Contact information: Eric Whittington, Assistant Director of External Relations, Babcock Graduate School of Management, Wake Forest University, (336) 758-5030, [email protected]
Tip sheet Babcock Graduate School of Management Wake Forest University Summer 1999
1. U.S. companies trail world in family friendly work policies
American companies lag behind most of the industrialized world in adopting family friendly work policies, but sustained low unemployment and a huge demand for labor in certain sectors are prompting more flexibility from selected industries. Kelly Mollica, assistant professor of management, says job benefits that provide for elder care and particularly child care aren't as prevalent in America as in some other industrialized countries. "However, in industries where there is a huge demand for labor, such as high-tech and computer firms, you may see more flexibility in scheduling and in family friendly work policies," Mollica says. "Face time, or the time that an employee is physically in the office or on the job, is becoming less important than results, regardless of what time of day those results are being achieved."
2. Corporate scandals can affect competitors too
Taking advantage of a corporate rival's scandal may not be as easy as it sounds. Research conducted by Michelle Roehm, assistant professor of management, indicates that size matters when it comes to capitalizing on a competitor's misfortune. "If a company like Nike gets involved in a scandal, many consumers will tend to look at Reebok - a similar-sized company - and believe they have the same problems," Roehm says. The more similar a company is to the one involved in the scandal, the more likely it is to be affected by it, she says. Companies that are most protected from this type of carry-over effect appear to be smaller, in this case a competitor such as Fila, Roehm says. The research finds similar results among Coca-Cola, Pepsi and the smaller Royal Crown Cola.
3. Consumers prefer state-of-the-art technology to a good deal on software
As personal computing technology advances, consumers repeatedly must decide whether to invest in the latest upgrade or wait until the next generation of that software or hardware is developed before purchasing it. "People appear to have reasonably realistic expectations about product introductions," says Derrick Boone, assistant professor of marketing. Boone's research indicates that consumers tend to opt for newer, state-of-the-art technology even when slightly older, but still very viable, technology is available at a lower cost-to-benefit ratio.
4. Mission statements can serve vital role for new businesses
Why should a company bother to create a mission statement? Many business observers and planners discount the need for such statements, but they can serve a vital role in an entrepreneurial business. "Everything follows the mission statement," says Stan Mandel, executive professor and director of the Angell Center for Entrepreneurship. "They can be very important in attracting financing and other resources, such as alliance partners, and the mission statement should be included in the business plan. Mission statements that outline a vision or a philosophy provide a focus for the new business. There is a temptation among some start-ups to follow any path that brings in cash, often to the long-term detriment of the business. Pursuing strategies that are within the framework of the mission statement helps assure that new companies follow a consistent path with the limited resources they control."
5. Are compensation committees awarding stock options effectively?
Academic research based largely upon data from the 1980s has concluded that the use of CEO stock-option awards conflicts with what theory says should happen in practice. In the meantime, CEO stock-option awards have exploded over the 1990s. Stephen Bryan, associate professor of accounting, has been involved in research to determine whether the earlier surprising findings still hold. If so, one may conclude that the theories are incomplete or that stock-option compensation policies are not optimal. While there are instances of large stock-option awards that seem extravagant or perhaps unwarranted, the research indicates that, on average, stock-option awards are made in accordance with what would be expected based on theory. Bryan attributes the findings, which contradict those of earlier research, to different methodology and improved data. Since 1992, the Securities and Exchange Commission has required detailed proxy disclosures that allow researchers to perform more comprehensive test
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For more information or to arrange interviews, contact Eric Whittington or Patricia Divine by phone at (336) 758-5030 or (800) 722-1622 or at [email protected] or [email protected]. Information about the Babcock School is available on the World Wide Web at www.mba.wfu.edu. Refer to our online media resource guide for a list of faculty who can provide expert comments on various business issues.
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