The institutional environment and the number of bank relationships: an empirical analysis of European SMEs

This article examines the association between creditor protection, as measured by the nature of legal rules and the quality of law enforcement, and multiple bank relationships using a unique survey sample of SMEs from 19 European countries. We find that the likelihood of multiple banking is the highest for SMEs in French-civil-law countries, next highest for German-civil-law countries, and the lowest in Scandinavian-civil-law and English-common-law countries. We also find that SMEs in countries with low legal efficiency are more likely to establish multiple bank relationships. These results seems to confirm the underlying idea in the law and finance literature that relevant loan risk for banks also arises from low quality of laws and institutions and not just from firm-specific characteristics. Banks in countries where protection of creditor rights is poor may resort to multiple banking to share this additional risk. Policy makers can use our findings to justify the necessity of improving their institutions by reducing legal formalisms and thereby, lowering the enforcement costs in the courts. This would lead to better loan contracting and enhance the flow of debt capital, which is required for a healthy and dynamic economy.     

Time-inconsistent risk preferences in a laboratory experiment

We conduct an experiment to explore the time-consistency of risk preferences in a multi-period betting game. Specifically, subjects planned their contingent betting decisions in advance then played the game dynamically later to determine whether their respective decisions matched. We find that subjects took more risk than planned in their initial bet and after losses. In addition, this increased risk was associated with an increase in breakeven mental accounting. Our findings indicate that immediacy of outcomes can lead to impulsive risk-taking behavior and highlight the importance of precommitment to long-term financial planning.     

Presale Contract and its Embedded Default and Abandonment Options

The presale contract is a popular property selling method that allows a buyer to default on the remaining payment and/or a developer to abandon a project. Using a simple two-period game theoretical model, we derive a closed-form pricing equation for a presale contract that explicitly accounts for a developer??s abandonment option and a buyer??s default option. Although a developer has an abandonment option under either a spot sale or a presale method, the option is more valuable under a presale contract because of an additional cash inflow from the presale downpayment. A presale also provides a buyer a default option, which is valuable in a real estate market with uncertain demand and price risk. We analyze the implications of the abandonment option on a developer??s construction decision and choice of selling method, as well as the implications of the default option on a buyer??s purchase decision. Furthermore, our model framework has implications to the pricing of futures contracts that involve both stochastic revenues and costs.     

UNIFIED CHINA AND DIVIDED EUROPE

This article studies the causes and consequences of political centralization and fragmentation in China and Europe. We argue that a severe and unidirectional threat of external invasion fostered centralization in China, whereas Europe faced a wider variety of smaller external threats and remained fragmented. Political centralization in China led to lower taxation and hence faster population growth during peacetime compared to Europe. But it also meant that China was more vulnerable to occasional negative population shocks. Our results are consistent with historical evidence of warfare, capital city location, tax levels, and population growth in both China and Europe.     

How and When Socially Entrepreneurial Nonprofit Organizations Benefit From Adopting Social Alliance Management Routines to Manage Social Alliances?

Social alliance is defined as the collaboration between for-profit and nonprofit organizations. Building on the insights derived from the resource-based theory, we develop a conceptual framework to explain how socially entrepreneurial nonprofit organizations (SENPOs) can improve their social alliance performance by adopting strategic alliance management routines. We test our framework using the data collected from 203 UK-based SENPOs in the context of cause-related marketing campaign-derived social alliances. Our results confirm a positive relationship between social alliance management routines and social alliance performance. We also find that relational mechanisms, such as mutual trust, relational embeddedness, and relational commitment, mediate the relationship between social alliance management routines and social alliance performance. Moreover, our findings suggest that different types of social alliance motivation can influence the impact of social alliance management routines on different types of the relational mechanisms. In general, we demonstrate that SENPOs can benefit from adopting social alliance management routines and, in addition, highlight how and when the social alliance management routines–social alliance performance relationship might be shaped. Our study offers important academic and managerial implications, and points out future research directions.     

The Relationship Between Price Stability and Financial Stability: Evidence From Major Emerging Economies

We examine the relationship between price stability and financial stability for major emerging economies using a Markov regime-switching model. Empirical results suggest that monetary policy is consistent with the Taylor rule in all countries except for India and all countries followed both low and high inflation targeting monetary policy regimes. Low inflation targeting regime seems to be more persistent and has higher duration than high inflation targeting regimes except for Indonesia and South Africa. All countries seem to have had financial stability concerns when they formulated their monetary policy as the coefficient of the financial stress index is statistically significant at least in one regime. Overall the results suggest that Taylor rule-based monetary policies have been implemented to various degrees in major emerging economies to achieve economic stability, price stability, and financial stability.     

Physics competition to inspire learning and improve soft skills: a case of the Chain Experiment

International Journal of Technology and Design Education - The Chain Experiment competition has been held successfully for 6 years in Poland and is attracting growing interest. The...     

Overcoming the liability of smallness by recruiting through networks in China: a guanxi-based social capital perspective

We investigate the role of guanxi in Chinese entrepreneurial firms’ recruitment practices in attempting to overcome the liability of smallness. Combining insights from the social capital and guanxi literature, we theorize the guanxi-based social capital perspective and use it to analysis 96 in-depth interviews with multiple members (entrepreneurs, senior managers and factory workers) from 15 die-casting entrepreneurial firms in Guangdong province, China. We find that the use of guanxi in recruitment practice can overcome the liability of smallness because it makes the hiring process more convenient, improves firms’ attractiveness to jobseekers and enhances the person-organizational fit between new hires and firms. We discuss how Chinese entrepreneurs and their senior managers use guanxi strategically to achieve these advantages. On the other hand, our findings suggest that jobseekers can also use guanxi to increase their options, improve their bargaining power and distract firms’ attention away from hiring the most appropriate candidate for the job in order to undermine the effectiveness of Chinese entrepreneurial firms’ recruitment procedures. We explore the implications of these findings for academic research and managerial practice.     

Linking employee confidence to performance: A study of self-managing service teams

The increasing implementation of self-managing teams (SMTs) in service delivery suggests the importance of developing confidence beliefs about a team’s collective competence. This research examined causality in the linkage between employee confidence beliefs and performance for boundary-spanning SMTs delivering financial services. The authors distinguish between task-specific (i.e., team efficacy) and generalized (i.e., group potency) employee confidence, as well as between customer-based (i.e., customer-perceived service quality) and financial (i.e., service revenues) performance. They analyzed employee and customer survey data as well as financial performance data from 51 SMTs at two points in time using lagged analyses. The findings reveal divergent results for team efficacy and group potency, suggesting that team efficacy has reciprocal, causal relationships with service revenues and customer-perceived service quality. In contrast, group potency has no causal relationship with service revenues. Finally, customer-perceived service quality predicts group potency, whereas no evidence for the reverse effect is provided. Ad de Jong (a.d.jong@tm.tue.nl) is an assistant professor in the Department of Organization Science & Marketing, Eindhoven University of Technology, Eindhoven, the Netherlands. His main research interests are service marketing and management, the service-profit chain, multilevel theory and research, and multichannel research. He has published in journals such asManagement Science, theJournal of Marketing, theJournal of Retailing, theInternational Journal of Research in Marketing, Decision Sciences, theJournal of Management Studies, and theJournal of Service Research, as well as many conference proceedings. Ko de Ruyter (k.deruyter@mw.unimaas.nl) is a professor of marketing and head of the Department of Marketing at Maastricht University, Maastricht, the Netherlands. He has published six books and numerous scholarly articles in, among others, theJournal of Marketing, Management Science, theJournal of Retailing, theInternational Journal of Research in Marketing, Decision Sciences, Marketing Letters, theJournal of Management Studies, theJournal of Business Research, theJournal of Economic Psychology, theJournal of Service Research, theInternational Journal of Service Industry Management, Information and Management, theEuropean Journal of Marketing and Accounting, andOrganisation andSociety. He serves on the editorial boards of various international academic journals, including theJournal of Service Research and theInternational Journal of Service Industry Management. His research interests concern international service management, e-commerce, and customer satisfaction and dissatisfaction. Martin Wetzels (m.wetzels@mw.unimaas.nl) is a professor of marketing and supply chain research in the Department of Marketing at Maastricht University, Maastricht, the Netherlands. His main research interests are customer satisfaction and dissatisfaction, customer value, services marketing, business-to-business marketing, (online) marketing research, supply chain management, cross-functional cooperation, e-commerce, new product development, technology infusion in services, and relationship marketing. His work has been published inManagement Science, Marketing Letters, the International Journal of Research in Marketing, theJournal of Business Research, theJournal of Interactive Marketing, theJournal of Economic Psychology, Industrial Marketing Management, theEuropean Journal of Marketing, theJournal of Management Studies, andTotal Quality Management. He has contributed more than 60 papers to conference proceedings.     

Financial integration, information and communication technology, and macroeconomic volatility: Evidence from ten Asian economies

This paper aims to examine the impact of financial integration and information and communication technology (ICT) development on output volatility. It applies a two-country dynamic general equilibrium model, in which ICT is assumed to increase the volume and speed of capital flows. This model predicts that economies with a high ICT development or/and a high degree of financial integration exhibit greater output fluctuations in the face of monetary policy shocks, but lower output fluctuations in the face of fiscal policy shocks. The empirical findings estimated by using the panel vector autoregression approach and impulse response analysis support these predictions.