Relative Target Setting and Cooperation

A large stream of work on relative performance evaluation highlights the benefits of using information about peer performance in contracting. In contrast, the potential costs of discouraging cooperation among peers have received much less attention. The purpose of our study is to examine how the importance of cooperation affects the use of information about peer performance in target setting, also known as relative target setting. Specifically, we use data from an industrial services company where business unit managers need to share specialized equipment and staff with their peers to manage bottlenecks in their capacity. We construct several empirical proxies for the costs and benefits of information about peer performance and examine their effects on target setting. We find robust evidence that the sensitivity of target revisions to past peer performance is higher when peer group performance has greater capacity to filter out noise but lower when the importance of cooperation among peers is greater.     

THE LONG‐TERM ECONOMIC CONSEQUENCES OF AGRICULTURAL MARKETING LEGISLATION IN SOUTH AFRICA

The marketing of most agricultural products in South Africa was subject to intervention by statutory bodies over a period of some 60 years. At the time of the promulgation of the first legislation there was a vigorous debate on the predicted economic effects; in 1983 one of the architects of these instruments published a justification in these pages, followed in 2000 by a “post‐mortem,” which confirmed most of the negative predictions that had been made. The purpose in this article is to revisit this debate and to provide a first assessment of the long‐term impacts of the legislation.     

The ‘Global’ in the City Economy: Multicultural Economic Development in Birmingham

This article draws on critiques of ‘global cities’ to conceptualize Birmingham, the UK's second largest metropole, as a ‘global’ city by highlighting forms of economic globalization that draw on the city's residents, their histories and their social and cultural networks. The article illustrates some of the diversity and significance of minority ethnic economic activity within Birmingham and the potential this holds for its future economic development, focusing on examples from three transnational networks (Chinese business networks, ethnic food manufacturing and the Bhangra music industry). The article signals a rather different understanding of ‘global’ as it relates to economic advantage, transnationalism and ethnic diversity within cities in general, and Birmingham in particular. We suggest that this different understanding of the global has important policy implications, not simply in terms of economic representations of the city, but also in terms of developing the possibilities of such transnational networks and engaging with the constraints facing them. We argue that encouraging a more relational way of thinking about cities like Birmingham has the potential for advancing social wellbeing by influencing socio‐economic policy and practice. We use the example of Birmingham, therefore, to engage broader debates about alternative paths of ‘global’ economic, social and cultural investment for UK (and other) cities. A partir de critiques des ‘villes planétaires’, cet article conceptualise Birmingham (deuxième métropole britannique) en tant que ville ‘planétaire’ en soulignant les formes de mondialisation économique qui s’appuient sur les citadins, leurs histoires et leurs réseaux sociaux et culturels. Pour illustrer en partie la diversité et la place de l’activitééconomique ethnique des minorités à Birmingham, ainsi que le potentiel afférent pour son essor économique futur, ce travail s’intéresse à des exemples issus de trois réseaux transnationaux (réseaux d’affaires chinois, fabrication d’alimentation ethnique et secteur de la musique indienne Bhangra). Il repère une compréhension assez différente de ‘planétaire’, selon que le terme est liéà un avantage économique, au transnationalisme et à la diversité ethnique au sein des grandes villes, et de Birmingham en particulier. Cette perception multiple a d’importantes implications politiques, à la fois au plan des représentations économiques de la ville et en termes de création de possibilités pour ces réseaux transnationaux et de prise en compte des contraintes à affronter. Encourager un mode de réflexion plus relationnelà l’égard de villes comme Birmingham permettrait de promouvoir le bien‐être social en influant sur la pratique et la politique socio‐économique. Le cas de Birmingham sert donc à lancer des débats plus larges sur les options d’acheminement de l’investissement économique, social et culturel ‘planétaire’ pour les grandes villes britanniques (et étrangères).     

Uncertainty and Investment Dynamics

This paper shows that with (partial) irreversibility higher uncertainty reduces the responsiveness of investment to demand shocks. Uncertainty increases real option values making firms more cautious when investing or disinvesting. This is confirmed both numerically for a model with a rich mix of adjustment costs, time-varying uncertainty, and aggregation over investment decisions and time and also empirically for a panel of manufacturing firms. These "cautionary effects" of uncertainty are large—going from the lower quartile to the upper quartile of the uncertainty distribution typically halves the first year investment response to demand shocks. This implies the responsiveness of firms to any given policy stimulus may be much weaker in periods of high uncertainty, such as after the 1973 oil crisis and September 11, 2001.