The Bank of England quarterly model of the UK economy

The Bank of England first acquired a macroeconomic model of the UK economy in early 1973, and used it for forecasting in June and July of that year. The initial model was obtained from the London Business School (LBS), but the last 14 years or so have, on the part of both the Bank and the LBS, led to developments which now make the models no closer to each other than to other large scale models of the UK. This article describes the structure and central properties of the current version of the Bank model, which has some 663 variables, 134 of which are modelled by behavioural equations, 153 by technical equations, 212 identities and 164 exogenous variables. In order to provide a transitional step between the kind of models with which most macroeconomists are familiar and the full scale version of the Bank model, one part of the article presents a very simple stylized version of the full model. This is a stepping stone to the full model which is described and analysed on a sectoral basis in Part 3, with a complete listing of equations in Part 4. Some of the simulation properties, and hence full model dynamic responses, are considered in Part 5.     

Cognitive flexibility and adaptive decision‐making: Evidence from a laboratory study of expert decision makers

Research Summary : How can strategic decision makers overcome inertia when dealing with change? In this article we argue that cognitive flexibility (i.e., the ability to match the type of cognitive processing with the type of problem at hand) enables decision makers to achieve significantly higher decision‐making performance. We show that superior decision‐making performance is associated with using semiautomatic Type 1 cognitive processes when faced with well‐structured problems, and more deliberative Type 2 processes when faced with ill‐structured problems. Our findings shed light on the individual‐level mechanism behind organizational adaptation and complement recent work on strategic inertia. In addition, our findings extend management studies that have stressed the relevance of cognitive flexibility for responding to the demands of increasingly open, flexible, and rapidly changing organizations. Managerial Summary : Humans are creatures of habits. We tend to prefer known courses of action over new ones. In many cases, habits are good. However, when things change in unpredictable ways, the past may not be good guidance for the future. We argue that “cognitive flexibility”—the ability of understanding when to rely on habits vs. when to explore new courses of action—enables managers to switch from a “fast” decision mode, based on habits, to a “slow,” more deliberate decision mode that facilitates the exploration of new courses of action. Managers high in cognitive flexibility reflect on the situation at hand, recognize and value diversity in viewpoints, and integrate such diversity in their own decision processes. By valuing diversity, they are more likely to overcome inertia.     

The impact of new technologies on customer satisfaction and business to business customer relationships: Evidence from the soft drinks industry

Sales technology has been touted as a primary tool for enhancing customer relationship management (CRM) and thus improving overall customer satisfaction. The marketing, IT, and practitioner literatures make numerous references to the impact of CRM on business orientation and performance. However, according to Richard et al. (2007), not many studies have investigated customer relationship technology adopted by a firm and the impact on relationship development. The aim of this paper is to examine the relative impact of new technologies on improving customer relations and overall customer satisfaction within the sales industry. New technologies have revolutionised the workplace and have become an integral part of organisations throughout the world (Forster, 2000). Driving this revolution are two powerful new forces, cyberspace and computing power. This article defines three key terms which include CRM, customer satisfaction and new technologies and evaluates the impact of these emerging technological developments on relationships and customer satisfaction in a sales force/customer context. Primary research was conducted using two focus groups consisting of nine participants from Britvic. The analysis reveals that technology is both beneficial and essential within the sales force industry for both the sales representative and their customers and provides an insight into the impact of technology on the sales force/customer relationship. The paper concludes with reference to new technologies and the future.     

Understanding the exploration–exploitation dilemma: An fMRI study of attention control and decision‐making performance

This paper studies the cognitive processes that enable decision makers to switch between exploitation and exploration. We use functional magnetic resonance imaging (fMRI) in a sample of expert decision makers to make two main contributions. First, we identify and contrast the specific brain regions and cognitive processes associated with exploitation and exploration decisions. Exploitation activates regions associated with reward seeking, which track and evaluate the value of current choices, while exploration relies on regions associated with attentional control, tracking the value of alternative choices. Second, we propose and test the idea that stronger activation of the brain circuits related to attentional control allows individuals to achieve better decision‐making performance as a result. We discuss the implications of these results for strategic management research and practice. Copyright © 2013 John Wiley & Sons, Ltd     

The pot snack market – are today's consumers demanding health as well as convenience?

Identifying the target audience for hot pot snacks and which factors influence their buyer behaviour is vital information for product developers and manufacturers. The reported market research evaluated the effect of changing lifestyles on the growth of the pot snack market and investigated consumer opinion of pot snacks with particular regard to their nutritional status. This information is of particular interest to health professionals involved in improving the nation's health. A consumer questionnaire measured the opinion of pot snacks, frequency of consumption and influences on the growth of the pot snack market. The 150 consumers comprised 86 males and 64 females aged 11–74 years. The data was analysed using chi‐square (Statistical Package for Social Sciences). Results indicated that within the pot snack market, there are a variety of reasons determining the demand for pot snacks. The frequency of consumption is influenced by knowledge and opinion about the nutritional content of the pot snack product, suggest‐ing that consumers are now demanding health as well as convenience.     

Daily Closing Inside Spreads and Trading Volumes Around Earnings Announcements

This paper examines the determinants of inside spreads and their behaviour around corporate earning announcement dates, for a sample of UK firms over the period 1986–94. The paper finds that closing daily inside spreads are affected by order processing costs (proxied by trading volumes), inventory control costs (trading volumes and return variability) and asymmetric information (unusually high trading volumes). Inside spreads start to narrow 15 days before an earnings announcement, and narrow further by the end of the announcement day. We also identify a puzzling phenomenon. There is only a 'sluggish' recovery of spreads after the announcement: inside spreads continue to remain at relatively narrow levels, and take up to 90 days to recover to their pre–announcement width.     

Commercial corporate governance ratings: an alternative view of their use and impact

The rise in the popularity of commercial corporate governance ratings is at once a source of dismay and a cause for alarm: the former because they do not appear to give accurate predictions of corporate performance and the latter because they add to the pressure on corporations to adapt their governance structures to a benchmark model that takes no account of the conditions in which they operate. This paper gives an alternative view of the potential use and impact of the commercially marketed governance ratings. It argues that their importance to institutional investors lies in providing them with information that accurately summarises corporate loyalty to shareholders rather than accurately predicts corporate performance. It goes on to argue that the commercial governance ratings can bring benefits to an economy by contributing to a new type of managerial control mechanism that is not only more efficient than hostile takeovers and stock options but also helps to reduce the governance role of these instruments.     

A Comparative Analysis of the Relative Importance of Service Quality for Two UK Grocery Retailers

This article identifies the relative importance of service quality across two grocery store formats. Research to date, indicates that within the grocery sector, customers expect value for money in terms of product quality, nutritional value and service quality. If these attributes are met in relation to the customers' perceived risk, it is more likely that customer satisfaction and retention will occur. In difficult competitive, social and economic circumstances, some sources indicate that there will be a trading down in customer shopping habits, with more customers expecting higher levels of service provision across a wider range of store formats, including the discounters. This study examines the relative importance of service quality for a quality-led retailer, compared to a discounter. Quantitative and qualitative research was carried out to obtain both a demand and supply–side perspective. Research findings demonstrate that despite the fact that consumer expectations are rising in relation to the overall shopping experience, distinctions in relation to customers' expectations between the levels of service provided across quality-led stores, compared to discounters, is still evident.     

A Tournament Model of Fund Management

Abstract:  We develop a tournament model of portfolio management and test it on UK investment trusts. Our model extends the literature by analysing middle-ranking funds who aim to beat a benchmark; spanning two periods; focusing on 'extreme' portfolios; and using a signal-extraction framework. We predict that 'losing' managers will adopt extreme portfolios, and increasingly so, the further behind the fund is and the nearer the ranking date. Losing managers will choose high/low market exposure depending both on anticipated market movements and on whether they have sufficient assets to take advantage of a rising market. Our empirical tests support these predictions.