Work force ageing and expanding service sector: a double burden on productivity?

Expansion of the service sector has often been considered as a threat to aggregate productivity. We examine whether work force ageing is a cause of further concern in the service sector, using matched employer–employee data from Finland. The results show hump-shaped relationships between average age of the work force and establishment productivity. The results vary somewhat across different service industries (hotels and restaurants, trade, transportation, and business services). The conclusion is that there is some worry about a double burden from ageing of the work force and expansion of the low-productivity service sector, especially in the labour-intensive, low-skill fields.     

Brand popularity as an advertising cue affecting consumer evaluation on sustainable brands: a comparison study of Korea,China, and Russia

This study examines how brand popularity in conjunction with consumers' varied styles of decision-making, as well as other consumer characteristics, can influence the overall evaluation of a sustainable brand. The results of our empirical analysis show that the effect of brand popularity varies widely according to which countries one considers. Here we examined Korea, China, and Russia, and found in each country that popularity significantly influenced consumers' evaluations of sustainable brands, yet in very different aspects. In Korea, when the brand popularity cue was presented, a significant positive influence on consumer evaluation resulted. However, China showed a significant negative influence, while Russia showed neutral, insignificant results. In addition, we found also that both a brand's fashion leadership and its connection with sustainable, conscientious causes can work as moderators. Finally, we found that consumer decision-making style varies not only according to fashion leadership and sustainability involvement, but that each country had a different opinion on sustainability in general. Thus, several important implications for international marketing are here presented.     

Exploring country-level institutional arrangements on the rate and type of entrepreneurial activity

This study introduces a novel multidimensional measure of the entrepreneurial environment that reveals how differences in institutional arrangements influence both the rate and the type of entrepreneurial activity in a country. Drawing from institutional theory, the measure examines the regulatory, normative, and cognitive dimensions of entrepreneurial activity, and introduces a novel conducive dimension that measures a country's capability to support high-impact entrepreneurship. Our findings suggest that differences in institutional arrangements are associated with variance in both the rate and type of entrepreneurial activity across countries. For the formation of innovative, high-growth new ventures, the regulative environment matters very little. For high-impact entrepreneurship an institutional environment filled with new opportunities created by knowledge spillovers and the capital necessary for high-impact entrepreneurship matter most.     

THE NEW THEORY OF COMMERCIAL BANKING AND BANK LENDING BEHAVIOR

This paper studies the bank's lending decision, based on three observed phenomena: banks earn substantial profits from off‐balance sheet activities and services, which they take into account in their lending decisions. Secondly, the critical point in the customer relation is the loan decision: the probability of the customer staying with the bank is a function of the loan extended each time one is applied for. Third, what is at stake in the loan decision is the expected value of the entire customer relation, which is the probability times the present value of expected future profits. The bank is a maximizer of this expected present value, while making decisions on individual loan applications. It is shown that the bank is in a corner solution with respect to its good customers, and other customers often have an incentive to get to a corner. Therefore, corner solutions may be the rule rather than the exception in the bank's customer relations, and there is no mechanism making the bank indifferent, at the margin, between lending to different customers. It can be optimal to extend loans to (present and expected future) good customers at an interest rate loss. A rationed customer with a concave enough probability function can receive a larger loan by asking for less. Loyalty increases the customer's value to the bank but improves its loan terms only if the customer makes it conditional on the loan extended.     

TAXATION AND CENTRALISED WAGE SETTING: THE CASE OF ENDOGENOUS LABOUR SUPPLY

The implications of centralised wage setting for the relationship between taxation, wages and employment are studied allowing for endogenous adjustment in work hours. We show that centralisation promotes wage moderation, makes wages and employment less sensitive to changes in wage taxation and reduces the hours worked. With an individual supply of working hours, a wage tax can even improve employment if wage setting is centralised and marginal utility from a public good is sufficiently high. Moreover, if a profit tax is used to finance public expenditure, higher tax reduces wages and improves employment.     

No-till technology: benefits to farmers and the environment? Theoretical analysis and application to Finnish agriculture

We assess theoretically and empirically the private profitabilityand social desirability of conventional tillage and no-tillwhen crop yields, production costs and nutrient and herbiciderunoff damages are taken into account. Based on Finnish experimentaldata, no-till provides higher social and private profit thanconventional tillage for barley but not for oats and wheat,for which the production cost advantage of no-till does notcompensate for lower yields in the private optimum. As regardssocial returns, no-till provides slightly better overall environmentalperformance but, given the existing valuation of nutrient andherbicide runoff damage, this is not enough to give no-tillan advantage in oats and wheat cultivation. Thus, the key factorsdetermining the private and social profitability of no-tilland conventional tillage are yields and production costs ratherthan environmental performance.     

Consumer trust in animal farming practices – exploring the high trust of Finnish consumers

Trust in animal farming is a complex phenomenon and it is expressed in heterogeneous ways in different cultural contexts. Nordic countries are typically known as high‐trust societies in terms of food issues. Based on group interviews among Finnish consumers, this paper explores how citizen–consumers express trust and distrust regarding animal farming practices and whether it is possible to identify different forms of trust among different consumer groups. The foundations of emotional trust in animal farming have been weakening due to urbanization and the structural change in agriculture. Ordinary shoppers responded to this situation by transferring responsibility for farm animal welfare to public authorities, relying on habitual policy‐generated trust in animal farming. In contrast, gastronomes and organic consumers actively cultivated their emotional trust in livestock production by creating new kinds of contacts to farming. Gastronomes, organic consumers and vegetarians especially acknowledged the complexity of the claims made in farm animal welfare politics. As trust in food has arguably become a subject of active negotiation in Finland, the foundations for the habit‐based policy‐generated trust may be partly weakening, creating more space for the politicizing of food issues and the developing of alternative sources for regaining trust in food production.     

Strategic behavior in a service industry

A model of service duopoly is formulated, where the arrival of customers and their service time in the firm are stochastic. The firms first choose the service capacity, and given the capacity they then choose the price in a Bertrand competition. Capacity choices have a negative externality on the competitor, since increased capacity in one firm decreases its expected full price (price plus cost of waiting) and leads to a flow of customers from the other firm. If the firms choose capacities strategically, it is optimal to underinvest compared to the non‐strategic case, but this result may arise in different ways. By underinvesting the firms commit themselves to longer queues (lower quality) to relax price competition. Copyright © 2002 John Wiley & Sons, Ltd.