Sector‐based corporate citizenship

This paper approaches the much‐debated issue of corporate citizenship (CC). Many models depict the development process of CC, and yet attempts to find one extensive definition remain in progress. We argue that more than one type of citizenship may be needed to fully describe the concept. So far, social factors have dominated the definitions of CC, but citizenship functions can also be found in other areas. In fact, for maximum benefit, the type of citizenship should be tied to the sector and business field of the corporation in question. Using data drawn from three internationally operating corporations headquartered in Finland, we introduce three different types of CC that are in line with their core business ideas: cultural citizenship, environmental citizenship and technological citizenship. These new types of citizenships can help in grasping the complexity of business responsibility and ethics, and offer tools for gaining competitive advantage by differentiation.     

BAYESIAN MODEL SELECTION AND FORECASTING IN NONCAUSAL AUTOREGRESSIVE MODELS

In this paper, we propose a Bayesian estimation and forecasting procedure for noncausal autoregressive (AR) models. Specifically, we derive the joint posterior density of the past and future errors and the parameters, yielding predictive densities as a by‐product. We show that the posterior model probabilities provide a convenient model selection criterion in discriminating between alternative causal and noncausal specifications. As an empirical application, we consider US inflation. The posterior probability of noncausality is found to be high—over 98%. Furthermore, the purely noncausal specifications yield more accurate inflation forecasts than alternative causal and noncausal AR models. Copyright © 2010 John Wiley & Sons, Ltd.     

The parameters of the gravity model are changing – how and why?

Friction of distance in spatial interaction grows when the distance increases. This is a well-known fact and almost self-evident on the basis of the gravity model analogy and numerous empirical studies. Because this friction should apparently decrease over time, the change of the distance–decay parameter should be monotonic along time. We present empirical and theoretical evidence that this is only partially true. We also investigate the role of another parameter which is the scale parameter and the factors influencing on it. An empirical and theoretical explanation will be given as to why the changes of that parameter are rather contrary to the changes of the distance parameter.     

Ecological tax reform—a value chain level approach

This study assesses the effects of an ecological tax reform on three value chains. These case studies lead to an analysis of the business strategy options when companies face a shift in the relative prices of their production factors. The results support earlier research findings that the direct effects of an ecological tax reform on the price competitiveness of companies is on average rather small. However, the effects of the reform are shown to vary significantly between the different parts of the value chain. Copyright © 2002 John Wiley & Sons, Ltd. and ERP Environment     

Extending Austrian Economics toward Psychology: Rules in Loan Decisions

The proponents of the Austrian school of economics, like economists in general, often take a negative view of incorporating psychological assumptions in the main body of economic theory. Still they regularly make use of such assumptions while applying the theory. The paper argues for a cautious use of the findings of psychology from the very start of economic reasoning. The examples employed to illustrate the argument are from the loan decision process of a banker.     

Contributions from mood research

In this article definitions of mood and the behavioral effects of negative moods are reviewed and scrutinized. This is an important task for two reasons. First, in prior studies, consumer researchers have treated concepts such as affect, mood, feeling, and emotion vaguely and arbitrarily. This has resulted in confusion regarding the substance of mood. In an attempt to dispel a part of this confusion, this article offers a conceptual analysis of mood. Second, a large part of prior consumer behavior‐ and advertising‐related mood research has addressed the relation between mood and mental constructs. The relation between mood and actual consumer behaviors is a more neglected research area. The behavioral effects of negative moods are an especially interesting phenomenon, because past studies have produced mixed and contradictory results. Thus, to offer novel insights, the key conclusion of the conceptual analysis of mood is harnessed to explain the inconsistent findings regarding the negative mood–(consumer) behavior relation. Another theoretical contribution is the provision of starting points for conceptualizing mood‐alleviative consumer behavior. Suggestions for future research are also briefly outlined in the concluding section of this article. © 2000 John Wiley & Sons, Inc.     

Using Psychology to Reinforce the Austrian Argument for Freedom: The Case of Loan Decisions

The emphatic statements of F. A. Hayek, and other members of the Austrian school of economics, in advocacy of a free society have produced much misgivings among the economics profession. The paper aims to make the Austrian views more intelligible by tracing them back to a theory of the mind that Hayek develops in The Sensory Order. More generally, the paper argues that Austrian economics would greatly benefit from extending itself from a pure logic of choice toward psychological analysis. The argument is illustrated throughout the paper by examples taken from the loan decision process of a banker.     

The Aggregate Production Function of the Finnish Economy in the Twentieth Century

This article uses the Bayesian approach to estimate the parameters of the normalized constant elasticity of substitution (CES) function with factor‐augmenting technical progress directly, rather than using derived first‐order conditions of profit maximizing behavior. Bayesian estimation is applied because maximum likelihood estimation is sensitive to the starting values of maximization, and the parameters typically fail to converge to the global optimum because of a multimodal likelihood. Thanks to a convenient prior distribution, the posterior simulation of parameters works fairly well. The results indicate that in the long run (over 100 years) the parameters for the elasticity of substitution and capital income share are intimately linked to the shape of capital‐augmenting technological progress. In particular, the linear restriction excludes the possibility that the speed of capital‐augmenting technological progress converges to zero, which seems to lead to upwardly biased estimates of the elasticity of substitution and income share parameters.     

Urban and Regional High Technologies: The Case of Oulu

This paper investigates the reasons behind what has been termed the 'Oulu Phenomenon' in Northern Finland. Over the past two to three decades the city of Oulu has transformed its economy from dependency on timber, paper and pulp industries into one based on High Technology, notably, telecommunications, biotechnology, electronics, multimedia and environmental technologies. In particular the paper will explore the role played by the national government via regional policy, higher education and the subsequent interaction between these, the local authorities and entrepreneurs     

Big splash,no waves? Cognitive mechanisms driving incumbent firms’ responses to low‐price market entry strategies

Research Summary: Low‐price market entries, aiming for rapid sales growth, tend to prompt strong competitive reactions. This research explores whether and how firms using low‐price entry strategies can mitigate retaliatory incumbent reactions. An experiment with 656 managers shows that entrants can attenuate the strength of incumbents’ responses by fostering perceptions of high aggressiveness or low commitment. Entrants may be able to accomplish this by adjusting their entry strategy to embed (subtle) cues of aggressiveness and (lack of) commitment. A replication experiment with university students reinforces our overall theoretical argument. However, the results also indicate that the interpretation of cues embedded in the entry strategy may be affected by the experience of incumbent firm managers. Overall, these results clarify the cognitive foundations of competitive responses to market entry. Managerial Summary: What drives incumbents to respond strongly to market entries, and what can the entrant, if anything, do to mitigate those responses? This research offers empirical evidence and theoretical insights for managers faced with these questions by shedding light on the thinking processes preceding competitive responses. The study shows that while managers are motivated to respond strongly to market entries that appear to be highly consequential to their business, these responses may be mitigated if the entrant manages to foster perceptions of high aggressiveness or low commitment to the market. Managers form these perceptions in part on the basis of the entrant’s behavior, creating an opportunity for entrants to adjust their entry strategies in a manner that demotivates strong competitive responses.