Technological change and the vertical organization of industries

The vertical scope of a firm, that is, which components or segments of the production processes are kept in–house and which are outsourced, is variously considered as depending on cost and/or technological conditions. Most of the literature focuses on the incentives for an individual firm facing exogenous competition and technological opportunities. In this paper we consider the problem from the perspective of the whole industry: in what respect does firm organizational behavior depend on the industry technological evolution and aggregate structure, and how does innovation and organizational behavior affect the industry structure. We build an evolutionary simulation model of an industry where competitors decide the number of internally produced components. We relate the industry average value of market outsourcing to the technological conditions prevalent in the industry. The results from the model shed light on a number of (apparently) contradictory suggestions in the economic and management literature.     

What Corporate Social Responsibility Activities are Valued by the Market?

Corporate management is torn between either focusing solely on the interests of stockholders (the neo-classical view) or taking into account the interests of a wide spectrum of stakeholders (the stakeholder theory view). Of course, there need be no conflict where taking the wider view is also consistent with maximising stockholder wealth. In this paper, we examine the extent to which a conflict actually exists by examining the relationship between a company’s positive (strengths) and negative (concerns) corporate social responsibility (CSR) activities and equity performance. In general, we find little evidence to suggest that managers taking a wider stakeholder perspective will jeopardise the interest of its stockholders. However, our findings do suggest that the market is not only influenced by the independent CSR activities, but also the totality of these activities and that the facets that they value do vary over time. It seems that␣most recently, the market has valued most firms that satisfied minimum requirements in the areas of diversity and environmental protection but were most proactive in the area of employee-relations. Ron Bird is an Emeritus Professor in the School of Finance and Economics at the University of Technology, Sydney. His research interests focus on market implications of corporate social responsibility and also dysfunctionality within capital markets. He received his Master's degree in economics at Monash University in 1971. Anthony D. Hall is currently the Head of the School of Finance and Economics and Director of the Quantitative FinanceResearch Centre at the University of Technology, Sydney. His research interests cover all aspects of financial econometrics. He was awarded a PhD in econometrics from the London School of Economics in `976.Francesco Momente is Professor of Corporate Finance at the Bocconi University, Milan (Italy). His research intersts focus on the market valuation of corporate social responsibility and the value relevance of accounting information.He received his PhD in General Management at Ca' Foscari University, Venice (Italy) in 1998. Francesco Reggiani is Professor of Corporate Finance at the Bocconi University, Milan (Italy). His research interests focuson the market valuation of corporate social responsibility and corporate governance. He received his PhD in GeneralManagement at Bocconi University in 2001.     

Media negativity bias and tax compliance: experimental evidence

We study the impact of the media negativity bias on tax compliance. Through a framed laboratory experiment, we assess how the exposure to biased news about government action affects compliance in a repeated taxation game. Subjects treated with positive news are significantly more compliant than the control group. Instead, the exposure to negative news does not prompt any significant reaction compared to the neutral condition, suggesting that participants may perceive the media negativity bias in the selection and tonality of news as the norm rather than the exception. Overall, our results suggest that biased news provision is a constant source of psychological priming and plays a vital role in taxpayers’ compliance decisions.