|
on Business Economics |
| By: | Riccardo Calcagno; Florian Heider |
| Abstract: | This paper examines the role of trading and liquidity in a large competitive market with dispersed heterogenous information on market-based managerial compensation. The paper recognizes the endogenous nature of a firm’s stock price - it is the outcome of self-interested speculative trading motivated by imperfect information about future firm value. Using the stock price as performance measure means bench-marking the manager’s performance against the market’s expectation of that performance. We obtain two main results: first, the degree of market-based compensation is proportional to the market depth, which is a measure of the ease of information trading. Secondly, using the dynamic trading model of Vives (1995) we show that if the investment horizon of informed traders decreases, at equilibrium the managerial e.ort reduces, and the optimal contract prescribes stock-compensation with longer vesting period. |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:cte:wbrepe:wb046224&r=bec |
| By: | Baalen, P.J. van; Karsten, L. (Erasmus Research Institute of Management (ERIM), Erasmus University Rotterdam) |
| Abstract: | In this paper we provide an alternative explanation for the rise of modern management schools at the turn of the 20th century. We argue that these schools were not just responses of the higher education system to the demand of industrializing companies for a new class of professional managers, like Chandler suggests. Based on our historical research we found that the struggle for emancipation of the new professions (engineers and accountants) was the main driver for the founding of these schools. Management schools were viewed as the main vehicles to raise the social status of these new professions. To legitimize their position in the higher education system, abstraction appeared to be the dominant strategy of the professions. By abstraction they could distinguish themselves from the lay public and other professional groups in the domain of management. At the moment the new professions had a foot in the higher education system the engineers and the accountants contested for the new management domain. Abstraction appeared also the successful strategy of the accountants to distinguish themselves from the engineers and to establish a sound base for the development of the Dutch variant of business economics. |
| Keywords: | Business schools;management education;professions;history of business schools;higher education; |
| Date: | 2004–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:30001964&r=bec |
| By: | Hoffmann, A.O.I.; Teerling, M.L. (Groningen University) |
| Abstract: | We are all influenced by the people whom surround us, i.e. our social network. So actually, to what extent do these social networks influence a consumers shopping behavior? Moreover are there differences in the strength of influence and to what level of consumers values does the influence of a social network stretch? We study the influence of two concepts of the social network, namely network expectations and the importance of so called hubs on the consumer value attitude system and store loyalty. The results show stronger global and domain specific values for hubs as well as a strong influence of the network expectations on the evaluation of store attributes as well as on store loyalty. |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:rugsom:04b17&r=bec |
| By: | Bosch-Sijtsema, P.; Postma, T.J.B.M. (Groningen University) |
| Abstract: | The knowledge-based view (KBV) of firms has received increasingly attention. A relatively unexplored area is knowledge transfer in project-based industries (PBIs). Traditional project management literature relies upon combining expertise from several internal and external parties in order to deliver their own capabilities in a one-off process. Due to the unique character of projects, knowledge of projects is difficult to transfer. Furthermore, the short-term perspective and fluctuating partners make it harder to develop new knowledge in cooperation with parties in the network. This paper aims at developing a conceptual framework for investigating innovation in PBI from a network perspective. We discuss knowledge properties of the project-based organization (PBO) and its network, governance relationships that affect the knowledge transfer and the impact of the industry context on knowledge transfer and innovation performance. We present illustrations from the construction industry and end with a set of propositions. |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:rugsom:04b18&r=bec |
| By: | Loo,Jasper B.,van; Toolsema,Bert (ROA rm) |
| Abstract: | Notwithstanding an impressive research tradition on key skills, no clear statistical criterion exists that is suitable to determine which skills may be considered key skills. This contribution proposes one possible methodology that can be used to identify key skills. Proposing an economic definition of the key skill concept and by disentangling the direct and indirect effects of skills on productivity, we develop an empirical criterion for the identification of key skills. We apply this methodology to a dataset of employed vocational education graduates. We find that problem-solving skills, independence, oral presentation/speaking skills, accuracy/carefulness and initiative/creativity may be considered key skills |
| Keywords: | education, training and the labour market; |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umaror:2004004&r=bec |
| By: | C. Mirjam van Praag (Faculty of Economics and Econometrics, Universiteit van Amsterdam); Justen van der Sluis (Faculty of Economics and Econometrics, Universiteit van Amsterdam); Arjen van Witteloostuijn (University Groningen, and University of Durham) |
| Abstract: | In the management literature, the locus-of-control concept has been applied extensively over the past three decades. This research note reports the results of a panel data study among a representative sample of 6,111 US young citizens who have been interviewed on a regular basis over a period of about two decades. In addition to this, various relevant personality traits and parental background characteristics have been administered before the first wave and before these young people started working. By analyzing this panel dataset, we offer three contributions to the locus-of-control literature. First, we test for the robustness of the locus-of-control effect on individual performance (in terms of hourly earnings) in the context of this impressive panel data context. Second, we explore whether or not the performance impact of the locus-of-control personality trait is different for employees vis-à-vis entrepreneurs. Third, we check whether the performance effect of an individual’s locus-of-control score interacts with her or his level of education. Our findings reveal that internality affects earnings positively, that this effect is stronger for entrepreneurs, and that education positively interacts with internality. |
| Keywords: | Entrepreneur; self-employment; earnings; return to education; locus-of-control; personality |
| JEL: | M13 J24 J31 N3 C33 |
| Date: | 2004–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20040130&r=bec |
| By: | Calcagno,R.; Renneboog,L. (TILEC (Tilburg Law and Economics Center)) |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubtil:2004015&r=bec |
| By: | Wagner, Joachim (University of Lueneburg and IZA Bonn); Addison, John T. (University of South Carolina, GEMF, University of Coimbra and IZA Bonn); Schnabel, Claus (University of Erlangen-Nuremberg); Schank, Thorsten (University of Erlangen-Nuremberg) |
| Abstract: | Using quantile regressions and a rich cross section data set for German manufacturing plants, this paper reports that the impact of works councils on labor productivity varies along the conditional distribution of value added per employee. It emerges that the positive and statistically significant effect of works council presence estimated by ordinary least squares now vanishes for large parts of this distribution. According to our results, such an effect can only be detected in plants at the top end of the conditional productivity distribution – plants that can be considered ‘over achievers.’ We would speculate that this might be because only highly competent managers can cooperate with a works council in a way that much enhances productivity. |
| Keywords: | labor productivity, works councils, quantile regressions, heterogeneous firms |
| JEL: | J50 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1414&r=bec |
| By: | Buddelmeyer, Hielke (Melbourne Institute of Applied Economic and Social Research and IZA Bonn); Mourre, Gilles (ECFIN, European Commission); Ward, Melanie (European Central Bank, CEPR and IZA Bonn) |
| Abstract: | A growing part-time employment share has been a main feature of a number of industrialized countries over the past two decades. A considerable variation in the rate of part-time work is evident by gender, age group, industrial sector and occupation. The stylized facts support the view that part-time employment represents an important opportunity particularly for young, older and female workers to enter the labour markets of the European Union. For the majority of workers in these groups, the decision to work part-time has been a voluntary one, which is all the more satisfactory in terms of welfare maximization. Our results indicate that the development of the part-time employment rate over time and the strong variation in the PTR across countries are significantly affected by policy and institutions. In particular policy measures geared toward encouraging part-time work are found to be positively related to actual part-time developments. These measures include both the legal framework directly affecting part-time positions and the creation of financial incentives (subsidies and improvement of social protection) to take up a part-time job. Moreover, other labour market institutions, including benefit systems and the stringency of employment protection legislation for regular contracts, are found to significantly but indirectly influence the growth in part-time work. |
| Keywords: | part-time employment, labour supply, labour market policies, institutions, regulations, subsidies |
| JEL: | J21 J22 J28 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1415&r=bec |
| By: | Card, David (University of California, Berkeley and IZA Bonn); de la Rica, Sara (DFAEII, Universidad del País Vasco) |
| Abstract: | In Spain, as in several other European countries, sectoral bargaining agreements are automatically extended to cover all firms in an industry. Employers and employees can also negotiate firm-specific contracts. We use a large matched employer-employee data set to study the effects of firm-level contracting on the structure of wages. Employees covered by firm-specific contracts earn about 10 percent more than those covered by sectoral contracts. The estimated premium is about the same for men in different skill groups, but higher for more highly skilled women, suggesting that firm-level contracts raise wage inequality for women. At the establishment level, we compare average wages under firm-level and sectoral bargaining, controlling for the propensity to negotiate a firm-specific contract. Consistent with the worker-level models, we find that firm-specific contracting raises average wages, with a pattern of effects that tends to increase inequality relative to sectoral bargaining for women. Although we cannot decisively test between alternative explanations for the firm-level contracting premium, workers with firm-specific contracts have significantly longer job tenure, suggesting that the premium is at least partially a non-competitive phenomenon. |
| Keywords: | bargaining, wage inequality, labor contracts |
| JEL: | J31 J51 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1421&r=bec |
| By: | Morten Bennedsen (Copenhagen Business School); Hans Christian Kongsted (Institute of Economics, University of Copenhagen); Kasper Meisner Nielsen (Centre for Economic and Business Research, Copenhagen) |
| Abstract: | Previous work on board size effects in closely held corporations has established a negative correlation between board size and firm performance. We argue that this work has been incomplete in analysing the causal relationship due to lack of ownership information and weak identification strategies in simultanous equation analysis. In the present paper we reexamine the causal relationship between board size and firm performance using a dataset of more than 5,000 small and medium sized closely held corporations with complete ownership information and detailed accounting data. We test the potential endogeneity of board size by using a new instrument given by the number of children of the founders of the firms. Our analysis shows that board size can be taken as exogenous in the performance equation. Furthermore, based on a flexible model specification we find that there is no empirical evidence of adverse board size effects in the typical range of three to six board members. Finally, we find a significantly negative board size effect in the minority of closely held firms which have comparatively large boards of seven or more members. |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuieca:2004_25&r=bec |
| By: | Herbert Schuetze; Peter Khun |
| Abstract: | Self-employment has risen dramatically in Canada, accounting for a disproportionate share of job growth since the 1980's. Using hitherto-unexploited information on labour force transitions from 13 waves of the Survey of Consumer Finances between 1982 and 1995, we show that the changes in transition patterns underlying these increases were very different for women and men. For women, most of the increase in self-employment is attributable to an increase in their retention rates in self-employment. For men, most is attributable to a decrease in the stability of paid employment, i.e. a rise in transitions from employment to non-employment. This generates an increase in self-employment because non-employed men are much more likely than employed men to enter self-employment. Changes in demographic characteristics account for very little of these altered transition probabilities. Somewhat paradoxically, self-employment thus rose both in secularly improving (women’s) and deteriorating (men’s) labour markets, due to different changes in the underlying transition processes. |
| Date: | 1999–05 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:deptwp:1999-05&r=bec |
| By: | B. VINDEVOGEL; D. VAN DEN POEL; G. WETS |
| Abstract: | In this research we use the framework of market-basket analysis and techniques from modern multivariate time-series analysis to measure and explain the dynamic impact of a price promotion on the sales of a complementary product. The large scale of this research enables us to derive empirical generalizations. We contribute to the literature in drawing the following conclusions: Firstly, we illustrate that using an intense promotion strategy, characterized by deeper and more frequent price promotions, has a negative impact on the cross-price effect. Secondly, we show that using the same brand name (umbrella branding) for two complements has a beneficial influence on the cross-price effect. Finally, we show that price levels of the products are important moderators in explaining persistent cross-price effects. |
| Keywords: | Empirical generalizations; market-basket analysis; cross-price elasticities; promotion strategy; multivariate time-series techniques; retailing. |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:04/276&r=bec |
| By: | Cristina Giménez; Helena Ramalhinho-Lourenço |
| Abstract: | This paper analyses the interaction of two topics: Supply Chain Management (SCM) and Internet. Merging these two fields is a key area of concern for contemporary managers and researchers. They have realized that Internet can enhance SCM by making real time information available and enabling collaboration between trading partners. The aim of this paper is to define e-SCM, analyze how research in this area has evolved during the period 1995-2003 and identify some lines of further research. To do that a literature review in prestigious academic journals in Operations Management and Logistics has been conducted. |
| Keywords: | E-supply chain management, internet, e-logistics, literature review |
| JEL: | L29 M10 M11 |
| Date: | 2004–09 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:769&r=bec |
| By: | Juan José Ganuza |
| Abstract: | Most cases of cost overruns in public procurement are related to important changes in the initial project design. This paper deals with the problem of design speciffication in public procurement and provides a rationale for design misspeciffication. We propose a model in which the sponsor decides how much to invest in design speciffication and awards competitively the project to a contractor. After the project has been awarded the sponsor engages in bilateral renegotiation with the contractor, in order to accommodate changes in the initial project's design that new information makes desirable. When procurement takes place in the presence of horizontally differentiated contractors, the design's speciffication level is seen to affect the resulting degree of competition. The paper highlights this interaction between market competition and design speciffication and shows that the sponsor's optimal strategy, when facing an imperfectly competitive market supply, is to underinvest in design speciffication so as to make signifficant cost overruns likely. Since no such misspeciffication occurs in a perfectly competitive market, cost overruns are seen to arise as a consequence of lack of competition in the procurement market. |
| Keywords: | Cost overruns, procurement contracts, strategic ignorance |
| JEL: | L51 H57 D44 |
| Date: | 2003–10 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:772&r=bec |
| By: | Lionel Martellini; Branko Urosevic |
| Abstract: | Executive compensation packages are often valued in an inconsistent manner: while employee stock options (ESOs) are typically valued ex-ante, cash bonuses are valued ex-post. This renders the existing valuation models of employee compensation packages theoretically unsatisfactory and, potentially, empirically distortive. In this paper, we propose an option-based framework for ex-ante valuation of cash bonus contracts. After obtaining closed-form expressions for ex-ante values of several frequently used types of bonus contracts, we utilize them to explore the e¤ects that the shape of a bonus contract has on the executive’s attitude toward risk-taking. We, also, study pay-performance sensitivity of such contracts. We show that the terms of a bonus contract can dramatically impact both risk-taking behavior as well as pay-performance incentives. Several testable predictions are made, and venues of future research outlined. |
| Keywords: | Executive compensation, cash bonus, incentives, risk-taking behavior |
| JEL: | J33 G13 |
| Date: | 2003–12 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:784&r=bec |
| By: | Stephen Dakin (University of Canterbury - Christchurch - New Zealand); JS Armstrong (The Wharton School - University of Pennsylvania) |
| Abstract: | A survey was conducted of New Zealand personnel consultants. Their beliefs about the validity of various selection tools and their claimed usage of these tools was then compared with the validities in a previously published meta-analysis. The experts claimed to use the predictors they believed to be most valid. However, their beliefs about validity were unrelated to empirically demonstrated validities (Spearman's rho = -0.06). Suggestions were made on the types of research that are needed to improve predictive ability in selection and on the ways in which practitioners can use existing research. |
| Keywords: | Employee selection, Forecasting, Job performance, Predictor validity, Research vs. expert opinion. |
| JEL: | A |
| Date: | 2004–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpgt:0412005&r=bec |
| By: | JS Armstrong (The Wharton School - University of Pennsylvania) |
| Abstract: | In the work of Armstrong (Journal of Business Research, 2002), I examined empirical research on the scientific process and related these to marketing science. The findings of some studies were surprising. In this reply, I address surprising findings and other issues raised by commentators. |
| Keywords: | marketing, marketing research |
| JEL: | A |
| Date: | 2004–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpgt:0412012&r=bec |
| By: | JS Armstrong (The Wharton School - University of Pennsylvania); Roderick J. Brodie (University of Auckland, New Zealand); Andrew G. Parsons (University of Auckland, New Zealand) |
| Abstract: | We examined three approaches to research in marketing: exploratory hypotheses, dominant hypothesis, and competing hypotheses. Our review of empirical studies on scientific methodology suggests that the use of a single dominant hypothesis lacks objectivity relative to the use of exploratory and competing hypotheses approaches. We then conducted a publication audit of over 1,700 empirical papers in six leading marketing journals during 1984-1999. Of these, 74% used the dominant hypothesis approach, while 13 % used multiple competing hypotheses, and 13% were exploratory. Competing hypotheses were more commonly used for studying methods (25%) than models (17%) and phenomena (7%). Changes in the approach to hypotheses since 1984 have been modest; there was a slight decrease in the percentage of competing hypotheses to 11%, which is explained primarily by an increasing proportion of papers on phenomena. Of the studies based on hypothesis testing, only 11 % described the conditions under which the hypotheses would apply, and dominant hypotheses were below competing hypotheses in this regard. Marketing scientists differed substantially in their opinions about what types of studies should be published and what was published. On average, they did not think dominant hypotheses should be used as often as they were, and they underestimated their use. |
| Keywords: | marketing, marketing research, marketing science |
| JEL: | A |
| Date: | 2004–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpgt:0412013&r=bec |
| By: | JS Armstrong (The Wharton School - University of Pennsylvania); Fred Collopy (Case Western Reserve University,) |
| Abstract: | Managers are often advised, 'beat your competitors,' which sometimes contrasts with the advice, 'do the best for your firm.' This may lead managers to focus on comparative measures such as market share. Drawing on game theory, the authors hypothesize that managers are competitor oriented under certain conditions, in particular, when they are provided with information about competitors' performance. Empirical studies lead to the additional hypothesis that a competitor orientation is detrimental to performance. To examine these hypotheses, the authors conduct two studies. The first is a laboratory study in which 1,016 subjects made pricing decisions. When information about the competitor's profits was provided, over 40% of the subjects were willing to sacrifice part of their company's profits to beat or harm the competitor. Such competitor-oriented behavior occurred across a variety of treatments. The second is a field study used to examine the performance over a half- century of 20 large U.S. firms with differing objectives. Firms with competitor-oriented (market, share) objectives were less profitable and less likely to survive than those whose objectives were directly oriented to profits. |
| Keywords: | management, decisions, |
| JEL: | A |
| Date: | 2004–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpgt:0412014&r=bec |
| By: | JS Armstrong (The Wharton School - University of Pennsylvania); J. Thomas Yokum (Angelo State University) |
| Abstract: | Members of professional groups were much more likely to respond to a mail survey than nonmembers who were also experts in the area (43.7% versus 13.7%). A one-dollar (U.S.) prepaid monetary incentive increased the response rates, and it was as effective for members as for nonmembers (gains of 18.6% and 15.3%, respectively). Surprisingly, the U.S. dollar monetary incentive had a greater effect on foreign than U.S. response rates (gains of 32.6% and 12.9%, respectively). |
| Keywords: | monetary incentives, marketing |
| JEL: | A |
| Date: | 2004–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpgt:0412015&r=bec |