A collaborative approach for managing project cost of poor quality

This paper presents a construct – a collaborative approach for managing project cost of poor quality. Changing project constraints makes it difficult or even impossible to utilize traditional cost of poor quality methodology in managing quality costs in project environments. The construct presented here modifies the root-cause analysis type of approach to manage the cost of poor quality by introducing the use of three prospective values and probabilities of occurrence in project ex-ante evaluations. An integral part of the construct is the way in which monetary values are determined through workshops. The results were obtained in a research project using the constructive research approach. The construct was created at Finnish Post, Hankkija-Maatalous and Nokia Networks, and the validity was further tested at Valmet Paper Machines.     

Local environment as a pitfall in the performance measurement of multi-site operations

The purpose of this paper is to disseminate an empirical observation that the external environment influences the data from performance metrics in a multi-site field service setting. The observation is made from real performance measurement data from 29 local units of a machinery manufacturer. We propose that the heterogeneity of local environments increases Type I and Type II errors in evaluating performance against targets and reduces the comparability of local units. These findings imply distortions in the managerial control effect of performance measurement and in decision making on interventions and improvements. As a practical implication, this study emphasizes the need for contextual understanding in the proper use of performance measurement numbers.     

EU-Enlargement and Beyond: A Simulation Study on EU and Russia Integration

This paper examines the economic effects of the opening of the Russian Federation. The analysis carried out in the paper is twofold. First we simulate the impact of the eastern enlargement of the EU and, second, we analyse how deeper integration between the EU and Russia contributes to this. The analysis is carried out with GTAP, a computable general equilibrium model. We find that there is a trade-off between the two roads of European integration arrangements. Eastern enlargement seems, even in its very deep form, be beneficial for all EU regions without causing substantial welfare losses outside the Union. EU–Russia integration, on the other hand, has different impact. To be beneficial for Russia free trade between the EU and Russia requires improved productivity in the latter, which may be due to better institutions or increased FDI. This might make the negotiations of the agreement cumbersome and if agreed its implementation difficult.This study stems from a project Opening of Russia in which the authors participated at RECEP in Moscow. This paper is substantially revised and updated version of Sulamaa, P. and Widgrén, M. (2003): EU Enlargement and Beyond: A Simulation Study on EU and CIS Integration, CEPR Discussion Papers 3768. The authors thank Peter Havlik and Risto Vaittinen and an anonymous referee for beneficial comments on earlier drafts, Comments and discussions with Paavo Suni, Ivan Samson, Xavier Richet and Xavier Greffe are also gratefully acknowledged. The usual disclaimer applies.     

Entrepreneurial Aspirations: Another Form of Job Search?

We study the labour market behaviour of employed individuals that have entrepreneurial aspirations in addition to aspirations to switch job. We analyze empirically these two “search processes” side-by-side and find that entrepreneurial aspirations and aspirations to switch job are relatively common. However, most employees are not engaged in both search processes, nor are the two processes alike: It is more difficult to empirically explain entrepreneurial aspirations than aspirations to switch job. Only few observable characteristics of the employed are related to both processes. Varied experience and job dissatisfaction are directly related to the probability of having entrepreneurial aspirations and aspirations to switch job, while job tenure is inversely related to them. Our analysis also contributes to the understanding of the process of transition from work into entrpreneurship: Employees who can experiment with new things in their present job, regard the content of their work important, and are dissatisfied with their superiors have more often entrepreneurial aspirations than others.     

Small business purchasing of capital equipment

This article concerns the results of a study employing consumer brand-choice methodology to explain the evaluation and buying decisions for light excavators by individual entrepreneurs. First, the purchasing of industrial products by small businesses is briefly discussed conceptually. Second, the buying decisions of Finnish contractors for light excavators were investigated with a multiattribute choice model. The results indicate that buying decisions are based on product attributes that differ from one excavator model to another. The usefulness of the selection model is evaluated, and a framework model describing factors affecting an individual entrepreneur's excavator buying process is suggested together with certain implications for marketers.     

Exploring causal relationships in an innovation program with Robust Portfolio Modeling

Many countries seek to foster the commercial exploitation of science-based research results through selective policy instruments. Typically, these instruments involve processes of follow-up data collection where the results of ex ante and ex post assessments are systematically recorded. Yet, several factors – such as the presence of multiple objectives, predominance of qualitative data and missing observations – may complicate the use of such data for adjusting the management practices of these instruments. With the aim of addressing these challenges, we adopt Robust Portfolio Modeling¹ (RPM) as an evaluation framework to the analysis of longitudinal data: specifically, we (i) determine subsets of outperforming and underperforming projects through the development of an explicit multicriteria model for ex post evaluation, and (ii) carry out comparative analyses between these subsets, in order to identify which ex ante interventions and contextual characteristics may have contributed to later performance. We also report experiences from the application of RPM-evaluation to a Finnish innovation program and outline extensions of this approach that provide further decision support to the managers of innovation programs.     

Multiple Objective Approach as an Alternative to Radial Projection in DEA

Radial projection is a standard technique applied in data envelopment analysis (DEA) to calculate efficiency scores for input and/or output variables. In this paper, we have studied the appropriateness of radial projection for target setting. We have created a situation where the decision making units (DMUs) are free to choose their own target values on the efficient frontier and then compared the results to those of radial projection. In practice, target values are primarily used for future goal attainment; hence, not only preferences but also, and on the whole, change in time frame, affect the choice of target values. Based on that, we conducted an empirical experiment with an aim to study how the DMUs choose their most preferred target values on the efficient frontier. The subjects, who all were students of the Helsinki School of Economics, were given the freedom to explore their personalized efficient frontiers by using a multiple objective linear programming (MOLP) approach. To study various and relevant scenarios, the personalized efficient frontiers for all students were constructed in such a way that the current position of each student in relation to the frontier made him/her inefficient, efficient, or super-efficient. The results show that the use of radial projection for target setting is too restrictive.     

The Roles of Employer and Employee Characteristics for Plant Productivity

The relationships of worker characteristics and productivity are examined using a matched worker-plant data set from Finnish manufacturing. The panel data are used for estimating productivity and wage profiles according to average age, seniority, and education. We measure productivity using the multilateral total factor productivity index. We find that the wage returns to plant-specific seniority exceed productivity returns when seniority is high. This result supports the hypothesis that human capital is not firm specific, and seniority related wages are used for incentive reasons, but may also be a symptom of sorting or insider influences on wage formation. Plant average age improves productivity more than it increases wage when average age is low, but for higher ages the productivity and wage returns to age are fairly similar. The returns to education in terms of wage and productivity are fairly close to each other for higher levels of education, but mid-level education is underpaid.     

Infrastructure public–private partnership project ecosystem – financial and economic positioning of stakeholders

The purpose of this paper is to construct an analytical cash flow-based project model to facilitate project appraisal of both private investors and public sector. With the help of the model that focuses on ecosystem and its stakeholders, it is simpler to identify potential conflicts usually encountered in public–private partnership (PPP) projects. The model construct is based on classical cash flow accounting and cost–benefit analysis. In the model, the flows of cash (private investors) and the flows of costs and benefits (public investors) are integrated in a single framework. The model shows that within the ecosystem the investors' (public vs. private) social, economic and financial targets are not necessarily coinciding. Prospecting of common ground and win–win situations becomes a crucial success factor for any PPP project. The paper discusses the policy and investment strategy implications for successful PPPs.     

When is money neutral under flexible exchange rates?

The paper studies the conditions for the neutrality of money under flexible exchange rates in an extended real-wage Mundell–Fleming model, with special emphasis on the specification of the behavior functions to correspond to their foundations in closed-economy macrotheory.It is shown that monetary expansion causes output first to decline, to eventually rise above its original level. However, if interest earnings on foreign securities dominate the trade balance in the expression for the exchange rate, monetary expansion leads to an appreciation of the exchange rate, while having an expansionary output effect. Money is neutral in the long run if either the wealth effect or foreign interest payments are abstracted from; if both are abstracted from, it is neutral also in the short run. Short and long-run neutrality results also if wealth consists only of foreign securities. The above responses hold both for net creditors and – with a minor qualification – debtors.