Corporate Entrepreneurship and Real Options in Transitional Policy Environments: Theory Development

ABSTRACT We develop a theoretical framework for describing, modelling, and predicting entrepreneurial strategies by corporations in transitional public policy environments. Drawing on research in entrepreneurship, real options, and strategic management under uncertainty, we demonstrate how corporations affected by government policy can use entrepreneurial strategies to exploit discontinuities generated by uncertain and unstable public policy environments. We argue that specific strategies will be effective depending on the degree and slope/inflection profile of policy change. Four strategies are identified: preemptive, optioned, synchronized, and adaptive. We develop propositions and provide illustrations to show how each of these strategies has helped firms respond to transitional policy environments. We conclude by offering a discussion of the utility and limitations of the framework and its potential application to other managerial circumstances in which uncertainty is pervasive, and by describing opportunities for further research, including empirical testing of our model.     

The World Bank and Poverty: A Review of the Evidence on Whether the Agency Has Diminished Emphasis on Aid to the Poor

Abstract . The World Bank's loan patterns in recent years are examined to see if there is any empirical evidence of a diminution of interest in poverty alleviation programs. Four very different concepts on what poverty alleviation is are used to categorize the international agency's loans: the share of lending going to (1) poor countries; (2) programs targeting direct aid to poor individuals; (3) certain sectors deemed to be intrinsically beneficial in meeting basic human needs, and (4) overall country programs which make poverty a key element of their goals. Each of the concepts has different criteria and standards. Analysis of the data indicates that the Bank seems to be doing at least as well today in the struggle against poverty as in previous decades. In some ways the Bank's current program is more poverty-oriented than are bilateral aid programs financed by the United States and other major donor countries.     

Optimal delegation implications of central bank transparency

The interrelationship between monetary regime design and central bank transparency is examined. We find optimal delegation requires the central bank be either: ‘representative’, not choosing to publicly reveal its private information; or ‘ultraconservative’, deciding to be fully transparent.     

Simple rules for making alliances work

Corporate alliances are growing in number--by about 25% a year--and account for up to a third of revenues and value at many companies. Yet some 60% to 70% of them fail. What is going wrong? Because alliances involve interdependence between companies that may be competitors and may also have vastly different operating styles and cultures, they demand more care and handling than other business arrangements, say Hughes and Weiss, management consultants at Vantage Partners. The authors have developed five principles--based on their two decades of work with alliances -to complement the conventional advice on alliance management: (1) Focus less on defining the business plan and more on how you and your partner will work together. (2) Develop metrics pegged not only to alliance goals but also to performance in working toward them. (3) Instead of trying to eliminate differences, leverage them to create value. (4) Go beyond formal systems and structures to enable and encourage collaborative behavior. (5) Be as diligent in managing your internal stakeholders as you are in managing the relationship with your partner. Companies that have adopted these principles have radically improved their alliance success rate. Schering-Plough, for example, engages in a systematic "alliance relationship launch": four to six weeks of meetings at which the partners explore potential challenges, examine key differences and develop shared protocols for managing them, and establish mechanisms for day-to-day decision making. Blue Cross and Blue Shield of Florida measures the quality of alliance progress through regular surveys of both its own staff and its partners'. These companies have learned that the conventional advice is not so much wrong as incomplete. The five simple rules can help fill in the blanks.     

Panel Composition and Judicial Compliance on the US Courts of Appeals

This article integrates the literatures on judicial compliance,panel decision making, and case selection in the federal judiciaryhierarchy. Many studies have speculated that "panel effects"—thephenomena under which an individual judge's vote may dependon her colleagues on a three-judge panel—can be tied toa "whistleblower effect," through which a lower court judgecan constrain a panel majority from disobeying with SupremeCourt precedent by threatening to dissent. However, no studyhas systematically found such a relationship. I present a game-theoreticmodel of circuit court-Supreme Court interaction that demonstrateshow panel composition might affect the likelihood of lower courtcompliance to Supreme Court doctrine. The model illustrateshow three-judge panels, while not inducing perfect doctrinalcontrol of lower courts by the Supreme Court, significantlyincreases the latter's ability to see its preferred doctrinecarried out by its subordinates in the judicial hierarchy.     

Extreme Value Dependence in Financial Markets: Diagnostics, Models, and Financial Implications

This article presents a general framework for identifying andmodeling the joint-tail distribution based on multivariate extremevalue theories. We argue that the multivariate approach is themost efficient and effective way to study extreme events suchas systemic risk and crisis. We show, using returns on fivemajor stock indices, that the use of traditional dependencemeasures could lead to inaccurate portfolio risk assessment.We explain how the framework proposed here could be exploitedin a number of finance applications such as portfolio selection,risk management, Sharpe ratio targeting, hedging, option valuation,and credit risk analysis.     

Do Inward Investors Achieve their Job Targets?*

The paper utilizes data for north‐east England over the period 1985–98 to examine if foreign‐owned start‐up plants achieve their job targets. Different models are estimated, each shedding light on the relationship between the jobs promised by plants in their initial investment and their actual employment attained. On average, it is found that the plants achieve their job targets, but larger plants fall someway short. It is argued that these plants may deliberately overstate the number of jobs, and that the employment‐creation claims of inward investors and economic development agencies should be treated with skepticism.     

Integrating innovation and learning curve theory: an enabler for moving nanotechnologies and other emerging process technologies into production

Process technology selection is biased against selection of emerging process technologies such as nanotechnologies, biotechnology and microtechnologies (MEMS), since these decisions are frequently based on assumptions that are only valid for mature sustaining process technologies. This is a great concern since emerging process technologies are drivers of economic growth, especially in developed economies. We consider the learning curve literature and integrate it with the literature on technological trajectories and innovation to develop a theory for modeling the learning curve for emerging process technologies.     

Bank Loan Availability and Trade Credit Demand

This paper investigates the effects of bank loan availability on the trade credit and credit card demand of small firms, using firm‐level data from the 1995 Credit, Banks, and Small Business Survey, conducted by the National Federation of Independent Business. We find that firms increase their demand for trade credit and credit card debt when facing credit constraints imposed by banks. These results provide evidence of a pecking order of debt financing, where firms increase their reliance on potentially expensive sources of funds when bank loans are not available.