nep-bec New Economics Papers
on Business Economics
Issue of 2005‒06‒19
seventeen papers chosen by
Christian Calmes
Universite du Quebec en Outaouais

  1. Reward Programs and Entry Deterrence By Lester M.K. Kwong
  2. Market Efficiency and International Linkage of Stock Prices: An Analysis with High-Frequency Data By Yoshiro Tsutsui; Kenjiro Hirayama
  3. Where in Entrepreneurship Research Heading? By Scott Shane
  4. The Impact of Interviewing Method On Measurement Error in Panel Survey Measures of Benefit Receipt: evidence from a validation study By Stephen P. Jenkins; Annette Jäckle; Peter Lynn; Emanuela Sala
  5. The Economics of Entrepreneurship: What We Know and What We Don't By Simon C Parker
  6. Entre gouvernance et leadership : la palabre et le chef By Juliette Arnal; Jean-Pierre Galavielle
  7. Monetary Transmissions Immediately after the Crisis in East Asia By Masahiro Enya; Akira Kohsaka
  8. The Comparative Statics on Asset Prices Based on Bull and Bear Market Measure By Masamitsu Ohnishi; Yusuke Osaki
  9. Two Theories of Entrepreneurship: Alternative Assumptions and the Study of Entrepreneurial Action By Sharon A. Alvarez
  10. Internal Auditor’s Perception about their Role in Risk Management Comparison between Belgian and US Companies By G. SARENS; I. DE BEELDE
  11. Entrepreneurship and Innovation By Zoltan J. Acs; David B. Audretsch
  12. How to Catch Foreign Fish? FDI and Privatisation in EU Accession Countries By B. MERLEVEDE; K. SCHOORS
  13. Explaining the Distribution of Firms Growth Rates By Giulio Bottazzi; Angelo Secchi
  14. Porter and Weihrich: Two Faces of a Strategic Matrix for Developing the Portuguese Molds Industry By João Leitão; Carlos Deodato
  15. Outsourcing bij Vlaamse Ondernemingen: een Exploratief Onderzoek By P. EVERAERT; G. SARENS
  16. China Business: Experiential Viewpoints and Approaches By Kiyoshi Urakami
  17. Les fondements économiques de la gratuité des biens et services informationnels. Financement indirect et investissement en gratuité By Françoise Vasselin

  1. By: Lester M.K. Kwong (Department of Economics, Brock University)
    Abstract: This paper seeks to endogenize consumer switching costs by considering simple reward programs in the form of a price discount on future purchases for current consumers to a firm. In a two period model with a more cost efficient potential entrant, we show that for sufficiently low entry costs, the introduction of a reward program by an incumbent is never optimal. For intermediate values of the entry cost, there exists a bounded interval of rewards under which entry can be successfully deterred. Nevertheless, the desirability for the incumbent to preclude entry is solely contingent on the relative cost efficiency of the entrant.
    Keywords: Reward and Loyalty programs, Barrier to Entry, Entry deterrence, Switching Costs
    JEL: D4 L13
    Date: 2004–08
  2. By: Yoshiro Tsutsui (Institute of Social and Economic Research, Osaka University); Kenjiro Hirayama (School of Economics, Kwansei Gakuin University)
    Abstract: This paper uses one-minute returns on the TOPIX and S&P500 to examine the efficiency of the Tokyo and New York Stock Exchanges. Our major finding is that Tokyo completes reactions to New York within six minutes, but New York reacts within fourteen minutes. Dividing the sample period into three subperiods, we found that the efficiency has improved and the magnitude of reaction has become larger over the period in both markets. The magnitude of response in New York to a fall in Tokyo is roughly double that of a rise.
    Keywords: international linkage, stock prices, market efficiency, high frequency data
    JEL: G14 G15 F36
    Date: 2003–01
  3. By: Scott Shane
  4. By: Stephen P. Jenkins (Institute for Social and Economic Research); Annette Jäckle (Institute for Social and Economic Research); Peter Lynn (Institute for Social and Economic Research); Emanuela Sala (Institute for Social and Economic Research)
    Abstract: This article is concerned with measurement error in panel survey reports of social security benefit receipt. Our aims are two-fold. First, we attempt to quantify the extent of measurement error and to identify its correlates. Second, we assess the extent to which this varies according to the questioning method used. Specifically, dependent interviewing has been proposed as a way to reduce under-reporting in some circumstances and we compare two versions of dependent interviewing (DI) with traditional independent interviewing in an experimental design. We use data from a large-scale UK household panel survey and we consider six benefits. To assess the measurement error, a validation exercise was conducted, with administrative data on benefit receipt matched at the individual level to the survey micro data.
    Keywords: Measurement error, dependent interviewing, longitudinal data quality, panel data
    Date: 2004–12
  5. By: Simon C Parker
    Abstract: This introductory, non-technical, article offers a reflective overview of what Economics adds to our understanding of entrepreneurship. It is designed primarily to showcase to young entrepreneurship scholars several interesting research questions and a toolbox of methods to answer them. First, I will illustrate the kinds of questions that can be posed and answered using Economics. Then I will present and discuss a selective list of "canonical" theoretical and empirical models that form the intellectual bedrock of the Economics of Entrepreneurship. After that, I present and discuss some well-established theoretical contributions and empirical findings that have been generated by the approach. I conclude by discussing aspects of "What we don't know" and should. This part of the article identifies several ideal future trends in research that build on and complement the foundations of entrepreneurship that are delineated in the main body of the article.
  6. By: Juliette Arnal (LESSOR - UniversitŽ Rennes II et MATISSE); Jean-Pierre Galavielle (MATISSE)
    Abstract: The question concerning the domain covered by entreprise governance has not been definitely settled and neither has the question of the dividing line between governance and leadership. Thus, the real issue is the interpretation of governance to-day. Does it have to be confronted with that other mode of management which is leadership ? Actually, the dividing line does not seem to be definitive. This remark appears to be all the more realistic as the decisions taken daily by entreprise refer simultaneously to social and societal dimensions. Furthermore, embedded in those two logics, the government of material objects is frequently opposed to the government of people. Thus, it seems adequate to juxtapose the "law of the market" and a possible responsibility of leading employees. Finally, it appears that confidence plays the part of mediator between governance and leadership, which explains the emergence of a certain number of instruments of ethical codifications, codes of conduct and norms.
    Keywords: Economic ethics, governance, leadership, social and societal responsibility, enterprise citizenship, confidence, codes, deontology.
    JEL: D2 D6 I3 K3 M14
    Date: 2004–04
  7. By: Masahiro Enya (Faculty of Politics, Economics and Law Osaka International University); Akira Kohsaka (Osaka School of International Public Policy, Osaka University)
    Abstract: We examine dynamic patterns of macroeconomic variables in East Asia immediately after the Asian financial crisis. Particularly, focusing on East Asia, we can identify their distinctive features from those of aggregate cross-country results. Also, we check with the financial crises in East Asia in the 1980s in order to make sure to what extent the contrast between the aggregate cross-country results and that of the Asian financial crisis comes from differences in time (external environment) or in country structure or both. Some distinctive features in East Asia include higher real interest rates in the crisis year, persistent output as well as investment slowdown, and different behaviors of trade and fiscal surpluses after the crisis. The results suggest that initial monetary tightening be responsible for the unexpectedly serious recession and that favorable external conditions and fiscal stimulus did contribute to the post-crisis real recovery even without credit recoveries.
    Keywords: macroeconomic dynamics, East Asia, financial crisis
    JEL: E5 O11 O53
    Date: 2004–03
  8. By: Masamitsu Ohnishi (Graduate School of Economics, Osaka University; Daiwa Securities Chair, Graduate School of Economics, Kyoto University); Yusuke Osaki (Graduate School of Economics, Osaka University)
    Abstract: For single?period complete financial asset markets with representative investors, we introduce a bull market measure for uncertain state occurrence and its associated ordering between representative investors in markets based on their marginal rate of substitution between equilibrium consumption allocations among possible states. These concepts combine and generalize the likelihood?ratio?dominance relation between probability prospects of state occurrence and the Arrow?Pratt ordering of risk aversion in expected utility settings. By analyzing the comparative statics for bull market effects on equilibrium asset prices, we derive some monotone properties of the risk?free rate and discounted prices of dividend?monotone assets.
    Keywords: Equilibrium Derivative Price, First-order Stochastic Dominance, Noise Risk, Risk-Neutral Probability.
    JEL: C65 D51 D81 G12
    Date: 2004–05
  9. By: Sharon A. Alvarez
    Abstract: In addition to a number of quantitative studies in this area, this study wants firstly to elaborate in a complementary qualitative way how internal auditors perceive their current role in risk management within the Belgian context where internal auditing is a relatively young profession. Secondly, we want to investigate whether, under the influence of recent changes in corporate governance regulations, a greater financial emphasis in internal auditors’ work can be noticed. Thirdly, we are interested in differences between Belgian companies and Belgian subsidiaries of US companies with relation to internal auditors’ role in risk management. In order to get adequate data, we interviewed 10 Chief Audit Executives and collected relevant documents. The data reveal that the specific content of internal auditors’ role in risk management is very time and country specific. For the Belgian companies, internal auditors’ focus on acute shortcomings in the risk management system creates opportunities to demonstrate their value in the short run. Internal auditors are playing a pioneering role in the creation of a higher level of risk and control awareness and a more formalised, standardised, transparent and documented risk management system. In the Belgian subsidiaries of US companies, internal auditors’ objective evaluations and opinions are a valuable input for the new internal control review and disclosure requirements mentioned in the Sarbanes Oxley Act. Moreover, an enhanced attention for financial controls and the quality of financial reporting was noticed within these companies.
    Keywords: internal auditors, risk assessment, risk management, risk and internal control communication, Sarbanes Oxley Act, interviews
    Date: 2005–04
  11. By: Zoltan J. Acs; David B. Audretsch
    Abstract: In a partial adjustment framework the observed FDI stock is the result of two driving forces. First, the stock converges towards its equilibrium level, even without policy changes. Second, the equilibrium level itself is driven by changes in its determinants. By means of a dynamic panel data analysis we examine the determinants of investment by ‘old’ EU-members in ten countries of Central and Eastern Europe. We find a rapid adjustment towards equilibrium. Traditional variables, such as market potential, trade integration, and relative unit labour costs, are fairly stable as determinants of equilibrium FDI stocks in transition economies. Institutional development in all its forms is a robust determinant of the optimal level of FDI. The relationship between FDI and the privatization process is complex. Non-direct privatization schemes negatively affect the speed of adjustment towards the equilibrium, whereas current direct privatization strategies positively affect the equilibrium level of FDI. Privatization history increases equilibrium FDI, independently of the method applied.
    Keywords: foreign direct investment, privatisation, partial adjustment
    JEL: F20 F23 P33
    Date: 2005–06
  13. By: Giulio Bottazzi; Angelo Secchi
    Abstract: Empirical analyses on aggregated datasets have revealed a common exponential behavior in the shape of the probability density of the corporate growth rates. We present clearcut evidence on this topic using disaggregated data. We explain the observed regularities proposing a model in which the firms’ ability of taking up new business opportunities increases with the number of opportunities already exploited. A theoretical result is presented for the limiting case in which the number of firms and opportunities go to infinity. Moreover, using simulations, we show that even in a small industry the agreement with asymptotic results is almost complete.
  14. By: João Leitão (Universidade da Beira Interior); Carlos Deodato (Universidade da Beira Interior)
    Abstract: The Portuguese producers of Molds are in its majority of small or medium dimension, competing in highly competitive international markets and using processes, which incorporate new technologies. The present study aims to identify the strategic quadrants for developing the Portuguese Molds Industry, in order to overcome the growing competition originated by the producers located in East Europe, and in Asia. In this sense, a strategic diagnosis is made, using, in first place, the model of the five competitive forces of Porter (1986) and, in second place, the TOWS Matrix of Weihrich (1982). Through the identification of the five competitive forces, we find out that the suppliers have a considerable bargaining power, and that the threat of new enters doesn't exercise great pressure on the industry, in analysis. Furthermore, the determinants of the rivalry are strong, whereas the threat for substitutes is weak. According to the application of the TOWS Matrix, we retain that this industry presents a good competitive positioning in the international markets; nevertheless, she has to bet in the formation of a specialized labour force, and in the promotion of a trade mark image, in order to increase the market power, and to overcome the direct competitors.
    Keywords: Clusters, Competitive Strategy, Molds.
    JEL: M20 M21
    Date: 2005–06–14
    Abstract: In deze paper onderzoeken we hoe Vlaamse bedrijven beslissen over outsourcing. In dit verkennende onderzoek komen volgende aspecten aan bod: (1) de soort activiteiten die worden uitbesteed, (2) de voornaamste drijfveren om aan outsourcing te doen, (3) de gepercipieerde risico’s verbonden aan outsourcing, en (4) het verloop van het outsourcingsproces. De resultaten zijn gebaseerd op een vragenlijst, afgenomen bij 35 grote productiebedrijven, gevestigd in Vlaanderen. De resultaten tonen dat vooral activiteiten worden uitbesteed met een lage strategische waarde (zoals drukwerk, transport, loonadministratie, onderhoud, ...) wat overeenstemt met internationaal onderzoek (o.a. Quinn en Hilmer, 1994). Strategisch belangrijke activiteiten (zoals netwerkbeheer, onderzoek en ontwikkeling, productie) worden momenteel niet (of nauwelijks) uitbesteed en worden ook niet in aanmerking genomen voor de toekomst. Als voornaamste redenen om aan outsourcing te doen worden kostenbeheersing en verhoogde flexibiliteit aangehaald. De respondenten schatten het negatieve sociale klimaat in als voornaamste risico van outsourcing. Ondanks het feit dat kostenbeheersing reden nummer één is om aan outsourcing te doen, vinden Vlaamse ondernemingen het aangeboden kwaliteitsniveau iets belangrijker dan de te betalen prijs bij de selectie van een geschikte leverancier. Het hele selectieproces duurt gemiddeld genomen twee maanden en twee derde van de respondenten maakt gebruik van meerdere leveranciers.
    Keywords: uitbesteden, outsourcing, Vlaamse ondernemingen, exploratief onderzoek
    JEL: M10 M55
    Date: 2005–05
  16. By: Kiyoshi Urakami (Urakami Asia Management Research)
    Abstract: Asian business has undergone substantial changes with the emergence of China. This paper aims at describing general trends in China business strategies being sought and followed by the Japanese multinationals in the electronics industry based on the authorfs practical business experiences with Hitachi, Ltd. in the region. One of the objectives of the paper is to document the authorfs experiential viewpoints and approaches.
    Keywords: Regional headquarters, Greater China region, Market place, Full ownership business
    JEL: F1 F2
    Date: 2005–06–12
  17. By: Françoise Vasselin (MATISSE)
    Abstract: Usually, an economic good isn't available gratuitously, but the case of information goods and services (IGS) is specific. Their intrinsic properties allow zero prices that is unconceivable for the others economic private goods. The gratuitousness is not the aim of productive activity ; it results from private choices we can group into two innovative generic models. On the one hand, the indirect financing of gratuitousness for information services is based on natural factors of gratuitousness inherent in information. On the other hand, the offer strategy of information goods uses potential factors of gratuitousness linked to their production and their distribution. These models are founded on the information valorisation, the getting round of intellectual property rights, opportunity cost and sacrifice of margins that constitute the economic foundations of gratuitousness of IGS.
    Keywords: Information goods and services, free, economies of scale, externalities, rivalry, exclusion, appropriation, strategy, financing, investment
    JEL: D62 H41 M2
    Date: 2005–03

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