Sticky cost behaviour: evidence from small and medium sized companies

This paper investigates whether cost stickiness occurs in small and medium sized companies using a sample of Italian nonlisted and listed firms during the period 1999–2008. Our findings show that cost stickiness emerges only for the total cost of labour and not for selling, general and administrative (SG&A) costs, cost of goods sold and operating costs. Stickiness of operating costs is only detected in a sample of listed companies. We further contribute to the literature on sticky cost behaviour by discussing critical issues associated with the extant approach of empirical analysis and interpretation of sticky cost behaviour.     

The influence of formal and informal sales controls on customer-directed selling behaviors and sales unit effectiveness

Adaptive selling (AS) and customer-oriented selling (COS) constitute two key customer-directed selling behaviors for the success of the modern sales force. However, knowledge regarding the organizational factors that can induce salespeople to engage in those behaviors is strikingly limited. Against this background, we develop a comprehensive model that delineates the influences of formal and informal sales controls on AS and COS and, through them, on sales unit effectiveness. Based on a sample of sales managers in a major European Union country, we present new evidence that (a) formal and informal sales controls exert differential impact on salespeople's AS and COS behaviors; (b) AS directly and positively influences sales unit effectiveness; (c) COS affects sales unit effectiveness only indirectly, i.e. by fostering AS; and (d) outcome and cultural controls directly improve sales unit effectiveness. We conclude with a discussion of our findings for academics and practitioners.     

Alitalia – The failure of a national carrier

The paper examines the case of Alitalia, Italy’s former flag carrier, as a case of a state-managed failure. The history of the airline is characterized by a continuous decline in its competitive position since the progressive liberalization of the European aviation market. The root cause of this decline lies in the carrier being mainly used as a political tool rather than operating as a competitive firm. In a liberalized market this doomed Alitalia to failure, which was artificially delayed by numerous state financial and regulatory interventions. The paper starts with a historical overview of the most important events in recent Alitalia history. Thereafter the main causes of the airline’s weak competitive position relative to other European carriers are analyzed. We argue that the underlying causes of the decline were continuous political protection, lack of strategic views in favor of short-term objectives, and poor managerial decisions.     

Discrimination,technology and unemployment

I study the interaction between discrimination and investment using a directed search model where firms decide the capital intensity of their production technologies before being matched. Discrimination makes some workers cheap to hire. As a consequence, some firms might save on capital costs adopting labour intensive technologies. This framework allows one to reconcile search models with three well-known facts regarding the labour market outcomes of minority workers: low wages, high unemployment and occupational segregation. Furthermore, the model questions the role of equal pay legislation in reducing inequality since removing this restriction, i.e., allowing firms to post type-contingent wages, eliminates the negative effects of discrimination on investment and wages.     

The Choice of the Working Secto in Transition: Income and non-income determinants of sector participation in Kazakhstan

This study compares the individual, household and location characteristics of private employees, the self-employed, the unemployed and the economically inactive in Kazakhstan making use of a 1996 World Bank Living Standards Measurement Survey. The purpose is to understand whether the process of transition has determined a selection of workers exiting the state sector and entering the three relatively new 'pools' of private employees, self-employed and unemployed. An 'occupational choice' model is used to explore the determinants of sector participation. It is found that income opportunities are similar between the private and self-employment sectors, that the private sector is not necessarily the workers' first choice and that non-income determinants including local economic and labour market conditions and household related factors explain better than income the choice of the working sector. Self-employment seems to be a key sector in understanding the mechanisms of sector choice and the reallocation of labour. Unemployment appears as a choice of last resort and made by truly 'rationed' individuals.     

The impossibility of compromise: some uniqueness properties of expected utility preferences

Summary. We focus on the following uniqueness property of expected utility preferences: Agreement of two preferences on one interior indifference class implies their equality. We show that, besides expected utility preferences under (objective) risk, this uniqueness property holds for subjective expected utility preferences in Anscombe-Aumann's (partially subjective) and Savage's (fully subjective) settings, while it does not hold for subjective expected utility preferences in settings without rich state spaces. Indeed, when it holds the uniqueness property is even stronger than described above, as it needs only agreement on binary acts. The extension of the uniqueness property to the subjective case is possible because beliefs in the mentioned settings are shown to satisfy an analogous property: If two decision makers agree on a likelihood indifference class, they must have identical beliefs. Received: November 15, 1999; revised version: December 29, 1999     

Strategic Interactions and Contagion Effects under Monetary Unions

This paper applies game theory and a cost‐benefit analysis to study voluntary exits and contagion effects in countries joined to a monetary union. The paper looks at two non‐core or periphery countries of a large union and examines the role of structural asymmetries and strategic interactions as determinants of equilibrium outcomes, following both country‐specific and common shocks. The paper finds that under almost symmetry between countries, country‐specific shocks are never associated with multiple equilibria and, if large enough, can spread to other countries leading to contagion. By contrast, common shocks are seen to sustain multiple equilibria if almost‐symmetric countries are considered and to have implications similar to those found in the country‐specific case if large structural asymmetries are admitted.     

Off-season tourists and the cultural offer of a mass-tourism destination: The case of Rimini

This paper assesses the potential implications on off-season tourism of enhancing the cultural offer of Rimini, a popular Italian seaside holiday destination hosting about 12 million overnight stays per year. Since more than 9 million of these stays are concentrated in the summer season, in the last 20 years. Rimini has been undergoing a policy of seasonality smoothing, which mainly pivots around business and cultural tourism. This assessment has been carried out through discrete choice experiments submitted to a sample of about 800 tourists who visited Rimini outside the summer months. Since tourism can be viewed as a composite good, which overall utility depends on how the component characteristics are arranged, the choice experiments allow to disentangle the importance and the willingness to pay of tourists for different attributes of the holiday. The choice model incorporates a number of possible changes to actual tourism features (which are also the subject of public debate), including them in hypothetical alternative “holiday packages”. The conditional logit analysis of the choice experiments can highlight any synergy or trade-off between cultural and business tourism. Results suggest that business and leisure tourists share many features related to the use of the territory, while there are important trade-offs between these two groups and cultural tourists. Since business tourists have a higher willingness to extend their stay, a softer budget, and their demand is also complementary to the demand of summer tourists (Brau, Scorcu, & Vici, 2009), from the destination point of view investing in this market segment would be the best option. Although a “second best”, however, cultural tourists share with the local population of Rimini many aspects of the demand of territory (Figini, Castellani, & Vici, 2009). Hence, cultural tourism can play a fundamental role in the intermediate season as a tool for smoothing seasonality, to diversify investments and to give value to the city’s cultural heritage.     

The capital structure of multinational companies under tax competition

This article studies the relation between debt policies of multinational companies (MNCs) and governments’ tax strategies. In the first part, we show that the ability to shift income from high- to low-tax countries affects MNCs’ financial choices. In the second part we show how MNCs’ financial decisions can affect the tax strategies of two governments competing to attract income.      

Asymmetric Reaction Functions for the Euro Area

This paper offers a preliminary evaluation of ECB conduct ofmonetary policy by estimating a fairly general reaction functionfor the euro area. The specification of the policy rule embodiesa number of nonlinearities which are shown to stem from asymmetricpreferences and a convex aggregate supply curve. Asymmetricpreferences allow, but do not require, policy-makers to weightdifferently positive and negative deviations of inflation andoutput from the reference values, and translate into an asymmetricreaction function. The empirical analysis on monthly euro-areaaggregated data over the last 5 years reveals that ECB monetarypolicy is effectively described by a nonlinear policy rule accordingto which output contractions have required a larger policy responsethan output expansions. Moreover, actual movements in the eurointerest rate closely resemble the simulated path that a Bundesbank-typeof behaviour would have implied.