nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2005‒11‒19
25 papers chosen by
Fabio Sabatini
Universitá degli Studi di Roma, La Sapienza

  1. The Economics of Fairness, Reciprocity and Altruism – Experimental Evidence and New Theories By Ernst Fehr; Klaus M. Schmidt
  2. How%u2019s the Job? Well-Being and Social Capital in the Workplace By John F. Heliwell; Haifang Huang
  3. The Emergence of Local Norms in Networks By Mary Burke; Gary Fournier
  4. Social norms and social choice By Anabela Botelho; Glenn W. Harrison; Lígia Pinto; Elisabet E. Rutstrom
  5. The Role of Equality and Equity in Social Preferences By Fehr, Ernst; Näf, Michael; Schmidt, Klaus M.
  6. Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes By Patrick Bayer; Stephen L. Ross; Giorgio Topa
  7. Understanding Social Capital: Its Nature and Manifestiations in Rural Canada By Bill Reimer
  8. Fairness and Contract Design By Ernst Fehr; Alexander Klein; Klaus M. Schmidt
  9. Fairness and the Optimal Allocation of Ownership Rights By Fehr, Ernst; Kremhelmer, Susanne; Schmidt, Klaus M.
  10. Hierarchy and opportunism in teams By Potters,Jan; Sefton,Martin; Heijden,Eline van der
  11. Sustainable development: How social entrepreneurs make it happen By Seelos, Christian; Mair, Johanna
  12. Neighborhood Influence and Political Change: Evidence from US School Districts By Johannes Rincke
  13. The Case for Mindless Economics By Faruk Gul; Wolfgang Pesendorfer
  14. Thy neighbour’s property. Communal property rights and institutional change in an iron producing forest district of Sweden 1630-1750 By Granér, Staffan
  15. Aversion to Inequality in Italy and its Determinants By Vincenzo Atella; Jay S. Coggins
  16. Socioeconomic Influences on the Health of Older Canadians: Estimates Based on Two Longitudinal Surveys By Neil J Buckley; Frank T Denton; A Leslie Robb; Byron G Spencer
  17. Accounting as Applied Ethics: Teaching a Discipline By Dolfsma, W.
  18. PD Games on Networks By Allen wilhite
  19. Social entrepreneurial business models: An exploratory study By Mair, Johanna; Schoen, Oliver
  20. NOVELTY OF PRODUCT INNOVATION: THE ROLE OF DIFFERENT NETWORKS By Maria Jesus Nieto; Lluis Santamaría
  21. Policy Innovation in Local Jurisdictions: Testing the Neighborhood Influence Against the Free-Riding Hypothesis By Johannes Rincke
  22. Heterogeneity and Learning in Labor Markets By Simon D. Woodcock
  23. Revealed Altruism By Jim C. Cox; Daniel Friedman; Vjollca Sadiraj
  24. FIRMS’ NETWORK FORMATION THROUGH THE TRANSMISSION OF HETEROGENEOUS KNOWLEDGE By Rainer Andergassen; Franco Nardini
  25. The Role of Turkish Immigrants in Entrepreneurial Activities in Germany By Amelie Constant; Yochanan Shachmurove; Klaus F. Zimmermann

  1. By: Ernst Fehr (Institute for Empirical Research in Economics, University of Zurich, Bluemlisalpstrasse 10, CH-8006 Zurich, Switzerland, email: efehr@iew.unizh.ch); Klaus M. Schmidt (Department of Economics, University of Munich, Ludwigstrasse 28, D-80539 Muenchen, Germany, email: klaus.schmidt@Lrz.uni-muenchen.de)
    Keywords: Behavioural Economics, Other-regarding Preferences, Fairness, Reciprocity, Altruism, Experiments, Incentives, Contracts, Competition
    JEL: C7 C9 D0 J3
    Date: 2005–06
    URL: http://d.repec.org/n?u=RePEc:trf:wpaper:66&r=soc
  2. By: John F. Heliwell; Haifang Huang
    Abstract: This paper takes a different tack in addressing one of the fundamental questions in economics: what are the factors that determine the distribution of jobs and wages? In Adam Smith’s classic formulation, and in much of the subsequent literature, wage levels have been used to estimate the values of job characteristics ("compensating" or "equalizing" differentials). There are econometric problems with this approach, principally caused by unmeasured differences in talents and aptitudes that enable people of high ability to have jobs with both high wages and good working conditions, thus understating the value of working conditions. We bypass this difficulty by estimating the extent to which incomes and job characteristics influence direct measures of life satisfaction from three large and recent Canadian surveys. The well-being results show strikingly large values for non-financial job characteristics, especially workplace trust and other measures of the quality of workplace social capital. The compensating differentials estimated for the quality of workplace social capital are so large as to suggest that they do not reflect a full equilibrium. Thus the current situation probably reflects the existence of unrecognized opportunities for managers and employees to alter workplace environments, or for workers to change jobs, so as to increase both life satisfaction and workplace efficiency.
    JEL: J31 I31 Z13
    Date: 2005–11
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:11759&r=soc
  3. By: Mary Burke; Gary Fournier
    Abstract: We develop an explanation of the emergence of local norms, and the associated phenom- enon of geographical variation in behavior. Individuals are assumed to interact locally with neighbors in an environment with a network externality. Although many patterns of behavior are possible, the dispersed interactive choices of agents are shown to select behavior that is locally uniform but globally diverse. The range of applications of the theory includes regional variation in the practice of medicine, technology choice, and corruption. The framework is also useful for further developing our understanding of important phenomena like lock-in, critical thresholds, and contagion
    Keywords: Social norms, networks, geographical variation
    JEL: C73
    Date: 2005–11–11
    URL: http://d.repec.org/n?u=RePEc:sce:scecf5:299&r=soc
  4. By: Anabela Botelho (NIMA, Universidade do Minho); Glenn W. Harrison; Lígia Pinto (NIMA, Universidade do Minho); Elisabet E. Rutstrom (University of South Carolina)
    Abstract: Experiments can provide rich information on behavior conditional on the institutional rules of the game being imposed by the experimenter. We consider what happens when the subjects are allowed to choose the institution through a simple social choice procedure. Our case study is a setting in which sanctions may or may not be allowed to encourage "righteous behavior". Laboratory experiments show that some subjects in public goods environments employ costly sanctions against other subjects in order to enforce what appears to be a social norm of contribution. We show that this artificial society is not an attractive place to live, by any of the standard social choice criteria. If it came about because of evolutionary forces, as speculated, then The Blind Watchmaker was having one of his many bad days at the workbench. In fact, none of our laboratory societies with perfect strangers matching ever chose to live in such a world. Our findings suggest that the conditions under which a group or a society would choose a constitution that is based on voluntary costly sanctions are very special.
    Date: 2005–11
    URL: http://d.repec.org/n?u=RePEc:nim:nimawp:30/2005&r=soc
  5. By: Fehr, Ernst; Näf, Michael; Schmidt, Klaus M.
    Abstract: Engelmann and Strobel (AER 2004) question the relevance of inequity aversion in simple dictator game experiments claiming that a combination of a preference for efficiency and a Rawlsian motive for helping the least well-off is more important than inequity aversion. We show that these results are partly based on a strong subject pool effect. The participants of the E&S experiments were undergraduate students of economics and business administration who self-selected into their field of study (economics) and learned in the first semester that efficiency is desirable. We show that for non-economists the preference for efficiency is much less pronounced. We also find a non-negligible gender effect indicating that women are more egalitarian than men. However, perhaps surprisingly, the dominance of equality over efficiency is unrelated to political attitudes.
    JEL: D64 D63 C92 C91 C7
    Date: 2005–02
    URL: http://d.repec.org/n?u=RePEc:lmu:muenec:725&r=soc
  6. By: Patrick Bayer (Economic Growth Center, Yale University); Stephen L. Ross (Economics Department, University of Connecticut); Giorgio Topa (Federal Reserve Bank of New York)
    Abstract: We use a novel dataset and research design to empirically detect the effect of social interactions among neighbors on labor market outcomes. Specifically, using Census data that characterize residential and employment locations down to the city block, we examine whether individuals residing in the same block are more likely to work together than those in nearby blocks. We find evidence of significant social interactions operating at the block level: residing on the same versus nearby blocks increases the probability of working together by over 33 percent. The results also indicate that this referral effect is stronger when individuals are similar in sociodemographic characteristics (e.g., both have children of similar ages) and when at least one individual is well attached to the labor market. These findings are robust across various specifications intended to address concerns related to sorting and reverse causation. Further, having determined the characteristics of a pair of individuals that lead to an especially strong referral effect, we provide evidence that the increased availability of neighborhood referrals has a significant impact on a wide range of labor market outcomes including employment and wages.
    Keywords: Neighborhood Effects, Job Referrals, Social Interactions, Social Interactions, Social Networks, Labor Supply
    JEL: J2 J3 J6
    URL: http://d.repec.org/n?u=RePEc:egc:wpaper:927&r=soc
  7. By: Bill Reimer (Concordia University)
    Abstract: This presentation discusses an interpretation and analysis of social capital that is strongly integrated into a framework of social relations. We argue that social capital is organized in four fundamental types of social relations: market, bureaucratic, associative, and communal. Each type of relation is distinguished by its own norms, rules of engagement, institutions, and control mechanisms. As a result, the processes by which social capital is created, maintained, and used will vary by each type. Using national community and household data collected as part of a research project on rural Canada (The New Rural Economy Project of the Canadian Rural Revitalization Foundation), we outline the framework, propose measures of the four types of social capital, demonstrate their multidimensional nature, and test a number of hypotheses regarding their relation to community and individual characteristics. Finally, we conclude with some theoretical and research implications for investigating rural communities and rural programs.
    Keywords: Social Capital; Measurement; Rural; Canada
    JEL: P Q Z
    Date: 2005–11–11
    URL: http://d.repec.org/n?u=RePEc:wpa:wuwpot:0511002&r=soc
  8. By: Ernst Fehr (Institute for Empirical Research in Economics, University of Zurich, Bluemlisalpstrasse 10, CH-8006 Zurich, Switzerland, email: efehr@iew.unizh.ch and Collegium Helveticum, Schmelzbergstrasse 25, CH-8092 Zürich, Switzerland); Alexander Klein (Department of Economics, University of Munich, Ludwigstrasse 28, D-80539 Muenchen, Germany); Klaus M. Schmidt (Department of Economics, University of Munich, Ludwigstrasse 28, D-80539 Muenchen, Germany, email: klaus.schmidt@Lrz.uni-muenchen.de)
    Abstract: We show experimentally that fairness concerns may have a decisive impact on the actual and optimal choice of contracts in a moral hazard context. Bonus contracts that offer a voluntary and unenforceable bonus for satisfactory performance provide powerful incentives and are superior to explicit incentive contracts when there are some fair-minded players. But trust contracts that pay a generous wage upfront are less efficient than incentive contracts. The principals understand this and predominantly choose the bonus contracts. Our results are consistent with recently developed theories of fairness, which offer important new insights into the interaction of contract choices, fairness and incentives.
    Keywords: Moral Hazard, Incentives, Bonus Contract, Trust Contract, Fairness, Inequity Aversion
    JEL: C7 C9 J3
    Date: 2005–11
    URL: http://d.repec.org/n?u=RePEc:trf:wpaper:67&r=soc
  9. By: Fehr, Ernst; Kremhelmer, Susanne; Schmidt, Klaus M.
    Abstract: We report on several experiments on the optimal allocation of ownership rights. The experiments confirm the property rights approach by showing that the ownership structure affects relationship-specific investments and that subjects attain the most efficient ownership allocation despite starting from different initial conditions. However, in contrast to the property rights approach, the most efficient ownership structure is joint ownership. These results are neither consistent with the self-interest model nor with models that assume that all people behave fairly, but they can be explained by the theory of inequity aversion that focuses on the interaction between selfish and fair players.
    JEL: J3 C9 C7
    Date: 2005–07
    URL: http://d.repec.org/n?u=RePEc:lmu:muenec:727&r=soc
  10. By: Potters,Jan; Sefton,Martin; Heijden,Eline van der (Tilburg University, Center for Economic Research)
    Abstract: We use experiments to compare two institutions for allocating the proceeds of team production. Under revenue-sharing, each team member receives an equal share of team output; under leader-determined shares, a team leader has the power to implement her own allocation. Both arrangements are vulnerable to opportunistic incentives: under revenuesharing team members have an incentive to free-ride, while under leader-determined shares leaders have an incentive to seize team output. We find that most leaders forego the temptation to appropriate team output and manage to curtail free-riding. As a result, compared to revenue-sharing, the presence of a team leader results in a significant improvement in team performance.
    Keywords: team production;leadership;opportunism;experiments
    JEL: C9 D2 H4 J3 L2
    Date: 2005
    URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:2005109&r=soc
  11. By: Seelos, Christian (IESE Business School); Mair, Johanna (IESE Business School)
    Abstract: This paper demonstrates that entrepreneurs who have created innovative organizations and service provision models are contributing to sustainable development. The processes, structures and outcomes of their initiatives are contrasted with more traditional efforts. World leaders have recently renewed the momentum for 'buying' sustainable development through massive allocation of development funds. The authors argue that such traditional approaches have repeatedly failed in the past and are unlikely to overcome the more fundamental hurdles to create development. Building on the findings of a three-year research project, the paper presents case studies which demonstrate how so-called 'social entrepreneurs' succeed in creating social and economic development in a poor country context. The process of discovery and creation from the ground up, in contrast to traditional design-driven development processes and strategies, is illustrated. The cases show how social entrepreneurs cater to various levels of needs: the basic needs of individuals, the institutional needs of communities, and the needs of future generations. The impact of social entrepreneurial activity on sustainable development measures such as the Millennium Development Goals is demonstrated. The findings suggest that social innovation may change the very structures and systems that recreate the circumstances for poverty and that development processes need to consider the link between social and economic development.
    Keywords: social entrepreneurship; sustainable development;
    Date: 2005–10–19
    URL: http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0611&r=soc
  12. By: Johannes Rincke (Zentrum für Europäische Wirtschaftsforschung)
    Abstract: This paper investigates how local jurisdictions in a federal system influence each other in the adoption of policy innovations. We look at school districts in Michigan and their participation in a public school choice program launched in 1996. Districts' participation decisions are modelled as simultaneous discrete choice decisions using a spatial latent variable model. Strong effects are found saying that lagged adoptions of neighbors positively affect the current probability of participation. This finding is robust to various changes in specification. The results suggest that in federal systems the diffusion of policy innovations is stimulated by horizontal interactions between jurisdictions.
    JEL: D6 D7 H
    Date: 2005–11–16
    URL: http://d.repec.org/n?u=RePEc:wpa:wuwppe:0511011&r=soc
  13. By: Faruk Gul; Wolfgang Pesendorfer
    Date: 2005–11–13
    URL: http://d.repec.org/n?u=RePEc:cla:levrem:784828000000000581&r=soc
  14. By: Granér, Staffan (Department of Economic History, School of Economics and Commercial Law, Göteborg University)
    Abstract: This paper focuses on the development of property rights to village com-mons, as they appear in the court rolls of a legal district in Sweden in the late 17th and the early 18th century. A development of agrarian property rights, from comparably attenuated towards more exclusive and private ones, has been considered one of the most important and crucial aspects of economic modernisation. To explain and analyse this development two, not necessarily incompatible, theoretical approaches can be identified. The neo-institutional property rights approach focuses on economising behav-iour among individual agents in relation to factors such as enforcement and transaction costs, relative prices, market integration and contracts. A more sociological, or class based, property relations approach focuses on factors such as power structure, distribu-tion, exploitation and social networks. In this area the regulation and privatisation of access to commonly controlled woodlands and pastures plays an important role. Immi-gration, population growth, colonisation, and a rapid establishment of iron mills in the 1690’s, contributed to a commercialisation of economic relations, and to an increased scarcity of commonly managed resources such as wood, charcoal and waterpower. This put considerable strain on traditional local conceptions of rights. A significant part of the legal cases reflects disputes over rights to village commons and the resources that they contain. The long-run result of this process could be described as a kind of enclosure where communal and socially embedded rights were gradually redefined. <p>
    Keywords: Economic History; Sweden; Property Rights; Common Rights; Institutional Change; Enclosure; Forest History
    JEL: K11 N23 N43 N53 Q15
    Date: 2005–11–08
    URL: http://d.repec.org/n?u=RePEc:hhs:gunhis:0003&r=soc
  15. By: Vincenzo Atella (University of Rome II - Faculty of Economics); Jay S. Coggins (University of Minnesota - Twin Cities - Department of Applied Economics; University of Verona - Department of Economics)
    Abstract: The main goal of this paper is to estimate the preferences of the Italian society towards equity in order to verify whether preferences i) have changed across the years, and ii) can be related to specific sociodemographic characteristics. Introducing equity concerns in the implementation of economic policies is a fundamental problem faced by both economists and policy makers. This paper uses a social welfare function a la Jorgenson and Slesnick to estimate society's aversion towards inequality by implementing a voting scheme for compiling individuals' equity preferences into a social choice by majority rule. The results show that preferences are highly polarized toward a low and a high concern for equity aversion and that this concern is significantly related with several sociodemographic characteristics. Among them, income plays an important role with richer people tending to favor less equity. Results also show that preferences towards equity have changed across the years.
    Keywords: Household Behavior , Economic Welfare, Personal Income and Wealth Distribution
    JEL: D1 D6 D31
    Date: 2004–06–10
    URL: http://d.repec.org/n?u=RePEc:rtv:ceisrp:56&r=soc
  16. By: Neil J Buckley; Frank T Denton; A Leslie Robb; Byron G Spencer
    Abstract: It is well established that there is a positive statistical relationship between socioeconomic status (SES) and health but identifying the direction of causation is difficult. This study exploits the longitudinal nature of two Canadian surveys, the Survey of Labour and Income Dynamics and the National Population Health Survey, to study the link from SES to health (as distinguished from the health-to-SES link). For people aged 50 and older who are initially in good health we examine whether changes in health status over the next two to four years are related to prior SES, as represented by income and education. Although the two surveys were designed for different purposes and had different questions for income and health, the evidence they yield with respect to the probability of remaining in good health is similar. Both suggest that SES does play a role and that the differences across SES groups are quantitatively significant, increase with age, and are much the same for men and women.
    Keywords: health transitions, income, education
    JEL: I10
    Date: 2005–10
    URL: http://d.repec.org/n?u=RePEc:mcm:sedapp:139&r=soc
  17. By: Dolfsma, W. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: In this article it is argued that there are notable parallels between all of the different strands within ethics on the one hand, and accountancy on the other that, in teaching, can be drawn upon to enhance students? understanding of the latter. Accountancy, part of economics, draws on utilitarian ethics, but not solely so. Accounting, in addition, draws on deontological and communitarian strands in ethics. The article suggests that the teaching of accounting ? especially to non-economists ? would benefit substantially from highlighting and developing these parallels.
    Keywords: Accounting;Ethics;Teaching Accounting;Utilitarianism;Deontology;Communitarian Ethics;
    Date: 2005–11–04
    URL: http://d.repec.org/n?u=RePEc:dgr:eureri:30007697&r=soc
  18. By: Allen wilhite
    Abstract: We tend to interact with same people, day after day. Might this affect our behavior? In an abstract fashion, we look at this question. To model this repeated interaction with a small subset of the entire population we place agents on the nodes of a network and have them play a prisoners’ dilemma game exclusively with their neighbors. We then alter the payoffs of the game and the topology of the network to see if, when, and to what degree cooperation survives. We find widely divergent aggregate decisions across networks and across payoffs. But, there is commonality as well. It seems clear that some networks, or some organizational structures, are more conducive to fostering cooperation
    Keywords: PD games, networks
    JEL: C73
    Date: 2005–11–11
    URL: http://d.repec.org/n?u=RePEc:sce:scecf5:20&r=soc
  19. By: Mair, Johanna (IESE Business School); Schoen, Oliver (IESE Business School)
    Abstract: Although social entrepreneurial organizations have begun to receive more scholarly attention, we still know relatively little about how they are able to create both social and economic value. This paper presents a comparative case analysis of three social entrepreneurial organizations, based in Bangladesh, Egypt and Spain, whose success has been widely recognized. Analysis of these organizations' business models reveals common patterns: in their use of strategic resources, in their value networks, and in their customer interface. The findings suggest that successful social entrepreneurial organizations pro-actively create their own value network of companies that share their social vision; develop resource strategies as an integral part of the business model; and integrate the target group into the social value network. Propositions are advanced regarding the business models of successful social entrepreneurial organizations.
    Keywords: social entrepreneurship; business model; developing countries;
    Date: 2005–10–07
    URL: http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0610&r=soc
  20. By: Maria Jesus Nieto; Lluis Santamaría
    Abstract: In the current competitive scenario, firms are driven to introduce products with a higher degree of novelty. Consequently, there is a growing need to understand the critical success factors behind radical innovation. Specifically, this work empirically and theoretically analyses the role of different types of collaborative networks in achieving product innovation and, more precisely, the degree of novelty. Using a longitudinal data of Spanish manufacturing firms, our results show that the continuity on the co-operative strategy, the type of partner and the diversity of collaborative networks are critical factors in achieving a higher degree of novelty in product innovation.
    URL: http://d.repec.org/n?u=RePEc:cte:wbrepe:wb056516&r=soc
  21. By: Johannes Rincke (Zentrum für Europäische Wirtschaftsforschung)
    Abstract: Before making difficult decisions, individuals tend to collect information on decision makers in reference groups. With respect to policy innovations in a decentralized public sector, this may give rise to positive neighborhood influence on adoption decisions. On the other hand, due to learning externalities, an incentive exists to free-ride on policy experiments of others. In this paper, U.S. data on school district policies are used to show that with respect to policy experiments, decision makers indeed are heavily affected by decision makers in reference groups. The results suggest that if a given district's neighbors' expected benefits from adopting a new policy increase, this substantially increases the original district's probability of adoption. The paper thus rejects the free-riding hypothesis and supports the view that in federal systems the discusion of policy innovations is stimulated by horizontal interactions between jurisdictions.
    JEL: D6 D7 H
    Date: 2005–11–16
    URL: http://d.repec.org/n?u=RePEc:wpa:wuwppe:0511009&r=soc
  22. By: Simon D. Woodcock (Simon Fraser University)
    Abstract: This paper examines the role of agent heterogeneity and learning on wage dispersion and employment dynamics. In the first half of the paper, I present an equilibrium matching model where heterogeneous workers and firms learn about match quality and bargain over wages. The model generalizes Jovanovic (1979) to the case of heterogeneous workers and firms. Equilibrium wage dispersion arises due to productivity differences across workers, technological differences across firms, and heterogeneity in beliefs about match quality. Under a simple CRS technology, the equilibrium wage is additively separable in worker- and firm-specific components, and in the posterior mean of beliefs about match quality. This parallels the 'person and firm effects' empirical specification of Abowd et. al. (1999, AKM) and others. It consequently provides a theoretical context for the AKM model, and a formal economic interpretation of their empirical person and firm effects. The model also yields an assortative matching result that predicts a negative correlation between estimated person and firm effects, which is consistent with most empirical evidence. Finally, the model makes novel predictions about the relationship between the person and firm effects and separation behavior, job duration, and firm size. In the second half of the paper, I test the model's empirical predictions. I estimate fixed and mixed effects specifications of the equilibrium wage function on the LEHD database. The mixed effect specifications generalize the earlier work of AKM and others. The learning component of the matching model implies a specific structure for the error covariance. I exploit this structure to test whether earnings residuals are consistent with Bayesian learning, and to estimate structural parameters of the matching model. I find considerable support for the matching model in these data.
    Keywords: matching, learning, heterogeneity, longitudinal linked data, mixed model
    JEL: J31 D83 C23
    Date: 2005–11–15
    URL: http://d.repec.org/n?u=RePEc:wpa:wuwpla:0511012&r=soc
  23. By: Jim C. Cox; Daniel Friedman; Vjollca Sadiraj
    Date: 2005–11–16
    URL: http://d.repec.org/n?u=RePEc:cla:levrem:784828000000000595&r=soc
  24. By: Rainer Andergassen (Economics Università di Bologna); Franco Nardini
    Abstract: This paper attempts to generalise some results obtained in previous work showing the conditions under which paradigm setters emerge. We distinguish two different but definitely complementary and overlapping ways through which searching and learning occur. The first exploits the spillover potential that lies in a firm's network and thanks to which gathering innovation-useful information is actually possible. The second rests with the autonomous capacity that a firm possesses in order to carry out in-house innovative search. While these two searching processes not only coexist but are also reciprocally sustaining, we find it expedient to separate them by integrating a knowledge diffusion mechanism that propagates technological capabilities with an independent stochastic process capturing innovation arrivals due to internal R.&D. A network's evolution depends on how firms assess their performance in terms of innovation-enabling spillovers. In a bounded rationality framework, firms normally explore a limited part of the firms' space and require a protocol to target their information gathering efforts. The paper addresses this issue by designing a routinised behaviour according to which firms periodically reshape the neighbourhood that they observe to glean information by reassessing other firms' contributions to their own capability. The way the specific neighbour-choosing routine is accordingly organised determines in a significant way firms' average innovative capability. This feature is modelled by changing the span of network observation from a very broad setting, the whole economy, to a very narrow one, namely the most proximate neighbourhood membership. The economy is further portrayed as a collection of cognitively heterogeneous agents possessing firm specific knowledge and, thus, firm specific innovative capability. We also find it expedient to classify this assumed population according to their capability to capture broadcast information. This procedure implies viewing the economy as an ensemble of areas of cognitive exchange within which knowledge spillovers flow with equal ease. This approach to modelling interaction bears an important implication: the choice of new neighbours poses the problem of a trade-off between easily obtainable information, yet carrying low innovation empowering content, and hard to acquire, because cognitively distant, information but possibly conveying high capability contributions. To keep the model mathematically tractable, we formalise the features stated above by means of a linear system in which technological capabilities are made to depend on a matrix of interaction with evolving neighbours as well as on a vector of in-house generated knowledge. The model is then simulated to determine the emergent properties of neighbourhood formation and stability together with average capability
    Keywords: Paradigm setters, Netwoks, Technical Change, Bounded Rationality
    JEL: L14 O33
    Date: 2005–11–11
    URL: http://d.repec.org/n?u=RePEc:sce:scecf5:322&r=soc
  25. By: Amelie Constant (IZA Bonn); Yochanan Shachmurove (Department of Economics, University of Pennsylvania); Klaus F. Zimmermann (Bonn University, IZA and DIW Berlin)
    Abstract: This paper addresses a central issue to migration the role of immigrants in entrepreneurial activity. In particular, the paper focuses on the determinants of the decision to become an entrepreneur for Turks living in Germany. The paper provides some important benchmarks, including the self-employment behavior of natives. The paper utilizes a comprehensive and reliable data base, the German Socioeconomic Panel to undertake systematic econometric analyses using appropriate statistical methods. The findings are that observable characteristics play different roles in the self-employment choice of immigrants and natives, whereas age-earnings profiles are similar for native and immigrant entrepreneurs.
    Keywords: Entrepreneurship, Self-employment, Immigration, Guest-workers, Turkey, Germany, European Union, German Socioeconomic Panel Data, Binomial Logit, Treiman international occupational prestige scale.
    JEL: J0 C23 C25 F22 J23 J61
    Date: 2005–10–01
    URL: http://d.repec.org/n?u=RePEc:pen:papers:05-029&r=soc

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