nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2011‒09‒05
six papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. Capital Allocation and Delegation of Decision-Making Authority within Firms By John R. Graham; Campbell R. Harvey; Manju Puri
  2. Risk Aversion or Risk Management?: How Measures of Risk Aversion Affect Firm Entry and Firm Survival By Cho, In Soo; Orazem, Peter
  3. Real Effort, Real Leisure and Real-time Supervision: Incentives and Peer Pressure in Virtual Organizations. By Brice Corgnet; Roberto Hernán-González; Stephen Rassenti
  4. Executive Coaching: An Emerging Role for Management Consultants By John L. Bennett; Mary Wayne Bush
  5. Evaluación económica del proyecto “Sistema Estratégico de Transporte Público de Pasajeros para la Ciudad de Pasto” By César Alberto Arcos Tiuso; Luis David Pulido Blasi; Abel Antonio Rincón Mesa; Ricardo Andrés Molina Suárez
  6. The Link between Innovation and Productivity in Estonia’s Service Sectors By Priit Vahter; Jaan Masso

  1. By: John R. Graham; Campbell R. Harvey; Manju Puri
    Abstract: We survey more than 1,000 CEOs and CFOs to understand how capital is allocated, and decision-making authority is delegated, within firms. We find that CEOs are least likely to share or delegate decision-making authority in mergers and acquisitions, relative to delegation of capital structure, payout, investment, and capital allocation decisions. We also find that CEOs are more likely to delegate decision authority when the firm is large or complex. Delegation is less likely when the CEO is particularly knowledgeable about a project, when the CEO has an MBA degree or long tenure, and when the CEO's pay is tilted towards incentive compensation. We study capital allocation in detail and learn that most companies allocate funds across divisions using the net present value rule, the reputation of the divisional manager, the timing of a project‟s cash flows, and senior management's "gut feel." Corporate politics and corporate socialism are more important allocation criteria in foreign countries than in the U.S.
    JEL: G30 G32 G34 L20 L22
    Date: 2011–08
  2. By: Cho, In Soo; Orazem, Peter
    Abstract: The link between measured risk aversion and the decision to become an entrepreneur is well established, but the link between risk preferences and entrepreneurial success is not. Standard theoretical models of occupational choice under uncertainty imply a positive correlation between an individual’s degree of risk aversion and the expected return from an entrepreneurial venture at the time of entry. Because the expected return is the risk neutral equivalent value, a higher expected return implies a higher survival probability, and so more risk averse entrepreneurs should survive more frequently than their less risk averse counterparts. We test that prediction using successive entry cohorts of young entrepreneurs in the National Longitudinal Survey of Youth 1979 (NLSY79). The empirical results soundly reject the prediction: the most successful entrepreneurs are the least risk averse. This surprising finding calls into question the interpretation of common measures of risk aversion as measures of taste for risk. Instead, measured risk attitudes perform as if they are indicators of entrepreneurial ability– the least risk averse are apparently those who can best assess and manage risks. Indeed, our interpretation is consistent with the work of recent experimental studies that find that the less risk averse have higher cognitive ability.
    JEL: J24 L24 M1
    Date: 2011–08–24
  3. By: Brice Corgnet (Economic Science Institute, Chapman University); Roberto Hernán-González (Economic Science Institute, Chapman University); Stephen Rassenti (Economic Science Institute, Chapman University)
    Abstract: We propose a novel approach to the analysis of organizations by developing a computerized platform that reproduces relevant features of existing organizations such as real-effort tasks and real-leisure alternative activities (Internet). In this environment, we find strong incentives effects as organizations using individual incentives significantly outperform those relying on team incentives. Combining real-time peer monitoring with team incentives, we report striking evidence of positive peer effects as production increases by 50% and Internet usage decreases by 54% compared with organizations using team incentives alone. Peer monitoring allows virtual organizations using team incentives to perform as well as those using individual incentives. However, the positive effect of peer monitoring does not apply to low performers.
    Keywords: team incentives, free-riding, monitoring, peer pressure, virtual organization
    JEL: C9 D23 J0 J41
    Date: 2011
  4. By: John L. Bennett (McColl School of Business, Queens University of Charlotte); Mary Wayne Bush (Colorado Technical University)
    Abstract: Both executive coaching and management consulting are relatively new disciplines, early in their development as professions. They share ambiguous social status, lack of clearly defined and agreed-upon professional standards or accreditation criteria, and low barriers to entry. A broad range of tasks are undertaken in the name of consulting and the professional identity of management consultants is continuously evolving. This experience-based paper explores how the professional identity of management consultants incorporates or includes a role as coach, with particular respect to work with organizational change interventions.
    Date: 2011
  5. By: César Alberto Arcos Tiuso; Luis David Pulido Blasi; Abel Antonio Rincón Mesa; Ricardo Andrés Molina Suárez
    Abstract: Este trabajo presenta la evaluación financiera y económica del “Sistema Estratégico de Transporte Público de Pasajeros para la Ciudad de Pasto - SETP”. Se desarrollo una metodología para la conceptualización y estimación de los beneficios y costos. Como resultado se destaca que el proyecto requiere del aporte de la Nación y de Pasto para ser financieramente viable. Asimismo, debido a que en ciudades intermedias como Pasto los niveles de congestión existentes son bajos y los tiempos de viaje cortos, no se evidenciaron grandes beneficios en ahorros de tiempo con la implementación del SETP; pero sí beneficios importantes en ahorro de costos operativos y la generación de viajes atraídos por el sistema.
    Date: 2011–06–14
  6. By: Priit Vahter; Jaan Masso
    Abstract: The emerging literature on the characteristics of innovation processes in the service sector has paid relatively little attention to the links between innovation and productivity. In this paper we investigate how the innovation-productivity relationship differs across various subbranches of the service sector. For the analysis we use the CDM structural model consisting of equations for innovation expenditures, innovation output, productivity and exports. We use data from the community innovation surveys for Estonia. We show that innovation is associated with increased productivity in the service sector. The results indicate surprisingly that the effect of innovation on productivity is stronger in the less knowledge-intensive service sectors, despite the lower frequency of innovative activities and the results of earlier literature. Non-technological innovation only plays a positive role in some specifications, despite its expected importance especially among the service firms. An additional positive channel of the effects of innovation on productivity may function through increased exports.
    Keywords: innovation, services, productivity
    JEL: O31 O33 L80
    Date: 2011–03–01

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