Stairway to heaven or highway to hell: Liquidity,sweat equity,and the uncertain path to ownership

We study a setting in which a principal contracts with an agent to operate a firm over an infinite time horizon when the agent is liquidity constrained and privately observes the sequence of cost realizations. We formulate the principal’s problem as a dynamic program in which the state variable is the agent’s continuation utility, which is naturally interpreted as his equity in the firm. The optimal incentive scheme resembles what is commonly regarded as a sweat equity contract, with all rents back loaded. Payments begin when the agent effectively becomes the owner, and from this point on, all production is efficient. These features are shown to be similar to features common in real‐world work‐to‐own franchising agreements and venture capital contracts.     

Injury care in low- and middle-income countries: identifying potential for change

The epidemiologic, demographic, and socio-political transitions underway in many low- and middle-income countries (LMIC) are associated with a substantial burden of disease due to injuries. LMIC have devoted relatively little attention to the injury problem. This paper argues that whereas prevention remains paramount, improving health care services for injuries will also contribute to reducing the burden. It examines the reasons for the relative inaction in LMIC to date, and contrasts this to high-income countries (HIC) which have seen substantial falls in mortality from improved trauma care systems. Mortality data, although readily available, are the tip of the clinical iceberg and there is a need for better-quality hospital data that can be used to monitor any future improvements. Models of trauma care from HIC are reviewed. It is suggested that the greatest potential for improvement can be achieved if entire trauma systems are improved, including pre-hospital, hospital and rehabilitation care. LMIC may not be able to afford the whole system and improving the most sensitive components of the system may be a better option. Models of trauma care developed in HIC need careful consideration to determine their effectiveness, appropriateness, affordability and equity implications for LMIC. Imports of blueprints from elsewhere are likely to fail; context sensitive and appropriate policies need to be developed locally through a consultative process. Effective working needs to be across disciplines, involving consultation with stakeholders, and requires investment in education, training and equipment. The evidence base for trauma services in LMIC is almost non-existent, highlighting the urgent need for research in these settings.     

United Nations Global Compact: The Promise–Performance Gap

Organizational deviance represents a costly behavior to many organizations. While some precursors to deviance have been identified, we hope to add to our predictive capabilities. Utilizing social cognitive theory and psychological contract theory as explanatory concepts, we explore the role of moral disengagement and turnover intentions, testing our hypotheses using two samples: a sample of 44 nurses from a hospital system in the Southwestern United States (Study 1), and a sample of 52 working adults collected from an online survey system (Study 2). Results strongly supported our hypotheses in both samples, indicating that the self-regulatory deactivation inherent in moral disengagement led to increased organizational deviance; effects that were much more pronounced when turnover intentions were high. Our findings support the increased role of cognition in determining behavior when environmental pressures stemming from the psychological contract have been altered, leading to a number of theoretical and practical implications, particularly in industries with high turnover rates.     

Reexamining dual-class stock

Snapchat’s initial public offering, which provided shares with no voting rights, is a culmination of the growing trend of dual-class shares. It contradicts the precept of one-share, one-vote that is essential for corporate democracy. Snapchat’s action caused an uproar among influential investors. In January 2017, a coalition of the world’s biggest money managers, which together control more than $17 trillion in assets, demanded a total ban on dual-class shares. We reason that the increasing prominence of dual-class stock is explained by the confluence of three economic trends: the growing importance of intangible investments, the rise of activist investors, and the decline of staggered boards and poison pills. A dual-class structure offers immunity against proxy contests initiated by short-term investors. It enables managers to ignore capital market pressures and to avoid myopic actions such as cutting research and development, which hurt companies in the long term. Thus, a dual-class structure is optimal in certain scenarios. We put forth alternatives to dual-class structure that enable managers to maintain control while retaining focus on sustainable value creation.     

Revenue and efficiency effects of resale in first-price auctions

We study first-price auctions in a model with asymmetric, independent private values. Asymmetries lead to inefficient allocations, thereby creating a motive for resale after the auction is over. In our model, resale takes place via monopoly pricing—the winner of the auction makes a take-it-or-leave-it offer to the loser. Our goal is to compare equilibria of the first-price auction without resale (FPA) with those of the first-price auction with resale (FPAR). For the three major families of distributions for which equilibria of the FPA are available in closed form, we show that resale possibilities increase the revenue of the original seller. We also show by example that, somewhat paradoxically, resale may actually decrease efficiency.     

Discrete forecast horizons for two-product variants of the dynamic lot-size problem

Motivated by the recent success of integer programming based procedures for computing discrete forecast horizons, we consider two-product variants of the classical dynamic lot-size model. In the first variant, we impose a warehouse capacity constraint on the total ending inventory of the two products in any period. In the second variant, the two products have both individual and joint setup costs for production. To our knowledge, there are no known procedures for computing forecast horizons for these variants.Under the assumption that future demands are discrete, we characterize forecast horizons for these two variants as feasibility/optimality questions in 0–1 mixed integer programs. A detailed computational study establishes the effectiveness of our approach and enables us to gain valuable insights into the behavior of minimal forecast horizons.     

India and the Impossible Trinity

In the 1990s, India responded to the well‐known trilemma of macroeconomic policy by adopting an intermediate exchange rate system combined with selective capital controls. This regime enabled the country to balance exchange rate stability, exchange rate targeting and monetary autonomy, and to weather successfully various shocks that included contagion from the East Asian crisis. India's experience serves to reinforce doubts about the desirability of bipolar exchange rate regimes for developing countries as an integral element of a new international financial architecture.     

Feedback‐seeking behavior within multinational corporations

Notwithstanding their concern with intra‐MNC control mechanisms, scholars have overlooked the complementary phenomenon of self‐regulatory behavior by subsidiaries. In this paper, we take the first steps towards addressing this gap by advancing and testing hypotheses dealing with the determinants of a major element of self‐regulatory behavior at the subsidiary level, i.e., the performance‐oriented feedback‐seeking behavior of subsidiary presidents. Utilizing data from 374 subsidiaries of 75 MNCs, we test hypotheses regarding the impact of subsidiary task and organizational context on the feedback‐seeking behavior of subsidiary presidents. The results of this study can be summarized as follows: (i) subsidiary presidents do engage in proactive performance‐oriented feedback‐seeking behavior; (ii) they vary in the extent to which they engage in such behavior; and (iii) these variations in feedback‐seeking behavior are at least partially systematic. Copyright © 1999 John Wiley & Sons, Ltd.