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on Business Economics |
| By: | Dominique Demougin; Anja Schöttner |
| Abstract: | With adverse selection, diseconomies of scale associated with hierarchies may induce the implementation of a second-best technology. This occurs whenever rents to lower tiers of the hierarchy increase faster than total surplus. This is more likely with longer hierarchies. |
| Keywords: | Adverse Selection, Hierarchies, Technology |
| JEL: | D82 L23 O33 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2006-028&r=bec |
| By: | Nishaal Gooroochurn (Nottingham University Business School); Aoife Hanley (Nottingham University Business School) |
| Abstract: | This paper investigates the relative importance of property rights (PR) and transactions cost (TC) factors in driving the decision of firms to outsource innovation. The TC literature explains a small part of outsourcing decisions (cost saving motives) while the PR literature deals with revenue maximisation. Using data for over 8,000 firms from the UK Community Innovation Survey, we find that PR variables dominate over TC variables. Our results suggest that the decision to outsource innovation is mostly driven by the ability of firms to control information leakages, less so by cost motives. |
| Keywords: | transaction cost, property rights, innovation |
| JEL: | L2 O3 |
| Date: | 2006–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:nub:occpap:17&r=bec |
| By: | Eric Ghysels; Jonathan H. Wright |
| Abstract: | Surveys of forecasters, containing respondents' predictions of future values of growth, inflation and other key macroeconomic variables, receive a lot of attention in the financial press, from investors, and from policy makers. They are apparently widely perceived to provide useful information about agents' expectations. Nonetheless, these survey forecasts suffer from the crucial disadvantage that they are often quite stale, as they are released only infrequently, such as on a quarterly basis. In this paper, we propose methods for using asset price data to construct daily forecasts of upcoming survey releases, which we can then evaluate. Our methods allow us to estimate what professional forecasters would predict if they were asked to make a forecast each day, making it possible to measure the effects of events and news announcements on expectations. We apply these methods to forecasts for several macroeconomic variables from both the Survey of Professional Forecasters and Consensus Forecasts. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2006-10&r=bec |
| By: | Aghion, Philippe; Bacchetta, Philippe; Rancière, Romain; Rogoff, Kenneth |
| Abstract: | This paper offers empirical evidence that real exchange rate volatility can have a significant impact on long-term rate of productivity growth, but the effect depends critically on a country's level of financial development. For countries with relatively low levels of financial development, exchange rate volatility generally reduces growth, whereas for financially advanced countries, there is no significant effect. Our empirical analysis is based on an 83 country data set spanning the years 1960-2000; our results appear robust to time window, alternative measures of financial development and exchange rate volatility, and outliers. We also offer a simple monetary growth model in which real exchange rate uncertainty exacerbates the negative investment effects of domestic credit market constraints. Our approach delivers results that are in striking contrast to the vast existing empirical exchange rate literature, which largely finds the effects of exchange rate volatility on real activity to be relatively small and insignificant. |
| Keywords: | exchange rate regime; financial development; growth |
| JEL: | E44 F33 F43 O42 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5629&r=bec |
| By: | Thyssen, Jesper (Center for Industrial Production); Israelsen, Poul (Center for Industrial Production); Jørgensen, Brian (Department of Business Studies) |
| Abstract: | The paper accounts for an Activity Based Costing (ABC) analysis supporting decision-making concerning product modularity. The ABC analysis carried out is communicated to decision-makers by telling how much higher the variable cost of the multi-purpose module can be compared to the average variable cost for the product-unique modules that it substitutes to break even in total cost. The analysis provides the platform for stating three general rules of cost efficiency of modularization, which in combination identify the highest profit potential of product modularisation. Finally the analysis points to problems of using ABC in costing modularity, i.e. handling of R&D costs and identification of product-profitability upon an enhanced modularization |
| Keywords: | No keywords; |
| Date: | 2005–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhb:aaracc:93-007&r=bec |
| By: | J. Christina Wang; Susanto Basu |
| Abstract: | What is the output of financial institutions? And how can we measure their nominal and, more importantly, real value, especially since many financial services are provided without explicit charges? This paper summarizes the theoretical result that, to correctly impute the nominal value of implicit financial service output, the “user cost of money” framework needs to be extended to take account of the systematic risk in financial instruments. This extension is easy to implement in principle: One can continue using the current imputation procedure, and the only change needed is to adjust the reference rates of interest for risk. ; The paper clarifies why the risk-related income is not part of the output—or equivalently, why risk bearing is not a service—of financial institutions. The paper next argues that, to measure real output, one must first explicitly specify and define the economic services produced by financial firms, a step that is absent from the “user cost of money” theory. Once it is established that only financial services, and not instruments, should be counted as the value added of financial firms, it follows that the quantity of services provided by these institutions is not necessarily in fixed proportion to the volume of instruments. The corollary is that the implicit price of financial services bears no definitive relationship with any reference rate. Instead, price deflators for financial services should be constructed using methods similar to those used for other services. |
| Keywords: | Financial services industry |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbpp:06-3&r=bec |
| By: | Kevin J. Stiroh |
| Abstract: | This paper examines the declining volatility of U.S. output growth from a production perspective. At the aggregate level, increased output stability reflects decreased volatility in both labor productivity growth and hours growth as well as a significant decline in the correlation. The decline in output volatility can also be traced to less volatile labor input and total factor productivity (TFP) growth and the smaller covariance between them. This relationship suggests that labor market changes such as increased labor market flexibility are an important source of increased output stability. At the industry level, the decline in volatility appears widespread, with about 80 percent of component industries showing smaller contributions to aggregate output volatility after 1984, although most of the aggregate decline reflects smaller covariances between industries. Across industries, there is strong evidence of a decline in the correlation between hours growth and labor productivity growth, suggesting again that the labor market dynamics are part of the decline in U.S. output volatility. |
| Keywords: | Production (Economic theory) ; Productivity ; Labor productivity ; Labor market ; Industries |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:245&r=bec |
| By: | Mele, Domenec (IESE Business School) |
| Abstract: | Mary Parker Follett never wrote on ethics in management nor on business ethics, both of which are now familiar. However, some implicit and even explicit references to these topics can be found in her thought. What is more, underlying her whole approach to business and management are concepts that have a lot to do with ethics. Follett holds that the manager must accept standards established by professional managerial associations. Additionally, she is aware of the contribution of business management to individual development and to the welfare and culture of society. She also presents a seminal approach to stakeholder theory. Her concept of ethics is related to her dynamic vision of the individual and society. It overcomes subjectivism and the narrow view of an individualistic ethics, but it is not an ethics rooted in ethical principles or in human virtues. |
| Keywords: | Management; History; Business ethics; Social sciences; Stakeholder theory; |
| Date: | 2006–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0618&r=bec |
| By: | Joel F. Houston; Kevin J. Stiroh |
| Abstract: | This paper examines the evolution of risk in the U.S. financial sector using firm-level equity market data from 1975 to 2005. Over this period, financial sector volatility has steadily increased, reaching extraordinary levels from 1998 to 2002. Much of this recent turbulence can be attributed to a series of major financial shocks, and we find evidence of an upward trend in volatility only for the common component that affects the entire financial sector. While idiosyncratic volatility remains dominant, a combination of common shocks, deregulation, and diversification has reduced its relative importance since the early 1990s. Within the financial sector, commercial banks show the largest rise in volatility, which also reflects industry shocks and not the idiosyncratic component. Despite these changes, we find that the links between the financial sector and economic activity have declined in recent years. These results have implications for investors, bank regulators, and other policymakers concerned with the origins of financial sector risk and with the links between the financial markets and real activity. |
| Keywords: | Risk ; Financial markets ; Banks and banking |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:248&r=bec |
| By: | Larsen, Christian (Department of Business Studies); Thorstenson, Anders (Department of Business Studies) |
| Abstract: | No abstract |
| Keywords: | No keywords; |
| Date: | 2006–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhb:aaracc:92-009&r=bec |
| By: | Domenico Giannone (European Centre for Advanced Research in Economics and Statistics (ECARES) Université Libre de Bruxelles, CP 114, Av. F.D. Roosevelt, 50. B-1050 Brussels, Belgium); Lucrezia Reichlin (European Central Bank, Kaiserstrasse 29, Postfach 16 03 19, 60066 Frankfurt am Main, Germany.) |
| Abstract: | Not so much and we should not, at least not yet. |
| Keywords: | International Business Cycles, Euro Area, Risk Sharing, European Integration, Income Insurance. |
| JEL: | E32 C33 C53 F2 F43 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20060595&r=bec |
| By: | Lynne G. Zucker; Michael R. Darby |
| Abstract: | This paper extends the concept of star scientist to all areas of science and technology. We follow 1,838 stars' careers 1981-2004, using their publication history to locate them each year. The number of stars in a U.S. region or in one of the top-25 science and technology countries has a consistently significant and quantitatively large positive effect on the probability of firm entry in the same area of science and technology. Thus the stars themselves rather than their potentially disembodied discoveries play a key role in the formation or transformation of high-tech industries. Other measures of academic knowledge stocks have weaker and less consistent effects. We identify separate economic geography effects in poisson regressions for the 179 BEA-defined U.S. regions, but not for the 25 countries analysis. Stars become more concentrated over time, moving from areas with relatively few peers to those with many in their discipline. A special counter-flow operating on the U.S. versus the other 24 countries is the tendency of foreign-born American stars to return to their homeland when it develops sufficient strength in their area of science and technology. In contrast high impact articles and university articles and patents all tend to diffuse, becoming more equally distributed over time. |
| JEL: | O31 J61 J44 M13 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12172&r=bec |
| By: | Hui Guo; Robert Savickas |
| Abstract: | Finance theory, e.g., Campbell's (1993) ICAPM, indicates that the expected equity premium is a linear function of stock market volatility and the volatility of shocks to investment opportunities. We show that one can use average CAPM-based idiosyncratic volatility as a proxy for the latter. In particular, over the period 1927:Q1 to 2005:Q4, stock market volatility and idiosyncratic volatility jointly forecast stock market returns both in sample and out of sample. This finding is robust to alternative measures of idiosyncratic volatility; subsamples; the log transformation of volatility measures; and control for various predictive variables commonly used by early authors. Our results suggest that stock market returns are predictable. |
| Keywords: | Stock exchanges ; Stock - Prices |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2006-019&r=bec |
| By: | Caldart, Adrian A. (Warwick Business School); Ricart, Joan E. (IESE Business School) |
| Abstract: | This paper analyzes the evolution during the period 1986-2002 of the corporate strategy of Lujan, a highly successful car components manufacturer headquartered in Spain, as a way to explore how the corporate level influences the successful evolution of a company exposed to a "turbulent" environment over a long period. We find that the corporate level plays three key roles. First, it drives a firm's evolution by developing a cognitive representation of the firm's competitive landscape. Second, it paces the company's evolution by alternately shifting the balance of organizational initiatives between static efficiency-based "local search" strategies, chosen in times of stability or economic slowdown, and dynamic efficiency-based "long jump" strategies, adopted during periods of major environmental turbulence. Long-jump corporate strategies, carried out through limited downside strategic initiatives such as real options and strategic alliances ("off-line long-jumps"), are particularly frequent in these circumstances. The third role consists of developing an organizational architecture that frames the self-organized coordination of the different business divisions. The Lujan story clearly illustrates the important role of corporate strategy in a firm that must undergo radical transitions as a result of major environmental changes. |
| Keywords: | corporate strategy; turbulent environments; complexity theory; car components; |
| Date: | 2006–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0623&r=bec |
| By: | Benno Torgler (Yale Center for International and Area Studies); Sascha L. Schmidt (University of St. Gallen); Bruno S. Frey (University of Zurich) |
| Abstract: | Many studies have established that people care a great deal about their relative economic position and not solely, as standard economic theory assumes, about their absolute economic position. However, behavioral evidence is rare. This paper provides an empirical analysis on how individuals’ relative income position affects their performance. Using a unique data set for 1114 soccer players over a period of eight seasons (2833 observations), our analysis suggests that the larger the income differences within a team, the worse the performance of the soccer players is. The more the players are integrated in a particular social environment (their team), the more evident this negative effect is. |
| Keywords: | Relative Income, Positional Concerns, Envy, Performance, Social Integration |
| JEL: | D00 D60 L83 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.39&r=bec |
| By: | Rosa Forte (CETE, Faculdade de Economia, Universidade do Porto); António Brandão (CETE, Faculdade de Economia, Universidade do Porto) |
| Abstract: | The present paper develops a moral hazard model applied to a multinational firm (MNF)'s decision between foreign direct investment (FDI) and international subcontracting. We compare the results of the moral hazard model, characterized by the fact that the MNF is not able to control operations performed by the subcontractor firm, with the traditional model, which considers symmetric information. We conclude that the uncertainty associated with the subcontractor firm's behaviour, in spite of increasing the preference of the MNF to engage in FDI, does not change the optimal decision, which continues to be to subcontract. The exception occurs in the case that the subsidiary stands as more efficient than the subcontractor firm. |
| Keywords: | Foreign direct investment, International subcontracting, Moral hazard |
| JEL: | D82 F23 L24 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:por:cetedp:0506&r=bec |
| By: | Balling, Morten (Department of Business Studies); Holm, Claus (Department of Business Studies); Poulsen, Thomas (Department of Business Studies) |
| Abstract: | Can corporate governance ratings reduce problems of asymmetric information between companies and investors? To answer this question, we set out to examine the information basis for providing such ratings by reviewing corporate governance attributes that are required or recommended in laws, accounting standards and codes, respectively. After that, we scrutinize and organize the publicly available information on the methodologies actually used by rating providers. However, important details of these methodologies are treated as confidential property, thus we approach the evaluation of corporate governance ratings as a means to reduce asymmetric information in a more general manner. We propose that the rating process may be seen as consisting of two general activities, namely a data reduction phase, and a data weighting, aggregation and classification phase. Findings based on a Danish data set suggest that rating providers by selecting relevant attributes in an intelligent way can improve the screening of companies according to governance quality. In contrast, it seems questionable that weighting, aggregation and classification of corporate governance attributes considerably improve discrimination according to governance quality |
| Keywords: | No; keywords |
| Date: | 2006–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhb:aaracc:91-005&r=bec |
| By: | Christopher Johann Kurz |
| Abstract: | This paper examines the differences in characteristics between outsourcers and non-outsourcers with a particular focus on productivity. The measure of outsourcing comes from a question in the 1987 and 1992 Census of Manufactures regarding plant-level purchases of foreign intermediate materials. There are two key findings. First, outsourcers are "outstanding." That is, all else equal, outsourcers tend to have premia for plant and firm characteristics, such as being larger, more capital intensive, and more productive. One exception to this outsourcing premia is that wages tend to be the same for both outsourcers and non-outsourcers. Second, outsourcing firms, but not plants, have significantly higher productivity growth. |
| Keywords: | Industrial productivity ; Manufactures |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2006-04&r=bec |
| By: | F. Lotti; E. Santarelli |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:461&r=bec |
| By: | Vedran Omanovic (The University of Gothenburg) |
| Abstract: | This paper is part of a larger dissertation project named: A Production of Diversity: Appearances, Ideas, Interests, Actions, Contradictions and Praxis. In this dissertation project, which is planned to be completed by the first half of 2006, I have attempted to describe, understand and analyse a process of diversity production at a large manufacturing company, which is located in Sweden and owned by a large American company (for the reason of confidentiality the name of the studied company, which is a large, technical-oriented company, has been changed and some of the information is modified, while another cannot be offered because it would expose the company. The studied manufacturing company will from now be called Diversico). My ambition with this paper is to call attention to different paradigmatical and methodological ways of understanding and studying “diversity in organizations”. A starting-point for my discussion here is an assumption that researchers, by exploring different social phenomena (including “diversity in organizations”), bring their different sets of assumptions to what the studied phenomenon is (or could be) but also at the same time make assumptions on what organizations are (or could be). In other words, researchers, by studying “diversity in organizations” (as well as other social phenomena) construct ideas of diversity by positioning this phenomenon differently, asking different questions or designing research projects differently. In that sense I try to actively engage in both showing some benefits and limits in the present literature and searching for new theoretical and methodological possibilities. In that sense, I give some empirical illustrations inspired by one of these other possibilities. More concretely, I show how my study fulfils images of diversity as actively produced and positioned significant issues, and as domination of particular sectional interests. Furthermore I give illustrations of universalization and naturalization of some aspects of diversity, as identified in the studied process of diversity production at the manufacturing company. |
| Keywords: | Diversity, Critical Theory, Social-Historical Context and Domination |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.64&r=bec |
| By: | Giulio Cainelli (Università degli Studi di Bari); Donato Iacobucci (Università Politecnica delle Marche) |
| Abstract: | Over the last few years a growing number of contributions have shown that the presence of business groups, i.e. sets of firms legally distinct but belonging to the same owner(s), is significant. From a theoretical point of view, this presence poses the question of whether the group or the single legal unit should be considered as the elementary unit in economic analysis: i.e., what is generally meant in microeconomic theory by ‘firm’. In this paper we consider the group as the appropriate unit to delimit the firm’s boundary, i.e. as the ‘observed’ organizational form adopted by firms when they grow in size. Starting from this hypothesis, the main aim of this paper is to analyse the role of structural variables, such as spatial agglomeration and technology, in determining some features of business groups’ strategy and organization. Specifically, the analysis concerns the presence and organizational specificity of business groups based on their membership of industrial districts (as a proxy for spatial agglomeration) and to the role of spatial agglomeration and technology in vertical integration strategies. To conduct the analysis, we take advantage of a new and large data-set at firm and business group level, recently developed by ISTAT (the Italian National Statistical Institute). The data-set, referring to 2001, covers all manufacturing firms organized as joint-stock companies. |
| Keywords: | Business Groups, Agglomeration, Technology, Organisation and Strategy |
| JEL: | L22 R12 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.43&r=bec |
| By: | Rikhardsson, Pall (Department of Business Studies); Rohde, Carsten (Copenhagen Business School); Rom, Anders (Copenhagen Business School) |
| Abstract: | Society is evolving from the industrial society towards the information society where information technology plays a crucial role. Few IT innovations have had as much impact on business organizations in the past years as Enterprise Systems (ES). These systems affect most functions in the organization as they support and standardize business processes, integrate data, can integrate external business partners into business processes and influence management activities such as planning and control. The main objective of this paper is to add to the limited body of knowledge of the relationship between ES and management control. We describe the changes taking place in companies operating in the information society, describe and define management control and review existing research on the relationship between management control and enterprise systems. We criticize existing management control frameworks for not recognizing the significance of information, communication and risk control in today’s operating environment. Finally, we propose a framework for viewing management control in the information society |
| Keywords: | No keywords; |
| Date: | 2005–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhb:aaracc:93-008&r=bec |
| By: | Rikhardsson, Pall (Department of Business Studies); Kræmmergaard, Pernille (Department of Business Studies) |
| Abstract: | This paper reports the results of an explorative study of six large Danish companies regarding the effects of ERP implementation and use. The study is part of a larger ERP study programme at the Aarhus School of Business. The data collection approach applied was based on interviews and management case writing. The main results show that the effects of ERP implementation and use are seldom fully predictable by management. The ERP system can be seen as an organisational actor in its own right as it to a large extent influences values, culture, behaviour, processes and procedures of other actors in the organisation. Given the complexity, size and organisational embeddedness of ERP systems, it can be said that the implementation project never ends and the ERP system becomes a significant variable in the future direction of the organisation |
| Keywords: | No keywords; |
| Date: | 2005–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhb:aaracc:93-010&r=bec |
| By: | Møller, Charles (Department of Business Studies); Kræmmergaard, Pernille (Department of Business Studies); Rikhardsson, Pall (Department of Business Studies) |
| Abstract: | This paper proposes four cornerstones of a future Information Systems curriculum. It analyzes the challenges of the IS curriculum based on the development of enterprise systems, and further argues that the practice and the research into enterprise systems have progressed to a new stage resulting in the emergence of Enterprise Systems Management (ESM). Enterprise Systems Management calls for new competences and consequently represents new challenges to the IS curriculum. The paper outlines potential teaching issues and discusses the impact on the IS curriculum. Finally the paper suggests ways of approaching the challenges. |
| Keywords: | No; keywords |
| Date: | 2006–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhb:aaracc:91-007&r=bec |