Prospect theory and risk appetite: an application to traders’ strategies in the financial market

According to behavioral finance theories, in this article we develop a dynamic model with heterogeneous traders, where the asset price is determined by the interaction among four different groups of agents: trend reversers, trend followers, risk averters and risk seekers. The main purpose of the study is centered on modeling and testing how the market efficiency changes along with the changes of agent’s behavior preference without exogenous influence. Combining with the assumption of risk appetite and prospect theory, focusing on analyzing the rules for selecting strategies, we establish a more reliable and comprehensive dynamic mechanism. In particular, our study suggests that diversified trading strategies will help to realize market efficiency.     

Consumers’ fluid milk consumption behaviors in TURKEY: an application of multinomial logit model

Although consumers’ fluid milk consumption behavior related to skim milk, low fat milk and whole milk have attracted a lot of attention in the last decade, relatively a few studies have examined the consumers’ unprocessed and processed fluid milk consumption. The objective of this study was to analyze consumers’ fluid milk consumption and preference in Turkey by using cross-sectional national survey data. The Chi-square test of independence and multinomial logit procedure were used to investigate the selected socioeconomic and demographic characteristics of consumers that determine households’ fluid milk consumption choices between unprocessed fluid milk, processed fluid milk and non-consumption choices. Empirical results indicate that unprocessed fluid milk preference is related positively to household size, number of children in family, household income, and age of housewife; and negatively to education level and employment status of housewife. On the other hand, processed fluid milk preferences are related positively to household income, number of children in households and education level of housewife and negatively to household size and age of housewife.     

Bayesian estimation of labor demand by age: theoretical consistency and an application to an input–output model

Extended input–output models require careful estimation of disaggregated consumption by households and comparable sources of labor income by sector. The latter components most often have to be estimated. The primary focus of this paper is to produce labor demand disaggregated by workers’ age. The results are evaluated through considerations of its consistency with a static labor demand model restricted with theoretical requirements. A Bayesian approach is used for more straightforward imposition of regularity conditions. The Bayesian model confirms elastic labor demand for youth workers, which is consistent with what past studies find. Additionally, to explore the effects of changes in age structure on a regional economy, the estimated age-group-specific labor demand model is integrated into a regional input–output model. The integrated model suggests that ceteris paribus ageing population contributes to lowering aggregate economic multipliers due to the rapidly growing number of elderly workers who earn less than younger workers.     

The temporal variation of cost-efficiency in Switzerland’s hospitals: an application of mixed models

This paper uses a mixed effects model to examine the temporal variation of cost efficiency in Switzerland’s general hospitals. The variations in total costs, the number of empty beds and the length of hospital stays are analyzed using financial data from a sample of 168 hospitals operating from 1998 to 2003, as well as hospitalization records disaggregated to Diagnosis Related Groups. Individual intercepts and random coefficients are used to account for the unobserved time-invariant heterogeneity and the differences in temporal patterns across hospitals and DRG categories. The analysis illustrates the usefulness of mixed models to account for unobserved factors such as quality, with a relatively weak assumption that their temporal variations, rather than their initial levels, be uncorrelated with efficiency changes. The results indicate that hospitals have adopted measures to curtail hospitalizations and reduce empty beds. The extent and effectiveness of these measures vary significantly across individual hospitals. However, there is no evidence in favor of a particular ownership type or subsidization regime. While the link between reduction rates of empty beds and gains in cost-efficiency is statistically significant, the expected association between shortening hospital stays and cost-efficiency cannot be clearly established in the data.

Persistent and transient cost efficiency—an application to the Swiss hydropower sector

Electricity prices on the European market have decreased significantly over the past few years, resulting in a deterioration of Swiss hydropower firms’ competitiveness and profitability. One option to improve the sector’s competitiveness is to increase cost efficiency. The goal of this study is to quantify the level of persistent and transient cost efficiency of individual firms by applying the generalized true random effects (GTRE) model introduced by Colombi et al. (Journal of Productivity Analysis 42(2): 123–136, 2014) and Filippini and Greene (Journal of Productivity Analysis 45(2): 187–196, 2016). Applying this newly developed GTRE model to a total cost function, the level of cost efficiency of 65 Swiss hydropower firms is analyzed for the period between 2000 and 2013. A true random effects specification is estimated as a benchmark for the transient level of cost efficiency. The results show the presence of both transient as well as persistent cost inefficiencies. The GTREM predicts the aggregate level of cost inefficiency to amount to 21.8% (8.0% transient, 13.8% persistent) on average between 2000 and 2013. These two components differ in interpretation and implication. From an individual firm’s perspective, the two types of cost inefficiencies might require a firm’s management to respond with different improvement strategies. The existing level of persistent inefficiency could prevent the hydropower firms from adjusting their production processes to new market environments. From a regulatory point of view, the results of this study could be used in the scope and determination of the amount of financial support given to struggling firms.     

Institutional versus non-institutional credit to agricultural households in India: Evidence on impact from a national farmers’ survey

A goal of agricultural policy in India has been to reduce farmers’ dependence on informal credit. To that end, recent initiatives are focused explicitly on rural areas and have a positive impact on the flow of agricultural credit. Despite the significance of the above initiatives in enhancing the flow of institutional credit to agriculture, the links between institutional credit and net farm income and consumption expenditures in India are not very well documented. Using large, national farm household level data and IV 2SLS estimation methods, we investigate the role of institutional farm credit on farm income and farm household consumption expenditures. Findings show that, in India, formal credit does indeed play a critical role in increasing both net farm income and per capita monthly household expenditures of Indian farm families. Finally, we find that, in the presence of formal credit, social safety net programs like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) may have unintended consequences. In particular, MGNREGA reduces both net farm income and per capita monthly household consumption expenditures. On the other hand, in the presence of formal credit, the Public Distribution System may increase both net farm income and per capita monthly household consumption expenditures.     

Diversification strategy,CEO management style and firm performance: an application of Heckman’s two-stage method

This paper aims to explore whether CEOs’ management style as agents or as stewards, which depends on their psychological and situational characteristics, moderates the effect of the diversification strategy on firm performance. After applying Heckman’s two-stage method to control econometrically for endogeneity bias in empirical work, results demonstrate that the relationship between diversification and profitability varies significantly depending on the management style of the diversifying CEO.     

Libraries in transition to a marketing orientation: are librarians' attitudes a barrier?

• This study examines librarians' attitudes toward the marketing of library services, as libraries continue their transition to a marketing orientation. Although prior studies had observed misunderstandings and hostility to marketing among librarians, most previous discussions of this topic were either speculative or based on extremely small samples. In order to provide more evidence in this matter, a large‐scale survey of members of the New Jersey Library Association (NJLA) was conducted. A ‘Pro Marketing’ scale was introduced and used to segment participants with respect to their attitudes. The findings indicate that most respondents expressed relatively positive attitudes toward marketing, but that more positive attitudes were expressed by public librarians than school or college/university librarians, and by administrators as opposed to reference and technical services librarians. Illustrative respondent comments and implications for library management are included.

Copyright © 2007 John Wiley & Sons, Ltd.     

Incentive regulation and performance measurement of Taiwan’s incineration plants: an application of the four-stage DEA method

The aim of this paper is to provide a technical efficiency assessment of Taiwan’s incineration plants as the basis of incentive regulation schemes. We integrate the four-stage approach with Simar and Wilson’s (in J Econom 136:31–64, 2007) double bootstrapping to filter out the impacts of external variables in the efficiency measurement. Empirical results show that there is room for 15 % cost reductions and capacity, ownership, location and experience are all influential in improving the performance of these plants. We also demonstrate how the results can be applied to modify a yardstick incentive scheme.     

Mapping potentials for input–output-based innovation flows in industrial clusters – an application to Germany

Our paper pursues two aims: first, it presents an approach based on input–output innovation flow matrices to study intersectoral innovation flows within industrial clusters. Second, we apply this approach to the identification of structural weaknesses in East Germany relative to the western part of the country. The case of East Germany forms an interesting subject because while its convergence process after unification began promisingly in the first half of the 1990s, convergence has since slowed down. The existing gap can now be traced mainly to structural weaknesses in the East German economy, such as the absence of strong industrial cluster structures. With this in mind, we investigate whether East Germany does in fact reveal the abovementioned structural weaknesses. Does East Germany possess fewer industrial clusters? Are they less connected? Does East Germany lack specific clusters that are also important for the non-clustered part of the economy?     

The importance of ‘fitting in’: collaboration and social value creation in response to community norms and expectations

Abstract

This article explores the effects of embeddedness in communities upon entrepreneurial practices. Based on the lived experiences of 10 craft entrepreneurs, this study reveals that within certain contexts, such as craft communities, entrepreneurs are expected to exhibit high levels of camaraderie and generosity, which leads them to create social value by supporting their peers and freely sharing their resources. Entrepreneurs achieve ‘fitting in’ not only by learning accepted norms, but also by performing strategic actions which allow them to temporarily adapt their conduct to meet the expectations of community members. Thus, this study exposes a largely concealed element of social entrepreneurial practice. This article also reveals that embeddedness in communities can lead entrepreneurs to collaborate with potential competitors. Craft entrepreneurs share their economic, cultural, social and symbolic capital in order to support and help revitalise their communities, to perpetuate their respective industries and to sustain a genuine interest in hand-crafted products. They consider such supportive behaviour a social responsibility that is shared among community members and a task that is passed from one generation to the next. Thus, this article reveals that collaboration and social value creation can be embraced in response to community norms and expectations.     

Entrepreneurial motivation: a non-entrepreneur’s journey to become an entrepreneur

In entrepreneurship literature, much research effort is focused on differentiating entrepreneurs, recognizing or exploiting opportunities, resources available or required, or a combination of the three entrepreneurship-defining factors. There is, however, very little research on understanding a non-entrepreneur’s motivation to become an entrepreneur. This greatly limits our knowledge of the entrepreneurial process. It has hindered our understanding of how non-entrepreneurs are motivated to pursue entrepreneurial career options and has led to misinformed decisions by scholars and policy makers. In this paper, our goal is to develop a theory of entrepreneurial motivation that explains how non-entrepreneurs develop the motivation to pursue entrepreneurship. We argue that an individual’s self-assessment of their identity is the primary factor in individuals developing entrepreneurial motivation. The identity self-assessment leads individuals either to seek enhancement of their identity or establish a new identity that opens them to the influence of entrepreneurial motivation reinforcing entrepreneurial exposure in their social environment.     

Estimating sensitive proportions from Warner’s randomized responses in alternative ways restricting to only distinct units sampled

Warner’s (J Am Stat Assoc 60:63–69, 1965) pioneering ‘randomized response’ (RR) technique (RRT), useful in unbiasedly estimating the proportion of people bearing a sensitive characteristic, is based exclusively on simple random sampling (SRS) with replacement (WR). Numerous developments that follow from it also use SRSWR and employ in estimation the mean of the RR’s yielded by each person everytime he/she is drawn in the sample. We examine how the accuracy in estimation alters when instead we use the mean of the RR’s from each distinct person sampled and also alternatively if the Horvitz and Thompson’s (HT, J Am Stat Assoc 47:663–685, 1952) method is employed for an SRSWR eliciting only, a single RR from each. Arnab’s (1999) approach of using repeated RR’s from each distinct person sampled is not taken up here to avoid algebraic complexity. Pathak’s (Sánkhya 24:287–302, 1962) results for direct response (DR) from SRSWR are modified with the use of such RR’s. Through simulations we present relative levels in accuracy in estimation by the above three alternative methods.     

Robust stochastic frontier analysis: a Student’s t-half normal model with application to highway maintenance costs in England

The presence of outliers in the data has implications for stochastic frontier analysis, and indeed any performance analysis methodology, because they may lead to imprecise parameter estimates and, crucially, lead to an exaggerated spread of efficiency predictions. In this paper we replace the normal distribution for the noise term in the standard stochastic frontier model with a Student’s t distribution, which generalises the normal distribution by adding a shape parameter governing the degree of kurtosis. This has the advantages of introducing flexibility in the heaviness of the tails, which can be determined by the data, as well as containing the normal distribution as a limiting case, and we outline how to test against the standard model. Monte Carlo simulation results for the maximum simulated likelihood estimator confirm that the model recovers appropriate frontier and distributional parameter estimates under various values of the true shape parameter. The simulation results also indicate the influence of a phenomenon we term ‘wrong kurtosis’ in the case of small samples, which is analogous to the issue of ‘wrong skewness’ previously identified in the literature. We apply a Student’s t-half normal cost frontier to data for highways authorities in England, and this formulation is found to be preferred by statistical testing to the comparator normal-half normal cost frontier model. The model yields a significantly narrower range of efficiency predictions, which are non-monotonic at the tails of the residual distribution.

     

Entrepreneurial Orientation’s effect on marketing strategies and success: implications for US firms entering Cuba

Entering a newly liberalized market is a great challenge for companies as the environment is new and untested. On one side, to have success in these markets, firms must have a plan of action before resources are committed. Entrepreneurial orientation (EO) is associated with the successful exploration of resources and the creation of new niches as the Resource Theory supports. On another side, a natural bond between EO and marketing is found in the Value Creation Theory. So, to maximize firm success in newly liberalized markets (such as Cuba), firms must be able to objectively gauge their own entrepreneurial orientation adopting a marketing approach. Within this framework, the present paper will attempt to effectively measure the entrepreneurial orientation of US firms that have an interest in entering the Cuban market. A final sample of 81 US firms was obtained. The sample was then split into two groups (high and low entrepreneurial orientation) and compared regarding their marketing strategies (H1) and their levels of success (H2). Our results confirmed both hypotheses.     

Measuring the effect of Kyoto protocol agreement on countries’ environmental efficiency in CO2 emissions: an application of conditional full frontiers

This paper applies the probabilistic approach developed by Daraio and Simar (J Prod Anal 24:93–121, 2005, Advanced robust and nonparametric methods in efficiency analysis. Springer Science, New York, 2007a, J Prod Anal 28:13–32, 2007b) in order to develop conditional and unconditional data envelopment analysis (DEA) models for the measurement of countries’ environmental efficiency levels for a sample of 110 countries in 2007. In order to capture the effect of countries compliance with the Kyoto protocol agreement (KPA) policies, we condition first the years since a country has signed the KPA until 2007 and secondly the obliged percentage level of countries’ emission reductions. Particularly, various DEA models have been applied alongside with bootstrap techniques in order to determine the effect of KPA on countries’ environmental efficiencies. The study illustrates how the recent developments in efficiency analysis and statistical inference can be applied when evaluating environmental performance issues. The results indicate a nonlinear relationship between countries’ obliged percentage levels of emission reductions and their environmental efficiency levels. Finally, a similar nonlinear relationship is also recorded between the duration which a country has signed the KPA and its environmental efficiency levels.     

Line managers’ AMO to manage employees’ performance: the route to effective and satisfying performance management

Abstract

Performance management systems are used to increase employees’ performance with the ultimate aim of increasing organizational performance. Organizations rely on line managers to implement performance management systems and to engage in a continuous process of goal-setting, feedback, coaching and performance appraisal with their employees. Drawing on the AMO theory, we predict that the effectiveness of performance management implementation will be a function of three factors. First, line managers should have the Ability to enact the activities that are involved in performance management. Secondly, they should be Motivated to perform these activities. Thirdly, line managers should have sufficient Opportunity to fulfill these activities on top of the demands from other organizational. If not, they could experience role conflict. We developed several cross-level hypotheses. The data came from 71 line managers and 318 employees working in Flemish education. Hierarchical linear modelling found that line managers’ AMO to implement performance management systems was positively related to employees’ satisfaction with the system. These relationships were mediated by employees’ perceptions that the performance management system is strong. A strong system signals that its features are salient across employees and that the system is clear and understood. This study has several theoretical and practical implications.     

Social sustainability in the food value chain: what is and how to adopt an integrative approach?

Quality & Quantity - Despite sustainability is a trending topic in the literature, the analysis of the social dimension in the food industry is almost neglected due to its complexity and the...     

Of Organizing and Sensemaking: From Action to Meaning and Back Again in a Half-Century of Weick’s Theorizing

The themes of organizing and sensemaking have reverberated throughout Weick’s remarkable career and constitute one of the hallmarks of his contribution. We review his major works and show how Weick differentially emphasizes organizing and sensemaking over time and, eventually, arrives at a fuller integration of meaning and action. Initially, Weick (1969; 1979) models their relationship as linear, focusing on how organizing functioned as a context for sensemaking, an approach we label Sensemaking in Organizing. Later, however, Weick (1995a; 2005) construes their relationship in more dynamic, interactive, and reciprocal cycles, modelling sensemaking as the process whereby organizing is achieved, an approach we label Sensemaking as Organizing. We explore the evolution and implications of these approaches and discuss their impact on management scholarship. Finally, we draw out potential future research directions at the interface of organizing and sensemaking.