Networks and linkages among firms and organizations in the Ottawa-region technology cluster

This paper reports on a study of the networking and linkage practices of technology and non-technology firms within the Ottawa cluster. The work seeks to understand how and why particular patterns of networks and linkages evolve and it examines empirically the usage and value of networks and linkages. Previous work argues that technology firms need to be relatively more adept at developing external relationships in order to be successful than do non-technology based companies. This work, however, finds that technology firms exhibit fewer linkages than non-technology based companies do within the Ottawa cluster. The research suggests that the vitality of the Ottawa cluster could be further enhanced through the promotion of additional networking and linkages among regional firms. A key implication for management practice is that CEOs of technology-based firms should work towards establishing and maintaining additional valued relationships.     

Pay-performance sensitivity and firm size: Insights from the mutual fund industry

I examine the ex ante decision to make an agent's pay-performance sensitivity an inverse function of organization size. I focus on mutual funds and their decision to use compensation contracts that reduce the advisor's marginal compensation as the fund grows (a declining-rate contract) over the dominant contract type, where marginal compensation is unrelated to fund size (a single-rate contract). I find evidence consistent with the view that declining-rate contracts are a mechanism to keep marginal compensation in line with the advisor's declining marginal product. Specifically, I find that funds with greater exposure to diseconomies of scale are more likely to use a declining-rate contract and to specify a greater amount of compensation decline in their contracts. Consistent with optimal contracting, I find no evidence of a performance difference between funds with declining-rate contracts and funds with single-rate contracts.     

Estimating time variation in measurement error from data revisions: an application to backcasting and forecasting in dynamic models

Over time, economic statistics are refined. This implies that data measuring recent economic events are typically less reliable than older data. Such time variation in measurement error affects optimal forecasts. Measurement error, and its time variation, are of course unobserved. Our contribution is to show how estimates of these can be recovered from the variance of revisions to data using a behavioural model of the statistics agency. We illustrate the gains in forecasting performance from exploiting these estimates using a real‐time dataset on UK aggregate expenditure data. Copyright © 2009 John Wiley & Sons, Ltd.     

Interest differentials and extreme support for uncovered interest rate parity

This paper addresses two findings from the empirical literature testing uncovered interest parity (UIP): (i) more favorable results when interest differentials (IDs) are large and (ii) instability across samples. Simulations demonstrate that explanations of the results using large IDs based on the hypothesis of a “zone of speculative inactivity” are inconsistent with empirical evidence. Furthermore, it is shown that, if agents forecast IDs based on long-run values, coefficient estimates will be unstable if rates of decay in IDs vary significantly and, for ex post UIP to hold, IDs must decay in absolute value. This is consistent with OECD country data.     

First-and second-best allocations under economic and environmental uncertainty

This paper uses a micro-founded DSGE model to compare second-best optimal environmental policy, and the resulting Ramsey allocation, to first-best allocation. The focus is on the source and size of uncertainty, and how this affects optimal choices and the comparison between second- and first-best. While higher economic volatility is bad for social welfare in all cases studied, the welfare effects of higher environmental volatility depend on its size and the effectiveness of public abatement policy. The Ramsey environmental tax is pro-cyclical when there is an economic shock, while it is counter-cyclical when there is an environmental shock.     

MNE home country cultural norms and conflict strategy fit in transnational business contract disputes

The increasing frequency and complexity of transnational business relationships has been commensurate with an increase in contractual disputes. In such situations, home country cultural norms will often influence how MNEs resolve contractual disputes in foreign markets. This begs the question: does fit between an MNE's choice of conflict strategy and its home country cultural norms affect monetary payouts (costs) in transnational business contract disputes? We apply organizational imprinting theory and the fit paradigm to a model employing data from U.S. court cases involving 316 MNEs from 47 countries. We find that choosing a conflict strategy that fits home country cultural norms will result in higher monetary payouts for MNEs. Additionally, cultural distance, but not legal distance, enhances the positive relationship between MNE conflict strategy fit and monetary payouts. Implications and future research directions are discussed.     

Corporate strategy financialized: Conjuncture,arbitrage and earnings capacity in the S&P500

The conjuncture that ushered in the era of shareholder value served to embed capital market expectations into corporate governance aligning management and shareholder interests. Market arbitrage focussed on modifying contractual relations with stakeholders to extract a (higher) return on invested capital. In this article we focus on cash earnings on capital employed generated by the S&P 500 survivor group of firms covering the period 1990–2008. We use this financial data to construct three complementary perspectives on corporate financial performance: firm, firm-relative and macro. Within this framework the financial numbers and perspectives are analogous to a ‘hall of mirrors’ where ambiguity and contradiction are in play frustrating straightforward performative narratives that connect purpose with financial transformation an era of shareholder value.     

Technical Progress and Product Reliability under Competition and Monopoly

Technical progress lowers costs and prices but appears to have an ambiguous effect on product reliability. This paper presents a simple model which explains this observation. Copyright © 2013 John Wiley & Sons, Ltd.