Management Science Literature Research Articles

Risk measures in strategic management research: auld lang syne?

Risk is an integral component of strategic management decisions and often appears as an element of empirical studies reported in the strategic management literature. Recent methodological research in the financial economics and management science literatures has, however, raised serious questions about the strategic management literature’s two most widely used measures of firm and business-level risk: beta (or its derivatives) from the Capital Asset Pricing Model and simple variance (or its variants). This research reviews risk studies published in leading management journals in the past 15 years and summarizes the recent methodological findings in the adjacent literatures. We discuss the implications of these findings for our understanding of risk in strategic management and assess alternative measures of risk and conclude with a discussion of directions for future strategy research. Copyright © 1999 John Wiley & Sons, Ltd.

Integrated Modeling Environments in Organizations: An Empirical Study

Considerable attention in the information systems and management science literature has focused on computer-based modeling environments, sometimes called integrated modeling environments or model management systems. This research has been primarily concerned with suggesting features/components of modeling environments such as improved executable modeling languages for model creation, integration, and data representation; specialized database systems for managing model data; and customized model-solver software. However, there has been little (if any) empirical guidance offered in the literature about the specific needs of business and industry for computer-based integrated modeling environments. Using a data set compiled from a national survey of modelers (analysts) and model users (decision makers), we empirically investigate the validity of several of the key assumptions of modeling environment research reported in the literature, and examine the relationships between the modeling factors: data complexity, model complexity, modeling intensity, modeler/user requirements, and need for computer-based integrated modeling environments in organizations. Our empirical analysis of the data set shows that practitioners rank automated access to model data and automated error checking (e.g., model syntax and semantics checking) high as desirable components in modeling environments. We find that users prefer to have modeling environments linked to their current modeling and modeling-support software systems. Our findings further suggest that a high percentage of modelers and users are dissatisfied with the software systems they are currently using to support their modeling activities. Finally, a covariance structure analysis of the modeling environment factors clearly shows that: (a) model complexity has a direct positive effect on modeling intensity; (b) data complexity has an insignificant direct effect on modeling intensity, but has a negative effect on modeler/user requirements; and (c) modeler/user requirements have a direct positive effect on need for computer-based integrated modeling environments in organizations.

Bayesian learning in negotiation

Negotiation has been extensively discussed in game-theoretic, economic and management science literatures for decades. Recent growing interest in autonomous interacting software agents and their potential application in areas such as electronic commerce has give increased importance to automated negotiation. Evidence both from theoretical analysis and from observations of human interactions suggests that if decision makers can somehow take into consideration what other agents are thinking and furthermore learn during their interactions how other agents behave, their payoff might increase. In this paper, we propose a sequential decision-making model of negotiation, called Bazaar. It provides an adaptive, multi-issue negotiation model capable of exhibiting a rich set of negotiation behaviors. Within the proposed negotiation framework, we model learning as a Bayesian belief update process. In this paper, we present both theoretical analysis and initial experimental results showing that learning is beneficial in the sequential negotiation model.

Petty Tyranny in Organizations: A Preliminary Examination of Antecedents and Consequences

AbstractPetty tyranny is defined as the tendency to lord one's power over others. A model of the individual and situa‐tional antecedents of petty tyranny in organizations and the effects of tyranny on subordinates is presented. The model is assessed via 63 sets of respondents, each consisting of one manager and two subordinates, plus 25 partial sets. The hypothesized effects are generally supported, but not the hypothesized antecedents. It is speculated that petty tyranny represents a relatively rare gestalt, that is, an integrated and resilient cluster of antecedents, leader behaviours, and effects on subordinates.RésuméOn entend par “petite tyrannie” la tendance à exercer une domination sur les autres. L'article présente un modèle des antécédents individuels et situationnels de la petite tyrannie dans les organisations et des effects de la tyrannie sur les subordonnés. Le modèle est testé à par‐tir de 63 groupes complets de répondants, composés chacun d'un chef de service et de deux subordonnés, et de 25 groupes partiels. Les hypothèses liées aux effets de la tyrannie sont généralement verifiées contrairement à celles des antécédents. L'auteur suggère que la petite tyrannie représente une “gestalt” relativement rare, c'est‐à‐dire un ensemble intégré d'antécédents, de com‐portements de leader et d'effets sur les subordonnés.

QUALITY, COMPLEXITY AND ORGANIZATIONAL HEALTH

There is an emerging body of literature in management science supporting the proposition that success in engendering a coherent philosophy of health among students is dependent to a significant extent upon a college that subscribes to those same health principles not only in the curriculum but in the management practices of the organization. Health then becomes the natural state of affairs not only for patients, but for the organization as a whole. One model of health care which is health-oriented, person-centered and evidence-based is identified as the basis for a model of organizational health. The Total Quality Management (TQM) model is shown to reflect these characteristics. Its strengths and limitations are reviewed and the model is extended through the introduction of complex adaptive systems (CAS) concepts emerging from the complexity sciences. These concepts are given operational status through the introduction of Senge's work with systems theory and learning organizations. The linkage of learning, whole-thinking and health is suggested as a viable model of organizational health for chiropractic educational institutions.

Designing Conferences to Improve Resource Utilization and Participant Satisfaction

We look at a conference scheduling problem with the objective of maximizing the ability of participants to attend sessions of interest. This problem was addressed in an article by Eglese and Rand; conference scheduling has otherwise received little attention in management science literature. Related problems of class- and exam-scheduling have been extensively studied and published, yet few cases consider participant (e.g. student) preferences. Our formulation, which a variation of that used by Eglese and Rand, includes prioritized preferences for conference sessions, as well as schedule resource constraints. The purpose of this paper is to extend the previous work by exploring the impact of various scheduling decisions on participant satisfaction (measured by enrollment in desired sessions). We use a previously published algorithm to look at issues such as conference length and make general observations that may aid the conference-scheduling decision maker.

Designing Conferences to Improve Resource Utilization and Participant Satisfaction

We look at a conference scheduling problem with the objective of maximizing the ability of participants to attend sessions of interest. This problem was addressed in an article by Eglese and Rand; conference scheduling has otherwise received little attention in management science literature. Related problems of class- and exam-scheduling have been extensively studied and published, yet few cases consider participant (e.g. student) preferences. Our formulation, which a variation of that used by Eglese and Rand, includes prioritized preferences for conference sessions, as well as schedule resource constraints. The purpose of this paper is to extend the previous work by exploring the impact of various scheduling decisions on participant satisfaction (measured by enrollment in desired sessions). We use a previously published algorithm to look at issues such as conference length and make general observations that may aid the conference-scheduling decision maker.

A Theory of Cutoff Formation Under Imperfect Information

Numerous models in the Management Science literature contain constructions that are a variant of the following: A decision-maker must choose from a set of alternatives based on imperfect information as to their relative quality, while further evaluation, through costly, provides more accurate information. We examine decision heuristics in which the optimal search policy entails a screening strategy limiting the number of alternatives in the subsequent, costly evaluation. There are two general methods for accomplishing this screening: Quota cutoffs operate by selecting the optimal number of alternatives to evaluate; Level cutoffs operate by specifying a minimally-acceptable level of the imperfect screening indicator. The present paper has three main objectives. First, to define the Level and Quota cutoff methods, broadly characterize optimal behavior for each and determine what aspects of the decision environment of order statistics as a methodology for exploring decision problems when information is imperfectly known; and third, to discuss the pivotal role of default, or fallback, options in a broad class of search problems. Quota and Level strategies restrict the number of alternatives passing the cutoff-based screen. Because restrictive cutoffs reduce evaluation costs while lowering the expected quality of the item finally selected, changes in the decision environment making the evaluation process less beneficial or increasing its cost drive the optimal cutoff to be more restrictive. In particular, increases in unit evaluation cost, improvement in the quality of a fallback option, decreases in the total number of alternatives available or improvement in the precision of the final evaluation process all lead to more restrictive cutoffs at optimum. These results hold over a remarkably broad range of assumptions and conditions. We also find that a better screening indicator leads to more restrictive screening when evaluation costs are low but, surprisingly, to less restrictive screening when costs are high. Comparing the two strategies, we find the unexpected result that the Quota cutoff strategy is generally superior to the Level, except under on of two fairly uncommon set of circumstances: when evaluation cost is prohibitively high, or when there is a fallback option of very high quality.

On the relationship of capacitated production/inventory models to manufacturing flow control models

Characterizing and determining optimal operating policies for production/inventory systems are of paramount importance. Perhaps two of the most important practical factors which make this a difficult problem are the randomness of demand and the finiteness of production capacity. In the traditional inventory literature of operations research and management science, it has been shown that a modified base-stock policy is optimal for a periodic review model; results exist that can be used to estimate the single parameter that characterizes the optimal policy. On the other hand, research found in the control systems community casts the problem in the framework of manufacturing flow control — where inventory is monitored continuously and the production rate is also controlled continuously — and has shown that the optimal policy can also be characterized by a single parameter called the hedging point. Our view is that these two models and approaches solve essentially the same problem, albeit one in discrete time and the other in continuous time. In this paper, we compare the two approaches and discuss various beneficial implications that result from correspondences between the two approaches. For example, both systems have fundamental connections to processes of a single-server queue: one to the discrete-time process of system time, and the other to the continuous-time process of the workload process. Finally we also tackle the problem of stochastic capacity in the context of both approaches.

Developing a Methodology for Multidisciplinary Action Research: A Case Study

This paper describes an approach taken to carrying out multidisciplinary action research into contract management within the National Health Service. The work forms part of the ‘Contracts and Competition Programme’ funded by the Economic and Social Research Council. The members of the team had little experience of multidisciplinary research prior to the start of the study and little guidance in this regard is provided in the management science literature. Hence, there was a clearly identified need to develop an approach capable of guiding the work and ensuring that the wide range of disciplinary perspectives within the team could be successfully incorporated into an integrated whole. The approach taken makes use of concepts from soft systems methodology to provide an overarching framework for this purpose and this paper reports on its successes and failures.

Forging Strategic Alliances in Canada's Agrifood Sector: Framework for Analysis and Action

In recent years, participants in Canadas agrifood sector have become more concerned about their competitiveness and have identified strategic alliances as being vital to becoming more competitive. This paper is a review of economics, strategic management and other social science literature examining several issues such as: the types of objectives organizations should pursue using strategic alliances the appropriate configuration for a strategic alliance, given its objectives advantages and disadvantages of strategic alliances versus other types of business relationships factors that enhance or inhibit organizations' abilities to forge alliances. The latter part of the paper concentrates on what managers interested in pursuing strategic alliances can do to enhance their chances of success.

Castrating the Female Advantage

This essay is a critique of the `female advantage" as it is currently represented in the management science literature. It draws on recent work in women's psychology to detail the essence of feminine, relational strengths, contrasts this with the instrumental representation of these strengths in the management literature, and names what is missing. It is a critique that suggests that management's diminished portrayal of feminine strengths is in danger of silencing rather than legitimizing women's voice. Finally, it suggests that a fully empowered representation of feminine strengths has the potential to transform organizational theory and practice by giving voice to the powerfulness of relational activity and challenging the preeminence of instrumentality in organizational discourse.

Evaluating the Venture Capital Fund Agreement

The purpose of this paper is to demonstrate how probabilistic simulation can be used to assist prospective general partners (GP) and limited partners (LP) of a venture capital limited partnership fund to evaluate alternative investment strategies for the proposed fund. The model presented in the paper is based upon observed characteristics of the venture capital market reported in the finance, economics, and management science literature. The body of the paper is organized as follows. In Section II we review the structural characteristics of the model. In Section III we present the results, in terms of ending wealth, obtained from simulating the fund's operations over its life under selected alternative investment strategies. In Section IV we show evaluations of the fund's simulated results under expected return, mean/variance and four moment approaches. In Section V, we present conclusions and implications of the results for financial management.

Locating oil spill response centres using mathematical models

The response to marine accidental spillage of oil requires careful advance planning to ensure that the impact of an oil spill is minimized. The fast dispatching of specialized cleanup equipment and facilities to the spill site will help to control the pollution of the sea and coastline. The presence of oil spill equipment and facilities at a nearby centre will speed up the response to an oil spill. In this paper several mathematical models, obtained from the operational research and management science literature, which address aspects related to determining optimal sites for regional centres where oil spill response equipment and facilities can be located are reviewed and discussed. The paper concludes with an emphasis on the great need for the use of such models for siting oil spill response centres within semienclosed waterways such as the Arabian Gulf area.

Recent progress in modeling R&D project-selection processes

The authors review the progress that has been made in the development of quantitative models of R&D project-selection processes. Future research needs in the area are assessed. R&D project-selection has traditionally been modeled in the management science literature as a constrained optimization problem. The deficiencies of this approach have been described, and the need for new approaches has been recognized. In particular, the optimization approach ignores the organizational context in which decisions are made. A new stream of research in R&D project-selection models emerged in the 1970s in response to this need. The philosophy underlying the new approach differs significantly from traditional optimization models. The new approach seeks insight rather than outcomes and focuses on the decision process. >

Sensitivity Analysis in Linear Programming Models with Common Inputs

The importance of sensitivity analysis information in linear programming has been stressed in the management science literature for some time. Indeed, Gal [3] has devoted an entire text to just this issue. Linear programs with common inputs (cost coefficients or right‐hand‐side values) present a problem in that classical sensitivity analysis does not allow for the simultaneous changes required to determine the sensitivity of these models to common inputs. We first survey the approaches previously developed for simultaneous‐change sensitivity analysis and cast them in the framework of the special common input case. These general techniques are compared to a simple aggregate variable technique that has not received attention in the literature.

Knowledge-based resolution of conflicting expert opinions

If several agents must collectively choose one of several possible acts (or compute a single joint control strategy) and if they disagree about the probable consequences of the acts, then how can they resolve their differences and make a choice? The statistics and management science literatures offer several probability aggregation formulas for solving this problem. This paper discusses an alternative that emphasizes knowledge-based resolution of conflicting probability judgments.

Optimal Price Skimming by a Monopolist Facing Rational Consumers

This paper considers the intertemporal pricing problem for a monopolist marketing a new product. The key feature differentiating this paper from the extant management science literature on intertemporal pricing is the assumption that consumers are intertemporal utility maximizers. A subgame perfect Nash equilibrium pricing policy is characterized and shown to involve intertemporal price discrimination. We compare this policy to the optimal policy for a monopolist facing myopic consumers and find that for any given state, prices are always lower with rational consumers than with myopic consumers. For plausible parameter values the assumption of consumer rationality can be shown to lead to large differences in optimal prices. Moreover, if a monopolist facing rational consumers implements the optimal myopic consumer pricing policy, profits can be significantly less than if the monopolist follows the equilibrium pricing policy for rational consumers.

Optimal Price Skimming by a Monopolist Facing Rational Consumers

This paper considers the intertemporal pricing problem for a monopolist marketing a new product. The key feature differentiating this paper from the extant management science literature on intertem...

Integrating marketing and production decisions

The problem of determining economic production policy has been extensively discussed in the Management Science literature [see Peterson and Silver (1979) Starr and Miller (1967), Hadley and Whitin (1963)] under various conditions and assumptions. Recently researchers have shown an interest in the study of production-inventory systems under varying marketing conditions like the frequency of advertisements, the effect of price elasticity etc. Ladany and Sternlieb (1974) consider the effect of price elasticity in demand. Subramanyam and Kumaraswany (1981) consider the effect of price elasticity as well as the frequency of advertisements on the demand. However, they assume a linear relationship between the demand and the frequency of advertisements. In this paper, we develop an integrated net profit model incorporating price elasticity, frequency of advertisements and the batch quantity. We propose a fast converging iterative procedure for determining the economic operating policy. The net profit model is based on the following assumptions: 1. The demand for the product is assumed to be at a uniform rate over time. 2. The advertisements are placed at equal time intervals. 3. Shortages are not permitted. 4. The items produced in a batch are put into the inventory only at the completion of a batch. 5. Time horizon is infinite. 6. Maximization of the net profit per unit of time is the objective. NOTATIONS