Reviewing and improving performance measurement systems: An action research

Reviewing and updating performance measurement systems (PMS) based on internal and external environmental changes are as important as developing and implementing them. The results of an action research study carried out to improve the PMS of an energy company's maritime transportation area are presented. The findings of this longitudinal study illustrate the difficulty and complexity of reviewing and updating an energy company's PMS for its maritime transportation area. This difficulty is due to the involvement of PMS users, the assessment of performance measures, the establishment of targets, and data availability. The complexity is related to the changes in information technology when implementing changes in procedures for computing performance measures. This article contributes to a better understanding of the process of reviewing and updating a company's existing PMS.     

Monetary policy and macroeconomic stability in Latin America: The cases of Brazil, Chile, Colombia and Mexico

In 1999, new monetary policy regimes were adopted in Brazil, Chile, Colombia and Mexico, combining inflation targeting with floating exchange rates. These regime changes have been accompanied by lower volatility in the monetary stance in Brazil, Colombia and Mexico, despite higher inflation volatility in Brazil and Colombia. This paper estimates a conventional New Keynesian model for these four countries and shows that: i) the post-1999 regime has been associated with greater responsiveness by the monetary authority to changes in expected inflation in Brazil and Chile, while in Colombia and Mexico monetary policy has become less counter-cyclical, ii) lower interest-rate volatility in the post-1999 period owes more to a benign economic environment than to a change in the policy setting, and iii) the change in the monetary regime has not yet resulted in a reduction in output volatility in these countries.     

Strategic diagnostics and management decision making: a hybrid knowledge‐based approach

A conceptual model is introduced whereby the focus is placed on environmental scanning, diagnostics and decision‐making on the basis of managerial judgement through the application of tools such as intelligent agents, hybrid intelligent systems, scenario analysis and knowledge‐based systems. The model has a critical stage as an antecedent to the strategic advice that encompasses the issues of strategic fit to purpose (theme, industry, company and strategic business unit‐driven). A number of applications dealing with these four layers are shown, as well as an illustration of hybrid intelligent systems for strategic marketing planning. Copyright © 2007 John Wiley & Sons, Ltd.     

Debt ceiling and fiscal sustainability in Brazil: A quantile autoregression approach

In this paper we investigate fiscal sustainability by using a quantile autoregression (QAR) model. We propose a novel methodology to separate periods of nonstationarity from stationary ones, allowing us to identify various trajectories of public debt that are compatible with fiscal sustainability. We use such trajectories to construct a debt ceiling, that is, the largest value of public debt that does not jeopardize long-run fiscal sustainability. We make an out-of-sample forecast of such a ceiling and show how it could be used by Policy makers interested in keeping the public debt on a sustainable path. We illustrate the applicability of our results using Brazilian data.     

Performance Heterogeneity in Latin America: An Investigation into the Transient Effects of Country of Origin

The heterogeneity of firm performance has been studied from the perspective of factors, including the firm effect, the industry effect, and the country effect. This study emphasizes the importance of country transient effects in light of the volatility present in Latin American countries. Variance decomposition was carried out for the economic and operational performance of five countries in the period from 1998 to 2007. The results show that country effects matter for Latin America, its transient effects increase in periods of higher turbulence, and have a greater effect on a firms' economic performance than on its operational performance.     

Supply chain risk: empirical research in the automotive industry

Supply chain risk management (SCRM) has become a popular topic over the past decade. It is not a surprise that the automotive industry has been a motivating arena for research within this field; however, the few existing empirical studies reveal that SCRM practices within this industry are still in their infancy. Because the identification of risks can be viewed as the trigger for SCRM, attempts to develop a risk profile for this industry that could serve as a guide to start the SCRM process are needed. This research identifies the main risks along the automotive supply chain by investigating their manifestation in three supply chains in Brazil and offers an initial risk profile for the Brazilian automotive industry. Although the importance of SCRM has been recognised by all analysed companies, the research findings underline the lack of preparedness regarding either identifying risk or considering risk-mitigation strategies and risk assessment. In this context, this study identifies the main risk in which a supply chain can be exposed, through the analysis of real-life manifested risks along different supply chains, as a way to help the supply chain start a SCRM process.     

Corruption,South African Multinational Enterprises and Institutions in Africa

We examine the responses of South African multinational enterprises (MNEs) to corruption in African markets in the context of institutional voids. Corruption is a source of uncertainty and additional transactional costs for MNEs and it necessitates a strategic response. The research employs a qualitative study of a sample of MNEs with experience in internationalising into Africa. The results indicate that corruption in African markets is pervasive and closely associated with the institutional voids in these countries. MNEs see themselves as ‘institution takers’ responding to countries’ institutional makeup at the organisational and individual level but fail to fully appreciate their impact on institutions both positively and negatively. Rather MNEs focus on strategic responses at the organisational level to address corruption operationally in the host country. We add to the existing literature by providing a dynamic framework of the complex webs of association between institutions, MNEs and corruption in conditions of economic underdevelopment. The research suggests that MNEs do not need to get caught in a vicious cycle whereby they perpetuate corruption in conditions of underdevelopment and institutional voids but instead can contribute towards a virtuous cycle through which they institutionalise ethical foundations.     

Methodological Procedure for Estimating Brazilian Quarterly GDP Series

This paper presents a methodology for estimating the Brazilian GDP quarterly series in the period between 1960–1996. Firstly, an Engle–Granger’s static equation is estimated using GDP yearly data and GDP-related variables. The estimated coefficients from this regression are then used to obtain a first estimation of the quarterly GDP, with unavoidable measurement errors. The subsequent step is entirely based on benchmarking models estimated within a state space framework and consists in improving the preliminary GDP estimation in order to both eliminate as much as possible the measurement error and that the sum of the quarterly values matches the annual GDP.

Exchange rate movements and monetary policy in Brazil: Econometric and simulation evidence

The literature on monetary economy has aroused growing interest in macroeconomics. Due to computational advancements, models have become increasingly more complex and accurate, allowing for an in-depth analysis of the relationships between real economic variables and nominal variables. Therefore, using a dynamic stochastic general equilibrium (DSGE) model, based on Gali and Monacelli (2005), we propose and estimate a model for the Brazilian economy by employing Bayesian methods so as to assess whether the Central Bank of Brazil takes exchange rate fluctuations into account in the conduct of monetary policy. The most striking result of the present study is that the Central Bank of Brazil does not directly change the interest rate path due to exchange rate movements. A simulation exercise is also used. Our conclusion is that the economy quickly accommodates shocks induced separately on the exchange rate, on the terms of trade, interest rate, and global inflation.     

MGARCH models: Trade-off between feasibility and flexibility

Multivariate GARCH (MGARCH) models need to be restricted so that their estimation is feasible in large systems and so that the covariance stationarity and positive definiteness of conditional covariance matrices are guaranteed. This paper analyzes the limitations of some of the popular restricted parametric MGARCH models that are often used to represent the dynamics observed in real systems of financial returns. These limitations are illustrated using simulated data generated by general VECH models of different dimensions in which volatilities and correlations are interrelated. We show that the restrictions imposed by the BEKK model are very unrealistic, generating potentially misleading forecasts of conditional correlations. On the other hand, models based on the DCC specification provide appropriate forecasts. Alternative estimators of the parameters are important in order to simplify the computations, and do not have implications for the estimates of conditional correlations. The implications of the restrictions imposed by the different specifications of MGARCH models considered are illustrated by forecasting the volatilities and correlations of a five-dimensional system of exchange rate returns.