Managerial Discretion in Imperfect Markets

Description

This book deals with behavioral responses of management of firms that make several decisions with respect to production, marketing, finance, organization of activities within divisions, and interrelations between divisions (including synergies between them and constraints placed on each other in the attainment of overall goals of the firm). The market conditions, that constitute the basis of such decisions, may be stable, random but predictable, or uncertain. It can be expected that objectives attained by the firm, as a result of decisions of management, may be different from the maximum which can be achieved. A generic conceptualization of such managerial discretion and operationally useful methods of measurement have been presented. It is possible to develop machine learning algorithms on this basis to minimize managerial discretion and assist managers in arriving at strategic decisions thereby leaving more resources to deal with uncertain events as they arise. The volume is a great resource not only for researchers, but also decision makers in corporates. Preface References About This Book Contents About the Author 1 Introduction 1.1 The Firm 1.2 Transaction Costs 1.3 Agency Costs 1.4 Some Hybrids 1.5 Non-price Strategies 1.6 Financial Issues 1.7 Managerial Discretion 1.8 Purpose of Study 1.9 Designing a Machine Learning Algorithm 1.10 A Look Ahead References 2 Managerial Discretion 2.1 The Genesis 2.2 Measuring Managerial Discretion 2.3 Choice of Materials 2.4 Choice of Products 2.5 Organizational Arrangements 2.6 Financial Mix 2.7 Summing Up 2.8 Lessons for Machine Learning References 3 Specification and Estimation 3.1 The Purpose 3.2 The Issues 3.3 The Variables 3.4 Price Determination 3.5 General Forms of Tradeoff 3.6 Contracts 3.7 Switching and Threshold Effects 3.8 Estimation Problems 3.9 Uncertainty Considerations 3.10 Tradeoff Estimation 3.11 Estimating Thresholds 3.12 Contract Parameters 3.13 Further Observations References 4 Production Decisions 4.1 Some Basics 4.2 Imperfect Markets 4.3 Related Products 4.4 Small Scale Firms 4.5 Public Sector Firms 4.6 Service Organizations 4.7 Price Determination 4.8 Summing Up References 5 Multi-product Firms 5.1 The Nature of Products 5.2 Economies of Scale and Scope 5.3 Tradeoff Between Objectives 5.4 Organizational Forms 5.5 Franchises and Subsidiaries 5.6 Non-Price Strategies and Value Generation 5.7 Empirical Evidence 5.8 Anomalies References 6 Advertising and Warranties 6.1 Focus on Consumer 6.2 Advertising and Selling Costs 6.3 Modeling the Effects 6.4 Empirical Experiences 6.5 Warranties 6.6 Further Observations References 7 Inventory Behavior 7.1 Sources of Inventory 7.2 Pertinent Issues 7.3 Determinants of Inventory Holding 7.4 Blinder Paradox 7.5 Fazzari and Peterson 7.6 Composition of Inventories 7.7 Empirical Patterns 7.8 Adjustments to Uncertainty 7.9 Some Issues Remain References 8 Capital Stock and Investment 8.1 The Setting 8.2 Why Invest? 8.3 Acceleration Principle 8.4 User Cost of Capital 8.5 Tobin’s q 8.6 Market Imperfection 8.7 Empirical Evidence References 9 Financial Arrangements 9.1 Product and Financial Markets 9.2 Capital Structure 9.3 Locus of Control 9.4 Focus Versus Flexibility 9.5 Debt–Equity Ratio 9.6 Dividend Decisions 9.7 Empirical Observations 9.8 The Imponderables References 10 Carveouts and Spinoffs 10.1 Empirical Setting 10.2 Elasticity of Substitution 10.3 Organizational Arrangements 10.4 Specification of Synergies 10.5 Basic Results 10.6 Conclusion References 11 Conclusion 11.1 Overall Pattern 11.2 Specific Patterns 11.3 Organizational Arrangements 11.4 Concept of Efficiency 11.5 Managerial Discretion 11.6 What Then? References