Expert and entrepreneur: the unique research domain of professional service entrepreneurs

Professionals are knowledge experts who create customized solutions for clients. Many professionals practice in the context of strong professional institutions that prescribe intense socialization and codes and norms. While some professionals work as employees, many start their own firms in order to practice. Firm start-up for professionals is more prevalent than for most other occupations. While professional institutions often constraint their activities, firm start-up for professional service entrepreneurs (PSEs) involves similar entrepreneurial activities as other entrepreneurs, creating an interesting paradox worth investigating. This paper explores the uniqueness of PSEs and the firms they start, and the distinctiveness and value of research in the context of PSEs and professional service firms.     

Corporate Finance and Sustainability: the Case of the Electric Utility Industry

The electric utility industry is in transition but needs to move even faster if the country is to meet its emissions goals. The industry has historically moved cautiously, but policies and regulatory approaches must avoid unintentionally reinforcing the status quo. Incentive‐oriented policies and redesigned regulations must balance environmental sustainability with economic sustainability. The authors draw on well‐established corporate finance principles to guide more effective policies. Shareholder‐focused utility executives must make investments conditioned by three elements: (1) the return on equity the utility can expect to make on each project; (2) the investors' required return on equity capital for each project; and (3) the size of the investment. The well‐established economic value added (EVA) model can assist policy analysis: V=(r‐k)I; where V is the shareholder value created, r is the return on equity, k is the return investors require if they are to invest in the stock, and I is the scale of the project. Any new incremental V translates into higher stock prices. All three elements of their model (i.e., risk, return, and scale) require attention by regulators and policymakers to create value for shareholders. The authors show how the right state policies could create powerful incentives for shareholder focused utility executives to support such transitions.     

What drives technology transitions? An integration of different approaches within transition studies

This paper aims to provide a deeper understanding of transition drivers by reviewing four major strands of inquiry in transition studies: Multi Level Perspective (MLP); Strategic Niche Management (SNM); Transition Management (TM); Technological Innovation Systems (TIS). To the best of our knowledge, none of these contributions have so far provided a clear-cut classification of main drivers of transitions, as evidenced by the difficulty of practitioners in reaching goals as entrepreneurs, or policy makers in supporting economic growth. We believe that these theoretical streams share views relating the origin and drivers of transitions and that the analysis of the multi-level developments and systemic sub-processes by using the Integrative Propositional Analysis (IPA) allows for a more comprehensive identification of transition drivers. By mapping causal relationships within each perspective and by developing an integrative framework that takes in due account of overlaps between theories, we derived a new conceptual structure for the identification of transitions’ drivers.     

Wealth transfer through private placements: Evidence from China

We examine private issuance of public equity (PIPE) in China, and our results suggest that PIPE investors benefit from the price manipulation before and after issuance. These investors tend to cash out after lockup expiration and make large profits. We also find evidence that the trading of PIPE investors after lockup expiration is informed. Tests about the abnormal returns in the 3 years after lockup expiration suggest that at least part of the benefits PIPE investors receive come from wealth transfer from outside investors. Overall, PIPE issuers in China seem to use an opaque mechanism to compensate PIPE investors.     

Buying reputation as a signal of quality: Evidence from an online marketplace

Seller reputation, generated by buyer feedback, is critical to fostering trust in online marketplaces. Marketplaces or sellers may choose to compensate buyers for providing feedback. Signaling theory predicts that only sellers of high-quality products will reward buyers for truthful feedback, especially when a product lacks any feedback and when the seller is not established. We confirm these hypotheses using Taobao's reward-for-feedback mechanism. High-quality products, especially without established feedback, are chosen for feedback rewards, which cause sales to increase by 36%. Marketplaces and consumers can therefore benefit from allowing sellers to buy feedback and signal their high-quality products in the process.     

Stakeholder planning of the institutionalization of the volunteer farmer-trainer approach in dairy producer organizations in Kenya: key steps and supporting mechanisms*

The effectiveness of community-based extension approaches has been widely documented, however their sustainability remains weak. Institutionalization has been proposed as a way of achieving sustainability. This paper shares experiences of the learning and planning phase of the institutionalization of the volunteer farmer-trainer (VFT) approach in three dairy producer organizations (POs) in Kenya. The paper builds a detailed understanding of the key steps and social processes involved and the wider lessons that might be learned regarding institutionalization in the context of local institutions such POs. We draw on data from key informant interviews, focus groups discussions and workshops. The first phase of the process which spanned one year involved engagements with stakeholders at different levels; from VFTs, dairy cooperative management, government extension and local NGOs. The process involved awareness creation, joint learning at the individual, group and organization level, a strengths-weaknesses-opportunities-threats (SWOT) analysis of producer organizations and identifying opportunities for harnessing resources for support functions. We highlight the important supporting social and institutional processes that are required for this to happen. These include getting acceptance and support from key stakeholders, developing a shared understanding, stakeholder ownership of the process, commitment from top leadership of POs and institutional structures to support the process. For the process to be actualized, we discuss mechanisms that need to be put in place.     

Trading off learning and performance: Exploration and exploitation at work

Employees are increasingly given control over how they learn, and their choices for training are diverse and varied, yet employees must balance competing demands. On one hand, they are expected to be increasingly efficient in their current job duties – on the other hand, they are expected to develop new skills and competencies that enable them to adapt and respond to changing job demands. Drawing from the organizational learning literature, we propose a model of worker and work characteristics that inform choices between two mindsets related to learning at work. The first mindset is exploration, or the pursuit of learning outside one’s current knowledge domain; the second mindset is exploitation, the refinement/deepening of one’s existing knowledge stock focusing on the task at hand. We further propose that these strategic choices, or trade-offs, influence employee learning and performance in unique ways, with different implications for both routine and adaptive performance. Finally, we incorporate the notions of feedback loops and risk assessments that influence ongoing decisions between exploration and exploitation mindsets. Recommendations for future research and extensions of the theoretical model are also proposed.     

Heterogeneous country responses to the Great Recession: the role of supply chains

Review of World Economics - The one time shock of the Great Recession in 2008/9 opens up the opportunity to study the sensitivity of countries to global economic shocks. Some countries are more...     

Economics at the Antitrust Division: 2017–2018

This article describes some of the work of Antitrust Division economists over the past year, with a focus on modeling. It begins by illustrating the mapping from evidence to prediction using tools for assessing the effects of mergers using Bertrand, Cournot, and auction models. It then turns to two hot topics in competition policy: the implications of claims of increasing margins for merger enforcement and the validity of claims of increasing concentration. Finally, it considers how mergers affect prices in bargaining models.