For-profit Firms Research Articles

Whose view is it anyway? Media coverage of litigation in for-profit firms’ role in the opioid crisis

ABSTRACT The United States opioid epidemic continues to bring suffering to individuals and families as well as a crushing economic toll to communities. Stakeholders require resources to combat the epidemic. Firms that manufacture, distribute, and market opioids are the primary defendants of lawsuits, which play out in public view. This study investigates the public statements made by firms and media coverage in opioid lawsuits through the lens of their word choices. We use text analysis to uncover the similarities and differences in the language used to discuss the opioid crisis. The results provide guidance for marketing, public relations, and communications.

The Role of For-Profit Firms in Disaster Management: A Typology

Contemporary existence presents a duality of sustained development and recurrent disasters. Whereas disaster studies have closely examined public policy and state initiative, the role of for-profits is under-explored. Stakeholder theory and its integration with marketing orientation provide a theoretical underpinning for understanding the behavior of firms across contingencies, including disasters. Accordingly, we traverse the range of actions that these market entities exhibit in aiding disaster management and develop a comprehensive typology. The current COVID-19 pandemic provides a context for illustrating the practical exemplar actions as mapped to the proposed typology. We add to theory by examining the role of marketing philosophy and for-profits in tackling disasters at multiple levels: from micro-aspects of maintaining relations with specific stakeholders to the macro-objective of building community resilience. Further, the proposed typology helps practice and research by highlighting the range of firms' responses contributing to disaster management and building community resilience.

The privatised city: technology and public-private partnerships in the smart city

ABSTRACT The ‘smart city’ movement asks new questions about the role of private actors in urban governance. Smart technology providers, because of their unique position, influence policymaking through their products and services. Yet, the effect of this role on public values remains unaddressed. This article considers how the use of public-private partnerships (PPPs) in smart city development challenges public values, particularly accountability and transparency. It shows how both PPPs and smart cities frame for-profit firms as central actors in creating efficient and innovative public services and infrastructure. The risks privatisation poses for public values have to be reassessed, in light of the issue of vendor lock-in and the value-embedding capacity of technology. Furthermore, this article suggests that to mitigate such risks, data protection legislation is insufficient: the wider notion of publicisation, namely the extension of public norms to private actors acting for public purposes, needs to be re-examined in the context of the smart city. Therefore, this article contributes to the literature with a novel discussion of the possibilities and limits of using smart city PPPs as tools to safeguard public values.

Internal benchmarking to assess the cost efficiency of a broiler production system combining data envelopment analysis and throughput accounting

Economic efficiency assessments based on Data Envelopment Analysis are scarce compared to technical efficiency studies, even in for-profit firms. Some aspects justify this scarcity, such as the difficulty to estimate accurate prices, given their variability over time. In many situations, external benchmarking is hindered due to organizations' unique nature and the barriers to sharing information considered critical to competitiveness. The use of internal benchmarking can overcome some of these difficulties. This study conducted an internal benchmarking analysis of a broiler production system, focusing on cost efficiency. We conducted longitudinal case-based research over six years (2014–2019). The concepts of throughput accounting of the Theory of Constraints were applied to structure the DEA model (inputs, prices, and output). The Critical Incident Technique was used to explore the effects of interventions on the production system's cost efficiency. The results show that the broiler production system could reduce 32% of the total cost per unit of production if the balance of inputs suggested by the DEA evaluation was used. This work contributes to the literature by showing the potential of internal benchmarking to explore the evolution of cost efficiency over time. From a practical perspective, this study is important for managers by showing how to measure the impact of management actions on performance, providing valuable information to guide continuous improvement.

Purpose in the For-Profit Firm: A Review and Framework for Management Research

Purpose is a concept often used in managerial communities to signal and define a firm’s benevolent and pluralistic approach to its stakeholders beyond its focus on shareholders. While some evidence has linked purpose to positive organizational outcomes such as growth, employee satisfaction, innovation, and superior stock market performance, the definition and application of purpose in management research has been varied and frequently ambiguous. We review literature streams that invoke purpose in the for-profit firm and propose a unifying definition. Next, we develop a framework to study purpose that decouples its framing and formalization within firms from its realization, thus helping to avoid conflation of the presence of purpose with positive organizational outcomes. The framework also highlights internal and external drivers that shape the framing of purpose as well as the influence of the institutional context on its adoption and effectiveness. Finally, we provide a rich agenda for future research on purpose.

Assessing the Mediating Effect of Internal Communication on Strategic Human Resource Management and Perceived Performance: An Intersectoral Comparison

Using five waves of Korean Workplace Panel Survey (KWPS) data, we examine the mediating effects of internal communication channels on the relationship between strategic human resource management and organizational performance. Comparing public, nonprofit, and for-profit organizations, we demonstrate significant sector differences in communication. Our analyses show that only for-profit firms have been able to tap into the advantages of internal communication channels in an effort to improve the alignment between strategic human resource management and perceptions of organizational performance. From the findings, we suggest that public and nonprofit human resource managers may have a number of structural, cultural, and knowledge barriers to effective communication.

The Nonprofit's Dilemma

Nonprofit firm producing services that are of broad public concern - mission-driven organizations - pay lower wages and often use low-powered incentive schemes, which has been explained by binding financial constraints and the threat to attract wrong worker types if wages are increased. Yet, they face higher labor turnover than for-profit firms, which is very costly. We construct a simple model that reproduces these stylized facts, explains the high labor turnover of mission-driven organizations, and suggests a way out of this nonprofit's dilemma, based on insights from the economic psychology literature. We construct testable empirical hypotheses and offer managerial and policy implications.

Risky Business: The Risk-Reward Trade-off is Different for Nonprofit and For-profit Firms

Experts generally agree that risk-taking is necessary for progress and innovation, however, the current research finds that consumers penalize nonprofit organizations for taking risks. Five studies document that people judge nonprofit organizations, relative to for-profit organizations, more negatively for choosing high-risk ventures even when the risks are linked to high expected returns. Process evidence shows that these patterns occur because nonprofit organizations are viewed as existing in a moral domain, rendering their decision to take risks as morally questionable; by contrast, risk-taking by for-profit companies is not similarly viewed as morally problematic. Follow-up studies demonstrate important implications for these findings, including that when for-profit companies operate in a moral domain, they too are penalized for risk-taking. In addition, individuals are less likely to financially support nonprofits, but not for-profits, after they choose risky ventures. These findings demonstrate that people exhibit different risk tolerances for nonprofit versus for-profit companies in ways that can limit innovation and growth in charitable and other morally-relevant domains.

Firm structure, scale economies, and productivity in the U.S. electric power industry: A cost function analysis

This paper analyzes economic performances of cooperatives relative to other types of ownership in the US electric power industry. Specifically, the paper uses a panel data of electric utilities over 2001–2013 to analyze economic performances of cooperatives relative to for-profit firms and to investigate the sources of performance differences under a model of cost minimization. The results show that investor-owned utilities are more profitable than cooperatives, but there are no significant differences in physical productivity between investor-owned utilities and cooperatives. Independent power producers are more financially profitable and more physically productive than their counterparts. The results also support that although the industry exhibits substantial scale economies over a broad range of output, cooperatives are constrained to exploit the scale economies than other groups as it is limited by higher cost of financing. This suggests that while a small number of very large firms are not required for efficient production in the industry, mergers between cooperatives could provide substantial scale economies, as discussed in the literature.

Do donors discount accounting information of nonprofits affiliated with for-profit firms?

ABSTRACT Recent anecdotes suggest that shareholdings of for-profit firms by nonprofit organizations engender agency conflicts between donors and managers. Analyzing a unique dataset of nonprofits in Korea, we find evidence that donors of the share-affiliated nonprofits rely less on the program ratio, a primary accounting performance metric in nonprofits, in making subsequent donations than those in unaffiliated nonprofits. We also report that the affiliation effect is primarily driven by individual donors but effectively attenuated by government monitoring. Our results highlight a novel source of agency problems in nonprofits.

Do hybrid organizations contribute to Sustainable Development Goals? Evidence from B Corps in Colombia

The Sustainable Development Goals (SDGs) agreed upon by the United Nations (UN) in 2015 encompass a set of 17 Goals, aimed at integrating matters of humanity’s most pressing problems. Although the SDGs were initially suggested to be carried out by governments, enterprises are key players for the achievement of these goals through their business activities. Among for-profit firms, Certified B Corporations (B Corps) are a legal form of hybrid organizations (HOs) that has received scarce attention in the literature. Building on business model and corporate social innovation (CSI) literature, this paper aims to identify to what extent and how B Corps contribute to the SDGs when focusing on the solution of renowned social problems highlighted by the UN. A multiple-case study based on in-depth, semi-structured interviews with 18 enterprises in an emerging economy in Latin America (Colombia), shows that B Corps are great contributors to the solution of social problems, such as agriculture-related challenges, corruption, climate change, labor, poverty, and unsustainable habits. Results elucidate that Colombian B Corps show great potential in the empowerment of communities, the introduction of novel organizational practices, the creation of alternatives that shape new lifestyles and consumption patterns, and the introduction of novel environmental solutions. Overall, Colombian B Corps show relevant contributions to Goals 2, 6, 8, 9, 10, 11, 12, and 16. Finally, this research provides a model for analyzing CSI in HOs and gives avenues for future research.

Call for papers for the 2021 Emerging Discourse Incubator: Managing Working Conditions in Supply Chains: Towards Decent Work

Call for papers for the 2021 Emerging Discourse Incubator: Managing Working Conditions in Supply Chains: Towards Decent Work

Impact Investing in Social Enterprises: A Systematic Literature Review

Social enterprises are hybrids between non-profit organizations and for-profit firms and as such they often struggle in the acquisition of funding. Impact investment aims at achieving a social impact next to a financial return. Hence, impact investment and social enterprises seem to be a perfect match. Research in both fields is growing, however it is anchored in a wide variety of disciplines with only limited cross-referencing. To bridge knowledge in the disciplines, we systematically review 80 academic articles from 2001 to 2019 coming from a wide range of disciplines like general management, non-profit, sustainability/CSR, entrepreneurship, finance/accounting, and politics. We show research trends, link those trends across the diverse disciplines, and identify gaps as well as opportunities for future research. Overall, we find that researchers from different disciplines address similar general obstacles in the market especially in terms of market growth as well as challenges for investors and investees in the pre-investment and investment phase. Only few areas receive adequate empirical attention to draw reasonable conclusions while the field is still largely a-theoretical. Therefore, we emphasize critical shortcomings in research methods and lacking research focus on the investee perspective among other underexposed topics.

Designing Knowledge Ecosystems Through Social, Mental, Material, and Moral Ecologies

Knowledge ecosystems, where universities, public research institutions, and for-profit firms collaborate to develop new knowledge in a pre-competitive setting, have become increasingly important to address complex, societal challenges requiring creating, combining, and recombining knowledge. Still, additional insights concerning the emergence and evolution of ecosystems are needed to understand if and how knowledge ecosystems can be designed. Based on a longitudinal study of a knowledge ecosystem, this paper explores how four ecologies; social, mental, material and moral, emerging from social interaction are influencing the emergence and evolution of the ecosystem. The findings enhance our understanding of the microfoundations of ecosystems, not only through in-depth knowledge about the dynamic and emergent organization of a knowledge ecosystem and the ecologies that constitute it, but also of the collaborative work that takes place to continuously regenerate it.

The Role of Hybrid Companies in Local Entrepreneurial Ecosystems: Complements or Competitors?

Using the organizational ecosystem perspective, we investigate relationships between hybrid companies, mainstream for-profit firms, and nonprofit organizations within a geographically-bounded ecosystem, and how these relationships are influenced by local contextual factors. We analyze panel data from 264 US Metropolitan Statistical Areas across 16 years. We find that hybrid companies tend to be positively related to the presence of nonprofit organizations in an ecosystem, whereas the interaction between entrepreneurial activity and nonprofit organizations elicits fewer hybrids. We conclude that the role of hybrid companies in local entrepreneurial ecosystems is nuanced and differentiated from that of mainstream for-profit firms or nonprofit organizations.

Individual auditor characteristics and audit quality: evidence from nonprofits in the US

PurposeUsing a sample of US nonprofit organizations, where the identity of the auditor in charge of the audit is revealed, I investigate whether individual auditor characteristics (gender, engagement size and tenure) are associated with audit quality.Design/methodology/approachTo investigate how individual audit partner characteristics affect audit quality, I follow Petrovits et al. (2011) and Fitzgerald et al. (2018) who investigate client characteristics and partner tenure as determinants of ICDs in nonprofits. I add three characteristics of the auditor in charge – gender, engagement size and tenure – to their models. In additional analyses, I use subsamples partitioned by client risk and audit firm size, and find that individual auditor characteristics generally play a more significant role in the issuance of ICDs and QAOs for riskier clients than for less risky clients.FindingsMy results show that female auditors are more likely to report internal control deficiencies and issue qualified audit opinions (QAOs) to nonprofits. I also find that auditors with more Single Audit engagements within the same year are less likely to report ICDs. In addition, auditor tenure is negatively associated with the likelihood of issuing an ICD report, suggesting that auditors become complacent as the length of the auditor–client relationship lengthens or, alternatively, that they are better able to assist their clients in correcting ICDs and in maintaining stronger internal control environments as they gain client-specific knowledge over time. Additional analysis suggests tenure and engagement load results are sensitive to the sample specification employed.Research limitations/implicationsOne caveat of this study is that self-selection bias may be present when a client chooses an audit firm, the audit firm selects a client, and the audit firm assigns a partner to the engagement. Future study with more advanced econometric models is needed to mitigate self-selection bias. Another limitation is that my sample consists of nonprofit organizations and may not be generalizable to for-profit firms. Another caveat of this study is that the tenure variable is truncated compared to prior literature (e.g. Fitzgerald et al., 2018). Also given the rarity of audit quality measures in the nonprofit setting, internal control deficiencies and qualified opinions are used as proxies for audit quality because they reflect both the quality of audit work and the quality of organizations' internal control and financial reporting. Future studies with data including additional audit quality measures could shed more light on the topic.Originality/valueThis study contributes to the literature in several ways. First, this study offers a more comprehensive examination on the impact that a broader set of individual auditor characteristics on audit quality in the nonprofit setting, compared to Fitzgerald et al.'s (2018) study. Second, the findings should be of interest to policymakers who recently mandated engagement partner disclosures from US audit firms (PCAOB, 2015b). Finally, another distinctive feature of this study is that I examine the impact of individual auditor characteristics on audit quality in a setting where Big 4 audit firms are not dominant.

Differences in consumer-benefiting misconduct by nonprofit, for-profit, and public organizations

We examine how organizations of different types – nonprofit, for-profit, and public – engage in consumer-benefiting misconduct (CBM) by examining which patients benefit from hospitals of the three types gaming the market for liver transplants. Consistent with our theory, we find that public firms are the least likely of the three organization types to engage in CBM. We find that for-profit firms engage in CBM for any paying consumers, nonprofit firms engage in CBM for their mission-driven beneficiaries, and public organizations engage in CBM for the set of consumers that their voting constituents direct them to serve. We also examine how the three organization types respond to others’ engagement in CBM, and explore heterogeneity in CBM within nonprofit and public organizations. As the first paper to theoretically predict and empirically examine differences in CBM across nonprofit, public, and for-profit firms, this paper has important implications for our understanding of how distinct governance structures influence misconduct.

Desert Places: Cooperatives as Infrastructure Providers in Marginalized Areas

In this study, we examine the comparative advantage of cooperatives relative to for-profit firms in infrastructure provision. We argue that infrastructure projects generate positive local externalities for the communities in which they are located, and that cooperatives, being able to internalize these benefits, may be willing to provide higher quality infrastructure than for-profits, especially in marginalized communities where the costs of provision are high relative to revenues. We test and find support for this argument in US internet broadband provision from 2014 to 2017, showing that cooperatives are more likely to provide internet in communities where for-profits offer poor quality service, with these effects being stronger in rural communities, communities with persistent poverty, and communities with high social cohesion.

Why Did the ACA Co-Op Program Fail? Lessons for the Health Reform Debate

The ACA created a new type of nonprofit health insurance entity, the "Consumer Operated and Oriented Plan" ("co-op"). Most of the newly created co-ops soon lost money, and only 4 of the original 23 remain. We interviewed key stakeholders and conducted in-depth case studies of 3 of these co-ops. We discovered that politicians and regulators made it unlikely the program could succeed, that most of the co-ops did not have the management capacity to overcome these political obstacles, and that even those with good managers lacked the needed fiscal resilience. We also considered lessons suggested for those proposing a newly created "public option." The main one is that a successful public option requires a supportive political environment, strong management, and significant fiscal capacity, none of which comes easily. A better route may be a quasi-public option in which the government subcontracts the operation of its newly created plan to a private firm. Although it is uncertain whether federal regulators have the capacity to hold such private for-profit firms accountable, pragmatism suggests that a combination of public-sector regulation and private-sector implementation may be the most direct path toward a US version of affordable universal coverage.

Can \u2018Civil Enterprises\u2019 survive in the market? Some game theoretical considerations on the one-shot game

Civil enterprises (CEs) are firms whose main goal is to produce benefits for the community, working according to a logic of reciprocity. In this paper we discuss, from a game theoretical perspective, as to what extent it is possible for such enterprises to survive in competition with profit-maximizing firms in the marketplace, since market competition might take the form of a prisoner’s dilemma game, where the public good at stake is the commitment to moral rules. In those games cooperative strategies are strictly dominated by the defective behavior of the players, i.e. CEs would not survive while retaining their values. We argue that market competition is more appropriately modelled as an n-firm model and show that, given a sufficient number of CEs in the market, they can survive despite having to interact with for-profit firms, even when the game is played only once.