Policy Dimensions of Progressive Institutional Change: Lessons from China’s Construction of a Socialist Market Economy

Abstract:

Through a comprehensive review of the progressive institutional change (PIC) literature, I first discuss four possible trajectories of PIC by considering the forces of societal reaction that might frame the path, as well as the scale and scope of the changes. Thus, I pose four questions that need to be asked when related policies are formulated for PIC. To illustrate this method, I scrutinize the evidence from the construction of a socialist market economy by the Chinese government since the 1980s and argue that related policies have successfully promoted PIC from three dimensions: (1) curbing potential conflicts with power groups; (2) promoting a sense of awareness among stakeholders; and (3) minimizing disturbances to the community. Actually, the related changes demonstrate a dynamic “displacement process” for PICs. Despite the success of this sociosystem, it is found that the sustaining of PIC which requires policy factors that enhance instrumental efficiency in the Chinese context will serve as a challenge to the Chinese government ahead.     

Depreciation of Business R&D Capital

We develop a forward-looking profit model to estimate the depreciation rates of business R&D capital. By using U.S. government data between 1987 and 2007, and the newly developed model, we estimate both constant and time-varying industry-specific R&D depreciation rates. The results comprise a set of R&D depreciation rates for major U.S. high-tech industries. They align with the main conclusions from recent studies that the rates are in general higher than the traditionally assumed 15 percent and vary across industries. The relative ranking of the constant R&D depreciation rates among industries is consistent with industry observations and the industry-specific time-varying rates are informative about the dynamics of technological change and the levels of competition across industries. Lastly, we also present a cross-country comparison of the R&D depreciation rates between the U.S. and Japan, and find that the results reflect the relative technological competitiveness in key industries.     

A Stochastic Model with Penalized Coefficients for Spatial Price Comparisons: An Application to Regional Price Indexes in Italy

This paper focuses on a new strand of research that uses stochastic approach for making spatial price comparisons. We propose a novel method to account for the presence of spatial dependencies in consumer prices and consequently in price indexes by imposing penalization conditions on the estimation of traditional CPD models leading to the spatially-penalized country-product-dummy (SP-CPD) model. The paper proposes an appropriate estimation strategy, which enables us to simultaneously estimate all the parameters in the model, including the smoothing parameter of the penalization term instead of determining it externally. In order to estimate spatial price indexes for areas lacking in price data, we suggest applying the kriging methodology to the price indexes obtained from the SP-CPD model. This new approach is applied to official Italian CPI data for constructing regional spatial price indexes for 2014. The results show that price levels are higher in the Northern-Central regions than in the South.     

Leader Emergence in Nascent Venture Teams: The Critical Roles of Individual Emotion Regulation and Team Emotions

This study advances a theory of how different aspects of emotion regulation influence individual leader emergence in the intensely emotional context of nascent venture teams. Despite the growing amount of research on the role of leadership in the entrepreneurial process, the emergence of leaders in nascent venture teams has rarely been explored. Drawing on theories and research on leadership emergence and emotion regulation, we argue that the two aspects of emotion regulation (i.e., reappraisal and suppression) exert opposite effects on the degree to which nascent venture team members come to perceive an individual as a leader. We also theorize that team emotions arising from affective events moderate the relationship between reappraisal and leader emergence in such teams. Data from 103 nascent venture teams without prior leaders show a negative relationship between individuals’ trait disposition to suppress emotions and their emergence as leaders, and a positive relationship between their trait disposition to reappraise emotions and their emergence as leaders. Moreover, we find that negative team emotions magnify the positive association between reappraisal and leader emergence, while positive team emotions mitigate it. We discuss the implications of our findings for the literature on entrepreneurial leadership, entrepreneurial emotions, and leadership in general.     

Preserving a Professional Institution: Emotion in Discursive Institutional Work

We studied the discursive institutional work written by pharmacy leaders as part of a larger institutional project to preserve the institution of pharmacy. Our analysis of monthly editorials printed in the Journal of the American Pharmacists Association from 1960 to 2003 shows how different discrete emotions were systematically incorporated in specific rhetorical argument structures over the course of an institutional project. In contrast to previous research, we show how discursive institutional work that is directed to members of the same specific social group (e.g., a profession) can vary over time in response to significant events and changes in practices of the target audience. Our longitudinal study shows that the relative frequency of argument types, the incorporation of emotion, and the content of rhetorical argumentation changed over time. We contribute to theory about the role of emotions in discursive institutional work by unpacking the role of discrete emotions and showing how such discourse evolves over time in concert with field conditions.     

How do leaders' perceptions of organizational health climate shape employee exhaustion and engagement? Toward a cascading-effects model

Although researchers and practitioners increasingly focus on health promotion in organizations, research has been mainly fragmented and fails to integrate different organizational levels in terms of their effects on employee health. Drawing on organizational climate and social identity research, we present a cascading model of organizational health climate and demonstrate how and when leaders' perceptions of organizational health climate are linked to employee well-being. We tested our model in two multisource studies (N_{Study 1} = 65 leaders and 291 employees; N_{Study 2} = 401 leader–employee dyads). Results showed that leaders' perceptions of organizational health climate were positively related to their health mindsets (i.e., their health awareness). These in turn were positively associated with their health-promoting leadership behavior, which ultimately went along with better employee well-being. Additionally, in Study 1, the relationship between perceived organizational health climate and leaders' health mindsets was moderated by their organizational identification. High leader identification strengthened the relationship between perceived organizational health climate and leaders' health mindsets. These findings have important implications for theory and practice as they show how the dynamics of an organizational health climate can unfold in organizations and how it is related to employee well-being via the novel concept of health-promoting leadership.     

Multilevel marketing: optimizing marketing effectiveness for high-involvement goods in the automotive industry

International Entrepreneurship and Management Journal - With a surge in communication channels increasing the complexity of today’s media landscape, companies face new challenges concerning...     

Inertia Risk: Improving Economic Models of Catastrophes*

We model endogenous catastrophic risk in a new way. We call it “inertia risk”, which accounts for delays between physical variables and the hazard rate – a characteristic often observed in reality. The added realism significantly affects optimal policies relative to the standard model of catastrophic risk. The probability of a catastrophe occurring at some point in time can span the entire interval [0,1], and is not 0 or 1 as is typical in standard models. Inertia risk can also generate path dependences. We illustrate the implications for policy in a simple model of climate change.     

The influence of user-supplier relationship on innovation dynamics of Oil & Gas industry

ABSTRACT

This paper analyses the role of user-supplier relationships in the innovation dynamics of the Oil and Gas (O&G) industry, from an analysis supported by R&D and patent application data. This paper points to some recent interesting phenomena in the O&G sector, such as: (i) the remarkable advancement of two Chinese oil companies; (ii) the significant growth in O&G companies’ technological engagement in exploration and production (E&P) from the 2000s; (iii) the non-negligible increase in the application of O&G companies’ patents for renewable energy. Moreover, by working with the oil and gas chain complete, we show that the performance of the companies oil and gas equipment and services industry (O&GES) is restricted to the upstream activities. Finally, we bring up some arguments that have as objective relativise the typology of R&D intensity adopted by OECD.     

The Growing Blessing of Unicorns: The Changing Nature of the Market for Privately Funded Companies

The past 15 years have seen the emergence of large infusions of private capital at levels previously accessible only in public markets. One direct effect of these non‐public fundraisings is the spawning of private entities with market valuations reaching $1 billion, thereby achieving the status of unicorns. As the authors reported in an earlier study, by the end of 2015, there were 142 unicorns with an aggregate value exceeding $500 billion. The conviction of many investors and managers at that time was that these companies could best create value by staying private, often by adopting governance structures focused on creating superior operating performance. It was also widely believed that unicorns would remain outside the public markets longer and succeed in attracting even more private capital, thereby enabling their investors to capture a greater share of the increase in company value. In this study, the authors examine how the characteristics and dynamics of “the blessing” have changed in the past five years. Despite the widespread view that the valuations and private financing trend fueling this market were not sustainable, the authors report that by March 2020, the “net” number of unicorns had grown from 142 to 464, a number that doesn't reflect the transformation of over half of the 2015 sample through acquisition or public offering and their replacement by new unicorns. Further, the cumulative market valuation of unicorns more than doubled from $500 billion to $1.37 trillion, representing growth far greater than that in the public equity markets (some 26% per annum, as compared to 9% for the S&P 500) over the same period—and the blessing has become more diversified, both in terms of industry and geographical location. The authors also consider what happens when unicorns “graduate” to a different organizational form by means of an IPO, private buyout, or business failure. Analyzing the 107 firms that departed the sample between 2015 and 2020, the authors report that the average lifespan of a unicorn from its founding date to its exit date has been 9.5 years, indicating that such firms indeed remain privately owned for a longer time than in the past. Additionally, the study finds that the founders and initial investors in unicorns have fared quite well, cashing out their initial investment at almost six times invested capital, on average. These private investment performance metrics have been significantly higher than the returns to public shareholders in the same firms during the post‐IPO period, signifying that unicorn investors have captured much more of the value created in the company's growth phase than public stockholders.