Knowledge that Transforms

In the last decade, large sectors of the chemical and plastics industries in the U.S.A. and West Europe have suffered drastic declines in price and gross margin during periods of low use of industry capacity. This paper shows that the major changes in gross margin observed for some commodity plastics can be modelled successfully in terms of the balance between buyer power and seller power. These industries have visibility of prices and industry occupacity and comparable concentrations of sellers and important buyers. The modelling follows Burgess (1982) in expressing buyer and seller power as simple functions of buyer and seller concentrations, industry occupacity and ‘cohesion’ between sellers. This work provides a first practical test of this new approach. It is shown that the model fits the observed data best if the ‘cohesion’ declines as occupacity declines. It is suggested that the approach would be useful in understanding the behaviour of other ‘near‐commodity’, capital‐intensive businesses, and in helping to distinguish between those businesses where margins are likely to remain relatively stable and those which might face drastically declining margins if the industry occupacity declines or new entrants change the balance between sellers and buyers.

This article argues that conservatism as a personal value among senior managers significantly affects corporate performance. A scale to measure conservatism was developed and its measurement properties were tested on several hundred executives. Empirical results were consistent with the hypotheses that conservatism among senior management teams is negatively associated with the firm's social responsiveness as well as certain aspects of financial performance.

A computerized interactive technique for mapping influence diagrams is presented. The technique can be used to elicit influence diagrams for large, complex business policy and planning problems, to map the diagrams, to encode more information in the diagrams than is possible with traditional techniques, and to do so systematically and efficiently. The technique can reduce the cognitive strain associated with mapping influence diagrams. At the same time it can improve the efficiency of interpretation and use of the diagrams.

This study examines organization structures of 37 large U.S. multinationals which are both highly diverse and heavily involved abroad. The findings show that the international division is still the most popular structure for this form of enterprise. However, Several other structures are also found to be in common use. An attempt is made to relate use of these structures to such strategic variables as extent of vertical integration, R & D intensity, level of foreign sales and method of diversifying.

Nowadays, scenarios are a popular subject in management literature. However, information available about how extensively scenarios are used and the possible motives for their use, as well as their effects on strategic behaviour in companies, has hitherto been very limited. Results of a survey among Fortune's top 1000 companies in the U.S.A. in 1977 and 1981 showed a growing corporate interest in scenarios. A survey of the use of scenarios in large Western European companies in 1981 provided evidence of similar interest in Europe. In this article, results of the European survey are presented and the differences between user and non‐user attitudes towards the future among European firms analysed and the implications for strategic behaviour outlined.