are negatively associated with future donations, after controlling for governance. Our results suggest that donors withhold contributions from charities that are likely to hold their donations for future use rather than deploy them in the current period. This study contributes to research addressing the role of governance in controlling nonprofit managers’ actions and provides new evidence on factors affecting donors’ giving decisions.