Daeil Nam

The Applicability of Porter’s Generic Strategies in the Digital Age: Assumptions, Conjectures, and Suggestions

Because current management theories evolved in the context of brick-and-mortar firms, this paper examines three key questions raised by the advent of e-business: (1) Will the strategy types found among e-business firms resemble Porter’s (1980) generic strategies? (2) Will we find performance differences among e-business firms pursuing different types of strategies? (3) Will we find differences in the strategy-performance relationships of pure online firms (pure plays) and firms with both online and offline operations (clicks-and-bricks)? We conclude that integrated strategies that combine elements of cost leadership and differentiation will outperform cost leadership or differentiation strategies. We also argue that, regardless of business strategy type, clicks-and-bricks firms that closely integrate their on-and offline operations will enjoy performance advantages over their pure play counterparts.

The whistle‐blowing zone: applying Barnard's insights to a modern ethical dilemma

Purpose – The purpose of this paper is to apply Chester Barnards ideas about authority in organizations to the modern phenomenon of “whistle‐blowing” and highlight insights that can advance contemporary theory in business ethics. The paper coins a new term “the whistle‐blowing zone,” and uses it as a way to capitalize on Barnards insights and to offer a conceptual framework that can help business ethics scholars explain the phenomenon.Design/methodology/approach – By comparing and contrasting Barnards ideas with contemporary research, the authors argue that he provides a number of insights that can advance modern business ethical theory and research. Implications about the origin and mechanism of whistle‐blowing are discussed.Findings – First, it is found that Barnards theory of authority, specifically the notion of a “zone of indifference” is applicable to the modern phenomenon of whistle‐blowing. Second, the paper coins a new term “the whistle‐blowing zone,” to explain why and how whistle‐blowing oc...

Looking Attractive until You Sell: Earnings Management, Lockup Expiration, and Venture Capitalists

Earnings management occurs when managerial discretion allows managers to influence reported earnings and thus mislead some investors about the underlying economic performance and quality of the firm. This study considers how potential investors may guard against earnings management by observing negative stock price reaction at the lockup expiration period of initial public offering (IPO) firms as a negative signal. Findings from a sample of 160 newly public firms show that earnings management behaviour is stronger in IPO firms backed by venture capitalists (VCs). Moreover, VC reputation negatively moderates this relationship such that IPO firms backed by reputable VCs are less likely to manage earnings, suggesting that reputable VCs serve an auditing function following an IPO. Overall, we provide insights into signalling theory by examining negative signals arising from the behaviour of multiple agents in an IPO firm.

INFORMATION DISCLOSURE AND IPO VALUATION: WHAT KINDS OF INFORMATION MATTER AND IS MORE INFORMATION ALWAYS BETTER?

Many financial theories emphasize the positive relationship between information disclosure and firm performance. However, disclosure of information can harm a firm if others make strategic use of the information. In this paper, we test the effect of information disclosure on performance. Using a sample of all firms which went through an IPO in the U.S. during the 2001-2003 period, we examine the relationship between different types of information including 1) the specificity of information, 2) the accuracy of information, and 3) the amount of time for information diffusion and the valuation of the IPO firm. We use OLS regression to predict IPO performance including 1) underpricing, 2) percent premium and 3) 3 year cumulative average adjusted returns. Also, we check for a potential curvilinear relationship between the level of information disclosure and IPO performance. We find a negative relationship between information disclosure and underprcing but a positive relationship with percent premium. The implications of these findings and several directions for future research are discussed as well.

A Managerial Perspective on Risk and Return for Corporate Innovation Projects

Virtually all companies today pursue innovation in order to remain competitive. The question facing corporate decision makers is not whether to innovate, but rather which projects to pursue. Conventional wisdom suggests high-risk projects provide the highest returns. We explore this notion with attention to the patent output from a cross-sectional sample of U.S. corporate innovation projects. Project risk is assessed upon project proposal using a managerial perspective. The manager viewpoint is an important one since managers are distinct in their approach to assessing risk, as we expound, and are often the initial filtering point for project proposals. Patent counts are measured 3 to 5 years later as an indicator of project returns. We find that a “swing-for-the-fences” strategy is effective, but not the sole best path to patent output. Findings inform research on managerial risk construal and provide a fundamental basis for evaluation of potential innovation projects.