Generational Accounts for The Netherlands: An Update

This paper extends the standard generational accounting methodologyby incorporating prospective changes in the economic environment,assigning the benefits of government purchases to generations,distinguishing between public consumption and public investment,and transforming the generational accounts into government budgets.It applies the methodology to the Netherlands. An expected increasein labor-force participation almost offsets the adverse effectof aging on the sustainability of the Dutch public finances.Since the rise in labor-force participation occurs before thebulk of the aging, the government will have to run sizable fiscalsurpluses in the next decades in order to create the budgetaryroom for higher age-related government expenditures in laterdecades.     

A Comparison of Full Profile and Hierarchical Information Integration Conjoint Methods to Modeling Group Preferences

This paper presents a comparative test of full profile (FP), original hierarchical information integration (HII-O), and integrated hierarchical information integration (HII-I) conjoint methods for modeling group preferences. It is hypothesized that in settings where groups need to decide about complex multi-attribute alternatives, HII-O will predict holdout profiles better than FP, and that HII-I will perform better than HII-O. The predictive ability of the three methods is tested for the case of housing preferences of housing co-ops, which are groups consisting of three to five people who jointly own a house. The results confirm that HII-I outperforms the other two methods and further suggest that FP and HII-O perform equally well. In addition, two variations of HII-I are developed. One of these provides independent estimates of the relative influence of group members on the decision outcomes, however at the expense of requiring larger designs. The two HII-I variations are also tested and found to be equivalent in predictive ability.     

Knowledge as Work: Conflicts in the Management of Knowledge Workers

Against the backdrop of increasing interest in knowledge management and intellectual capital, this paper analyzes the emergence and management of knowledge worker groups. It suggests that knowledge work is a useful way of characterizing some important changes in the nature of work across a range of different occupational and professional groups. These changes have important implications for management and organizational performance. The paper discusses these implications through a conflictbased analysis which highlights the inherent conflict between 'knowing' as part of the work experience and 'knowledge' as an economic commodity. This conflict is expressed at both institutional and organizational levels. The management of knowledge workers therefore centres on the quasi-resolution of such conflict. As the illustrative example of the Microsoft Corporation indicates, competitive success depends very largely on the precarious ability to reconcile this conflict between the social production of knowledge and the economic appropriation of profit.     

The Business(es) of the Chinese State

The state industrial sector is the Achilles heel of China's otherwise remarkable economic performance over the past two decades. Most other countries in transition from socialism have transformed SOEs into commercial entities through systematic, market‐driven restructuring and privatisation to become more efficient and competitive. In China, a series of innovative, if often administrative, insitutional reforms since 1978 have begun to achieve the Chinese authorities' goal of ‘separating governemtn from business.’ But the Chinese State still maintains ownership of key enterprises, and government agencies carry out shareholder functions typically performed by private owners in a market economy. Although privatisation and restructuring of SOEs is occurring, it mostly pertains to small and medium sized firms. For the principal businesses, by contrast, the creation of large state enterprise groups and holding companies (and experiments in other forms of ‘state asset management’) have become the main form of restructuring. Today, China's SOEs still account for more than one‐quarter of national production, two‐thirds of total assets, more than half of urban employment and almost three‐quarters of investment. While direct budgetary subsidies have declined, explicit and implicit subsidies are still making their way to prop up loss‐making SOEs through the financial system and other routes. At the same time, SOEs are still producing non‐marketable products, resulting in a sizeable inventory overhang. These inefficiencies and distortions represent a drain on the country's resources and thus present a challenge to the Chinese leadership for reform. This paper sheds light on these challenges by analysing the incentives and constraints on China's SOE reform programme. Four critical aspects of the reforms are highlighted and evaluated against the backdrop of international experience: clarification of property rights; establishment of large group/holding companies and other new organisational structures; improved corporate governance incentives; and implementation of international financial accounting and auditing practices. The paper concludes with policy recommendations.     

Recombination in the open-ended value landscape of digital innovation

Digital innovation introduces a new open-ended value landscape to anyone seeking to generate or capture new value. To understand this landscape, we distinguish between design recombination and use recombination, explore how they play out together, and redirect the attention from products and services toward digital resources. Digital resources serve as building-blocks in digital innovation, and they hold the potential to simultaneously be part of multiple value paths, offered through design recombination and assembled through use recombination. Building on this perspective, we offer the value spaces framework as a tool for better understanding value creation and capture in digital innovation. We illustrate the framework and offer the early contours of a research agenda for information systems researchers.     

Venture capitalist governance and value added in four countries

The rapid internationalization of markets for venture capital is expanding the funding alternatives available to entrepreneurs. For venture capital firms, this trend spells intensified competition in markets already at or past saturation. At issue for both entrepreneurs and venture capital firms is how and when venture capitalists (VCs) can provide meaningful oversight and add value to their portfolio companies beyond the provision of capital. An important way VCs add value beyond the money they provide is through their close relationships with the managers of their portfolio companies. Whereas some VCs take a very hands-off approach to oversight, others become deeply involved in the development of their portfolio companies.Utilizing surveys of VCs in the United States and the three largest markets in Europe (the United Kingdom, the Netherlands, and France), we examined the determinants of interaction between VCs and CEOs, the roles VCs assume, and VCs' perceptions of how much value they add through these roles. We examined the strategic, interpersonal, and networking roles through which VCs are involved in their portfolio companies, and we analyzed how successful such efforts were. By so doing we were able to shed light on how and when VCs in four major markets expend their greatest effort to provide oversight and value-added assistance to their investment companies.Consistent with prior empirical work, we found that VCs saw strategic involvement as their most important role, i.e., providing financial and business advice and functioning as a sounding board. They rated their interpersonal roles (as mentor and confidant to CEOs) as next in value.Finally, they rated their networking roles (i.e., as contacts to other firms and professionals) as third most important. These ratings were consistent across all four markets. VCs in the United States and the United Kingdom were the most involved in their ventures, and they added the most value. VCs in France were the least involved and added the least value; VCs in France appeared to be least like others in terms of what factors drove their efforts. Our theoretical models explained a greater proportion of variance in governance and value added in the United States than elsewhere. Clear patterns of behavior emerged that reflect the manner in which different markets operate. Among the European markets, practices in the United Kingdom appear to be most like that in the United States.Determinants of Governance (Face-to-Face Interaction)We operationalized VC governance or monitoring of ventures as the amount of face-to-face interaction VCs had with venture CEOs. We found some evidence that VCs increase monitoring in response to agency risks, but the results were mixed. Lack of experience on the part of CEOs did not prompt significant additional monitoring as had been predicted. A more potent determinant was how long the VC-CEO pairs worked together; longer relationships mitigated agency concerns and reduced monitoring. Contrary to expectations, perceived business risk in the form of VCs' satisfaction with recent venture performance had little impact on face-to-face interaction. Monitoring was greatest in early stage ventures, indicating that VCs respond to high uncertainty by increased information exchange with CEOs. We measured two types of VC experience and found different patterns for the two. Generally speaking, VCs with greater experience in the venture capital industry required less interaction with CEOs, whereas VCs with greater experience in the portfolio company's industry interacted more frequently with CEOs than did VCs without such experience.Determinants of Value AddedWe argued that VCs would most add value to ventures when the venture lacked resources or faced perceived business risks, when the task environment was highly uncertain, and when VCs had great investing and operating experience. Contrary to expectations, VCs added most value to those ventures already performing well. As we had predicted, VCs did add relatively more value when uncertainty was high: e.g., for ventures in the earliest stages and for ventures pursuing innovation strategies. Finally, we found that VCs with operating experience in the venture's focal industry added significantly more value than those with less industry-specific experience. These results are consistent with anecdotal evidence that entrepreneurs have a strong preference for VCs with similar backgrounds as their own. We found no evidence that experience in the venture capital industry contributed significantly to value added. Together, these results suggest that investigations of the social as well as economic dimensions of venture building may prove a fruitful avenue for future study. Overall, the results showed that value-added is strongly related to the amount of face-to-face interaction between VC-CEO pairs and to the number of hours VCs put in on each individual venture.Implications for Venture CapitalistsThe competition for attractive investments is heating up as economies become more globalized. Thus, the pressure on venture capital firms to operate both efficiently and effectively is also likely to build. It is as yet unclear whether the recent trend toward later stage, safer investments will continue, and how those venture capital firms following this path can differentiate themselves from other sources of capital. Venture capital firms that are able to choose the appropriate bases for determining governance effort and the appropriate roles for delivering added value to their portfolio companies will be those most likely to survive.In the largest, most robust markets (i.e., the United States and the United Kingdom), more effort is expended by venture capitalists to deliver something of value beyond the money. This suggests that the tradeoff preferred by those succeeding is to be more rather than less involved in their investments. Our results indicate that VCs clearly economize on the time they devote to involvement in their portfolio companies. However, our results also indicate that they do this at the great peril of producing value insufficient to justify the cost of their product.Implications for EntrepreneursOur findings provide two important insights for entrepreneurs. First, they show that where and when they obtain venture capital is likely to have an impact on the extent and nature of effort delivered by their venture capital investors. It appears that on average entrepreneurs receiving venture capital in the United States and the United Kingdom will be more closely monitored and will receive more value-adding effort from their VCs than will those in France or the Netherlands. Needless to say, entrepreneurs should consider their preferences for level and type of involvement from their investors as they consider their choice of partners. In France, for example, VCs put great emphasis on their financial role in comparison with other roles, but they contribute much less than VCs elswhere via other strategic, interpersonal, and networking roles.The second key implication of our findings is that entrepreneurs may be able to gauge what roles VCs will see as most important, when VCs are more or less apt to become involved in their companies, and when they believe they can most add value. Such knowledge may help CEOs anticipate VC activity, be aware of the parameters of VCs' preferences, communicate their own preferences, and negotiate the timing and extent of interaction. For example, although our results indicate that geographic distance significantly limits face-to-face interaction, it appears to have less impact on the amount of value added.Implications for ResearchersMuch more can be learned about the relative efficiency and effectiveness of alternative governance arrangements. Little is known about how formal structures such as contract covenants and board control work in conjunction with informal oversight and interaction. Even less is known about how value is added and how it is best measured. Although this study took a step toward developing a model of the circumstances under which value is added, the theory and its operationalization await further development.     

Does Production Labeling Stigmatize Conventional Milk?

Production labeling is a common approach for differentiating otherwise similar products in the marketplace. While these labels may convey positive messages to consumers about the new product, they may simultaneously stigmatize the conventionally produced product by highlighting perceived problems. The net economic result for producers can be negative since consumers may decrease their willingness to pay for the conventional product that dominates the market, while the new product has a relatively small market share. This experimental research identifies this stigma effect in the case of milk, where the introduction of rBST-free and organic milk reduces consumers' willingness to purchase conventional milk.     

COVID-19 and Long-Term Economic Growth

This article investigates the impact of the COVID-19 pandemic on the long-term economic growth of South Africa. We embed an epidemiological model in a modified Solow–Swan model and explore various channels such as morbidity, mortality, unemployment, loss of school days and capital accumulation. We demonstrate that COVID-19 will lower the average annual growth rate of GDP per capita of South Africa by 0.07 percentage points in the next four decades, a 25 per cent decline relative to the no-COVID benchmark. We show that human capital losses due to school closures account for more than half of the economic slowdown.     

The location of cross-border and national mergers and acquisitions within the United States

Research on the location choice of foreign direct investment (FDI) focuses on the choice between countries. The within-country location choice is either not analyzed at all or restricted to greenfield investments only. The majority of FDI, however, takes the form of cross-border mergers and acquisitions (M&As). We develop and test a pair of hypotheses regarding location-target selection for both cross-border and national M&As across the United States, expecting differences in line with the liability of foreignness argument. Using a detailed firm-level data set for M&As in the period 1985–2012, we compare location choices of cross-border versus national M&As. We find that cross-border M&As are more spatially concentrated, and tend to sort into larger agglomerations than national M&As. This finding holds both for urban agglomerations in isolation, as well as for agglomerations that take the economic geography of the United States into account.     

Government ideology and international migration*

We provide the first empirical evidence that government ideology affects the choice of migration destinations. As ruling political parties differ in their discourse, policies, and positions on migration, the ideology differential between the host and home country governments can shape the relative generosity of the welfare system, the degree of tolerance towards out-groups, and the restrictiveness of migration policies, all acting as important drivers of international migration. Using data on bilateral migration and government ideology for OECD countries between 1990 and 2016, we show that migration flows increase when the government at the destination becomes more left-wing relative to the government at the origin, particularly when both countries are members of the European Economic Area.