Hayek on the essential dispersion of market knowledge

The Review of Austrian Economics - A key insight in Hayek’s thought is the importance of so-called “local knowledge” in economic activity. In The Fatal Conceit, he states that...     

A regularity theory of causality for the social sciences

Quality & Quantity - This article discusses a regularity theory of causality (RTC) for the social sciences. With RTC, causality is a relationship between X and Y characterized by three...     

Estimating Differential Dynamic Merger Effects on Market Structure and Entry in Related Markets

The U.S. and EU merger guidelines emphasize “ease of entry” arguments but little is known about the dynamic impact of realized mergers on market structure. This study provides insights on this topic with the use of detailed firm-level data on the memory chip market. Our estimation results provide evidence for differential merger effects on market structure. These effects depend on whether the mergers are dominated by market-power or efficiency gains. While efficiency-dominated mergers cause exit, market-power-dominated mergers attract entrants, and these effects are increasing over time. We also find that market-power mergers have a larger effect on entry than efficiency mergers have on exit. Our results show that mergers can reduce the number of potential entrants into related product markets and serve as an instrument to “reduce the likelihood of entry”.

     

Capital asset pricing model in Portugal: Evidence from fractal regressions

We examine risk profiles of the Portuguese stock market index component stocks using a novel approach to the classical capital asset pricing model (CAPM). Specifically, we estimate the CAPM via fractal regressions that allow studying the marginal effects at selected scales. In this way, we can reveal whether the risk is perceived differently by market participants with different investment horizons. Apart from the analysis itself, we provide new statistical insights into the issue of separating and comparing the scale-specific effects with statistical validity. We find several stocks deviating from an expected risk perception homogeneity across investment horizons. This is true for both analysed periods, i.e. before and after the global financial crisis. There are also several stocks that changed their relationship to the market portfolio in between, which has strong implications for possible portfolio construction. The proposed methodology is not limited to financial topics but can be used in any discipline where the scale-specific marginal effects might be of interest.     

Business model innovation in a knowledge revolution: An evolutionary theory perspective

For knowledge‐intensive industries, a need remains to increase clarity on the dynamics through which business model innovation occurs. Progress has been limited owing to complexities in these industries and to the underlying ontology of the business model concept itself. Through a conceptual methodology, our findings expose impediments to current business model theory and propose economic evolutionary theory as a useful alternative lens through which to address these limitations. This research contributes to the literature by broadening the traditional scope of the economic evolutionary view as relevant for business model innovation research and by offering a corresponding framework for future research.     

How Hybrids Manage Growth and Social–Business Tensions in Global Supply Chains: The Case of Impact Sourcing

This study contributes to the growing interest in how hybrid organizations manage paradoxical social–business tensions. Our empirical case is “impact sourcing”—hybrids in global supply chains that hire staff from disadvantaged communities to provide services to business clients. We identify two major growth orientations—“community-focused” and “client-focused” growth—their inherent tensions and ways that hybrids manage them. The former favors slow growth and manages tensions through highly integrated client and community relations; the latter promotes faster growth and manages client and community relations separately. Both growth orientations address social–business tensions in particular ways, but also create latent constraints that manifest when entrepreneurial aspirations conflict with the current growth path. In presenting and discussing our findings, we introduce preempting management practices of tensions, and the importance of geographic embeddedness and distance to the paradox literature.     

The Structure of Problem Structuring Conversations: A Boundary Games Approach

One of the questions associated with facilitated problem structuring is how the micro level of actors’ multimodal communications, contributes to the emergence of a macro level, framing the possibilities for action in a workshop. This paper shows a way to study this macro level, building the visualization of the conversations’ structure starting from a boundary games theory micro analysis of the interactions. Our empirical evidence comes from following a group of academic consultants working to define a value proposition for their activity. We focus on analyzing two out of nine workshops that were felt diametrically opposite in terms of facilitation and achievements. Moving from the micro towards an upward level, three configurations building the structure are identified—shifting, branching and converging. The work carried out allows us to: (1) visualize the structure of conversations in a problem structuring context, (2) highlight the role of multimodal communications in building the conversations and (3) construct an interpretation bridging the micro and macro readings of a workshop. This knowledge is useful for facilitators guiding the dynamic of a workshop and for researchers looking forward to understanding how micro level interactions build higher levels of the social phenomenon of intervention.