nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2012‒05‒02
eight papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. Corporate investment decisions under asymmetric information and uncertainty By Bell, Peter N
  2. The renaissance of the "renaissance man"? : specialists vs. generalists in teams of inventors By Eduardo Melero; Neus Palomeras
  3. Crowdsourcing patent application review to capitalize on innovation By Ghafele, Roya; Gibert, Benjamin; DiGiammarino, Paul
  4. Economic growth and inequality patterns in the presence of costly technology adoption and uncertainty By Ziv Chinzara; Radhika Lahiri
  5. Economic statecraft in China's new overseas special economic zones: Soft power, business, or resource security? By Brautigam, Deborah; Xiaoyang, Tang
  6. Inference of Bidders’ Risk Attitudes in Ascending Auctions with Endogenous Entry, Second Version By Hanming Fang; Xun Tang
  7. Shadow of the contract: how contract structure shapes inter-firm dispute resolution By Lumineau, Fabrice; Malhotra, Deepak

  1. By: Bell, Peter N
    Abstract: This paper develops a model to study corporate investment decisions using the principal-agent framework. The model has asymmetric information where the agent knows the true value of the company and the principal does not. The model also has uncertainty where the company is presented an investment opportunity with a certain cost and random benefit. The agent must decide whether they will sell stock to the principal and make the investment. Results show that the information asymmetry imposes a cost on the principal because the agent will forgo some profitable projects or undertake some with expected losses. A procedure for the principal to distinguish undervalued and overvalued companies is presented.
    Keywords: Decision making; Investment project; private information; uncertainty;
    JEL: D82 G30
    Date: 2012–04–18
  2. By: Eduardo Melero; Neus Palomeras
    Abstract: Is there a role for the multifaceted Renaissance Man in modern team-intensive innovation activities? This paper argues that researchers with broad knowledge, also known as generalists, make an especially valuable contribution to innovation teams. Given the re-combinative nature of technological progress, innovation results depend crucially on the skilful matching of different pieces of knowledge. The presence of generalists in innovation teams makes the knowledge recombination process more effective, even if this comes at the cost of reduced knowledge depth. Moreover, typical barriers in team processes become less acute with the presence of generalists. We analyze the role of generalists versus specialists in innovation teams by tracking the trajectories of inventors in the electrical and electronics industry through their patenting activity. Our findings suggest that innovation teams with the contribution of generalists outperform those that rely on a diverse set of specialists
    Date: 2012–01
  3. By: Ghafele, Roya; Gibert, Benjamin; DiGiammarino, Paul
    Abstract: Worldwide filings of patent applications and the ensuing invalidation requests have seen staggering growth over the last decade. The result is increasing patent backlog, deteriorating patent quality and an uncertain economic environment. Patent application review is an integral part of the examination procedures undertaken by patent offices before a patent grant is given. Prior art search is a complex and time consuming part of this process. Crowdsourcing this critical stage is a valuable opportunity to render the patent application review process more efficient. This paper describes the crowdsourcing phenomenon and then details how it can aid patent review. The open source review pilot projects of the USPTO and JPO are presented in order to assess the potential of opening prior art search to the wider community of experts and practitioners. Public-private partnerships between patent offices and companies managing online review communities are proposed as a valuable opportunity to leverage the benefits of open review while providing sufficient incentives and quality assurances to yield useful contributions.
    Keywords: Patent application review; prior art search; crowdsourcing; public-private partnerships; patent quality
    JEL: O38 O34
    Date: 2011–06
  4. By: Ziv Chinzara (QUT); Radhika Lahiri (QUT)
    Abstract: We develop a stochastic endogenous growth model to explain the diversity in growth and inequality patterns and the non-convergence of incomes in transitional economies where an underdeveloped financial sector imposes an implicit, fixed cost on the diversification of idiosyncratic risk. In the model endogenous growth occurs through physical and human capital deepening, with the latter being the more dominant element. We interpret the fixed cost as 'learning by doing' cost for entrepreneurs who undertake risk in the absence of well developed financial markets and institutions that help diversify such risk. As such, this cost may be interpreted as the implicit returns foregone due to the lack of diversification opportunities that would otherwise have been available, had such institutions been present. The analytical and numerical results of the model suggest three growth outcomes depending on the productivity differences between the projects and the fixed cost associated with the more productive project. We label these outcomes as poverty trap, dual economy and balanced growth. Further analysis of these three outcomes highlights the existence of a diversity within diversity. Specifically, within the 'poverty trap' and 'dual economy' scenarios growth and inequality patterns differ, depending on the initial conditions. This additional diversity allows the model to capture a richer range of outcomes that are consistent with the empirical experience of several transitional economies.
    Keywords: Overlapping generations model, costly technology adoption, uncertainty, economic growth, inequality
    Date: 2012–03–19
  5. By: Brautigam, Deborah; Xiaoyang, Tang
    Abstract: China's growing economic engagement with other developing countries has aroused heated debates. Yet there has been relatively little research on when, how, and why the Chinese state intervenes in the overseas economic activities of its firms. We examine China's program to establish overseas special economic zones as one tool of Beijing's economic statecraft. We trace the process by which they were established and implemented, and we investigate the characteristics of the 19 initial zones. China's state-sponsored economic diplomacy in other developing countries could play three major strategic roles: strengthening resource security, enhancing political relationships and soft power, and boosting commercial opportunities for national firms. We conclude that even in countries rich in natural resources, the overseas zones are overwhelmingly positioned as commercial projects and represent a clear case of the international projection of China's developmental state. In Africa (but not generally elsewhere), they also enhance China's soft power.
    Keywords: Chinese outward investment, economic statecraft, overseas economic zones, soft power,
    Date: 2012
  6. By: Hanming Fang (Department of Economics, University of Pennsylvania); Xun Tang (Department of Economics, University of Pennsylvania)
    Abstract: Bidders’ risk attitudes have important implications for sellers seeking to maximize expected revenues. In ascending auctions, auction theory predicts bid distributions in Bayesian Nash equilibrium does not convey any information about bidders' risk preference. We propose a new approach for inference of bidders’ risk attitudes when they make endogenous participation decisions. Our approach is based on the idea that bidders' risk premium - the difference between ex ante expected profits from entry and the certainty equivalent - required for entry into the auction is strictly positive if and only if bidders are risk averse. We show bidders' expected profits from entry into auctions is nonparametrically recoverable, if a researcher observes the distribution of transaction prices, bidders' entry decisions and some noisy measures of entry costs. We propose a nonparametric test which attains the correct level asymptotically under the null of risk-neutrality, and is consistent under fixed alternatives. We provide Monte Carlo evidence of the finite sample performance of the test. We also establish identification of risk attitudes in more general auction models, where in the entry stage bidders receive signals that are correlated with private values to be drawn in the bidding stage.
    Keywords: Ascending auctions, Risk attitudes, Endogenous entry, Nonparametric Test, Bootstrap
    JEL: D44 C12 C14
    Date: 2011–05–28
  7. By: Lumineau, Fabrice; Malhotra, Deepak
    Abstract: This paper investigates how contract structure influences inter-firm dispute resolution processes and outcomes by examining a unique dataset consisting of over 150,000 pages of documents relating to 102 business disputes. We find that the level of contract detail affects the type of dispute resolution approach that is adopted when conflict arises, and that different approaches are associated with different costs for resolving the dispute. We also find that the effect of contract choice on dispute resolution approach is moderated by the degree of coordination required in the relationship, and that the effect of dispute approach on costs is moderated by the degree of power asymmetry between the parties. Thus, even after controlling for various attributes of the exchange relationship and the dispute, the choice of contracting structure has important strategic implications.
    Keywords: Contractual Governance; Disputes; Framing; Interest-Based Negotiation and Rights-Based Negotiation; Control and Coordination; Power
    JEL: L14 K40 K42 L22 K41 M10
    Date: 2011
    Abstract: We open up the black box of learning from experience by building upon the emerging stream of research on learning from performance feedbacks. We go beyond prior research that has regarded experience as a homogenous construct by introducing and theorizing three specific attributes of experience: the quantity of performance feedbacks, the incompleteness of performance feedbacks and the proportion of negative performance feedbacks. We test specific hypotheses regarding the joint impact of these three factors on performance using a novel, proprietary dataset relating to the private equity industry. Largely in line with our expectations, we find that performance feedbacks quantity and incompleteness have a negative impact on performance, and that these negative impacts are alleviated by the proportion of negative performance feedbacks received.
    Date: 2012–02

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