Contracting and Organizations Research Institute publications (MU)
https://hdl.handle.net/10355/53180
2024-03-29T11:38:36ZAre Internal Capital Markets Good for Innovation?
https://hdl.handle.net/10355/8913
Are Internal Capital Markets Good for Innovation?
Klein, Peter G.
Which type of firm is more innovative: the decentralized, diversified corporation or
the smaller, more narrowly focused “entrepreneurial” firm? According to one argument, diversified corporations can do more R&D because their operating units have access to an internal capital market. Other writers argue that decentralized, diversified firms over-rely on financial accounting criteria to evaluate the performance of their operating units, discouraging divisional managers from investing in projects like R&D with long-term, uncertain payoffs. This paper uses a comprehensive sample of diversified and nondiversified firms from 1980 to 1999 to study the relationship between diversification and innovation. I find a robust negative correlation between diversification and R&D intensity, even when controlling for firm scale, cash flow, and investment opportunities. Industry-adjusted R&D—the difference between the R&D intensity of a diversified firm and the R&D intensity it would most likely have if its divisions were standalone firms—is negative, consistent with the hypothesis that diversification reduces innovation by discouraging R&D investment. However, other evidence suggests that internal-capital-market inefficiencies, rather than managerial myopia, are driving the negative relationship between diversification and innovation.
2007-07-01T00:00:00ZContracting for Consistency: Hog Quality and the Use of Marketing Contracts
https://hdl.handle.net/10355/8923
Contracting for Consistency: Hog Quality and the Use of Marketing Contracts
Jang, Jongick; Sykuta, Michael E.
Despite the dramatic change in the organization of the US hog industry over the
past two decades, the existing literature offers little insight into the decision by pork
packers to use long-term marketing contracts, which represent the dominant form of hog procurement transactions. Existing studies focus instead on the efficacy of incentive mechanisms for which contracts are neither necessary nor sufficient, on hog producers' motivations for accepting contracts, or on packers' use of production contracts or vertical integration, which represent a relatively small share of slaughtered hogs. This paper offers a framework to explain pork packers' adoption of marketing contracts based on packers' downstream strategic market positioning and their resulting demands for specific hog quality attributes. Based on an analysis of hog procurement contract terms and of survey data related to packers' procurement practices, we provide support for the argument that packers' use of contracts is driven by issues of measurement costs and demand for intertemporal consistency of quality rather than by technological and market structure factors associated with asset specificity arguments.
2009-03-01T00:00:00ZFarmer Trust in Producer- and Investor-owned Firms: Evidence from Missouri Corn and Soybean Producers
https://hdl.handle.net/10355/8922
Farmer Trust in Producer- and Investor-owned Firms: Evidence from Missouri Corn and Soybean Producers
James, Harvey S. (Harvey Stanley); Sykuta, Michael E.
We examine whether cooperatives are characterized by greater trust than investor-owned firms. We survey 2000 Missouri corn and soybean farmers and find that trust and farmer perceptions of honesty and competence are higher in cooperatives than in investor-owned firms and that trust is a significant factor explaining the choice of farmers to market to cooperatives rather than investor-owned firms. Interestingly, we find that trust is more significant in producers' decisions for marketing soybeans than for corn.
The definitive version is available at www3.interscience.wiley.com.
2004-12-01T00:00:00ZMarkets, Contracts, or Integration? The Adoption, Diffusion, and Evolution of Organizational Form
https://hdl.handle.net/10355/8910
Markets, Contracts, or Integration? The Adoption, Diffusion, and Evolution of Organizational Form
James, Harvey S. (Harvey Stanley); Klein, Peter G.; Sykuta, Michael E.
The rise of contract farming and vertical integration is one of the most important changes in modern agriculture. Yet the adoption and diffusion of these new forms of organization has varied widely across regions, commodities, and farm types. Transaction cost and other modern theories of the firm help explain the advantages of contracting and integration over reliance on spot markets and commodity brokers. However, these theories do not address the variation in adoption rates of new organizational forms. This paper lays out a more dynamic framework for understanding the evolution of organizational practices in U.S. agriculture, drawing on theories of the diffusion of technology and organizational complementarities. Using recent trends as stylized facts we argue that the agrifood sector is characterized by strong complementarities and that identifying and describing these complementarities more fully sheds considerable light on the organizational structure of agricultural production. We illustrate our arguments with case studies from the oilseed, poultry, and hog industries.
2007-04-01T00:00:00Z