Why Does the Problem Persist? ‘Rational Rigidity’ and the Plight of Japanese Banks

One of the most perplexing factors in the Japanese financial crisis is the apparently non‐optimal and non‐rational behaviour of Japanese banks. We provide a “rational” explanation for bank behaviour based on a theory of community banking that incorporates Japanese institutional characteristics. We find three implications of community banking – a low lending rate, a low bankruptcy rate, and in particular, institutionalisation of ‘rational rigidity’ (an institutional pledge of no profit maximisation) – in Japanese banks. We argue that this type of banking is viable as long as the economy expands and asset prices go up, which was the case before the asset‐market crash in 1990. The stagnation and free‐fall of asset prices in the 1990s exerted tremendous pressure on Japanese banks but did not paralyse them completely in the 1990s, although there are indications that they failed to restructure distressed large corporations in some sectors, notably real estate. Thus, the problem is not that paralysed banks are blocking recovery, but that their current institutionalised rigidity in banking practices is no longer viable because private enterprises in the market economy are suffering from asset‐price deflation and economic stagnation.     

The impact of venture capital on the productivity growth of European entrepreneurial firms: ‘Screening’ or ‘value added’ effect?

We aim to ascertain to what extent the better performance of European venture capital (VC)‐backed firms in high-tech industries is due to either ‘screening’ or ‘value added’ provided by VC investors. We compare portfolio firms' productivity growth before and after the first VC round, using a matched control group as benchmark. We show that productivity growth is not significantly different between VC and non-VC-backed firms before the first round of VC financing, whereas significant differences are found in the first years after the investment event. We also find that the value-adding services provided by VC investors ‘imprint’ the portfolio firm.     

How Does the Franchisor's Choice of Different Control Mechanisms Affect Franchisees’ and Employee-Managers’ Satisfaction?

Satisfaction of franchisees and employee-managers affects the overall performance of a franchise system. We argue that different actors in the same franchise system need to be treated in different ways. The franchisor's choice of control mechanisms affects the satisfaction of franchisees and employee-managers differently. To our knowledge this is the first study that gathers primary data from franchisees and employee-managers in the same franchise system at the store level with almost identical questionnaires. We show based on data from the largest German franchise system that outcome control leads to higher satisfaction among franchisees and employee-managers, while behavior control enhances employee-managers’ satisfaction. Thereby, outcome control leads to higher satisfaction among more experienced franchisees, while behavior control enhances both highly and lowly experienced employee-managers’ satisfaction. Our results suggest that franchisors face a dilemma: On the one hand, behavior control is associated with high costs and has no impact on franchisees’ satisfaction at all. On the other hand, it might still be necessary to prevent franchisees from behaving opportunistically.     

Europe – Quo Vadis? Reflections on the Future Institutional Framework of the European Union

With twelve new members the decision making in the European Union via intergovernmental cooperation will become ineffective. The EU is at the Cross Roads. In order to avoid a Stagno‐Europe the EU has a choice: Either it looks for the very essentials in the common institutional framework and adjusts it accordingly or the member states agree in ceding national sovereignty to the European level. This, however, requires that the democratic deficit at the EU level is reduced. The Treaty of Nice has failed to solve these issues. The paper elaborates in detail the non‐essentials and the essentials of European integration and discusses the basics of an approach to a constitution‐like arrangement for Europe.     

The carbon‐conscious‐consumer? A causal model for the product carbon footprint of asparagus at the consumer stage

Tools to measure climate impacts, such as a product carbon footprinting (PCF), have gained increasing attention in recent years. Our study shows that it is possible to develop a valid structural equation model for a PCF for the example of the use phase of asparagus on the basis of empirical data generated by a panel survey. The parameters considered in the model are environmental and sustainability‐related attitudes, sociodemographics and a technical component. The results show that the age of the technical component has effect on the PCF, an older technical component having an increasing impact, while a high degree of environmental concern has a decreasing effect.     

Does Service Employees’ Appearance Affect the Healthiness of Food Choice?

Derived from previous research on social influence on food consumption and social comparison theory, this article examines the effect of service employees’ appearance on consumers’ food choice using an experimental study, involving a video manipulation and eye‐tracking technique. The video shows a menu being proffered by a waitress whose degree of apparent healthiness varies (healthy, overweight, unhealthy lifestyle). The menu contains both healthy and unhealthy meal alternatives. The analysis of participants’ eye movements demonstrated that exposure to the overweight employee did not stimulate greater (i.e., earlier or longer) attention to unhealthy meal alternatives, whereas exposure to the employee who displayed an unhealthy lifestyle did. These findings have social and managerial implications: The postulated stigma according to which the presence of overweight others encourages unhealthy eating appears questionable. Service providers that might secretly hire according to body weight have no grounds to do so. In contrast, employees signaling an unhealthy lifestyle through their style choices prompt patrons to pay more attention to unhealthy meal alternatives. Food service providers might want to take this factor into consideration and actively manage the aspects that can be altered by simple measures.     

Estimating the impact of Denison's (1996), “What is the difference between organizational culture and organizational climate? A native's point of view on a decade of paradigm wars”

Denison [Denison, D.R. (1996), What is the difference between organizational culture and organizational climate? A native's point of view on a decade of paradigm wars, The Academy of Management Review, 21 (3), 619-654] offers a paradigm to comprehend the difference between studying organizational culture and organizational climate from a methodological perspective. The present study uses a Scopus analysis to understand the contributions of Denison's work in contemporary research of organization studies, and to recognize benefits of his discussion on organizational culture and organizational climate. The Scopus analysis shows that Denison's article is seminal across academic disciplines from its appearance.     

Flying Work of Art Captures the spirit of the dragon

China has transformed itself beyond recognition in the last two decades,and is fast becoming an economic take-off. Dragonair has been there every step of the way.     

The stock of external sovereign debt: Can we take the data at ‘face value’?

The stock of sovereign debt is typically measured at face value. Defined as the undiscounted sum of future principal repayments, face values are misleading when debts are issued with different contractual forms or maturities. In this paper, we construct alternative measures of the stock of external sovereign debt for 100 developing countries from 1979 through 2006 that correct for differences in contractual form and maturity. We show that our alternative measures: (1) paint a very different quantitative, and in some cases also qualitative, picture of the stock of developing country external sovereign debt; (2) often invert rankings of indebtedness across countries, which historically defined eligibility for debt forgiveness; (3) indicate that the empirical performance of the benchmark quantitative model of sovereign debt deteriorates by roughly 50% once model-consistent measures of debt are used; (4) show how the spread of aggregation clauses in debt contracts that award creditors voting power in proportion to the contractual face value may introduce inefficiencies into the process of restructuring sovereign debts; and (5) illustrate how countries have manipulated their debt issuance to meet fiscal targets written in terms of face values.     

Measures of the Customs of the People＇s Republic of China for the Administration of Centralized Declaration of Import and Export Goods

In addition, new measures of centralized declaration of import and export goods in China＇s Customs will be taken from this May. Therefore, China＇s Foreign Trade offers you the latest information.     

On the crisis of the “liberalization policy” in the economics of interdependence

In spite of all protestations and exhortations it is a fact that trade liberalization, the modern version of free trade, is caught in a crisis. Professor Detlef Lorenz is here analysing the causes of this crisis and suggesting alternatives for a future liberalization policy.     

Regulation and the Promotion of Audit Ethics: Analysis of the Content of the EU’s Policy

Accounting literature has commonly judged the impact of regulation on auditors’ ethical commitment by studying daily audit practice. We argue that the content of the regulations themselves is an important determinant of such an impact. This paper evaluates the capacity of the content of regulation to promote audit ethics by reference to the European Union’s (EU) audit policy. Anchored in the extant conceptual perspectives on ethics, our analysis of relevant policy documents shows that the EU’s approach to audit ethics relates most strongly to the deontological perspectives on ethics and leaves largely unexplored other means of promoting auditors’ ethical stance, such as by stimulating virtue ethics. We find that it is the EU regulators’ restricted view of the conceptual foundations of audit ethics that limits the capacity of their policy to effectively stimulate auditors’ ethical commitment. The paper also discusses the potential implications of our analysis for the design of future audit policy.     

Measures of the General Administration of Customs of the People＇s Republic of China for Implementing the Regulations of the People＇s Republic of China on Customs Protection of Intellectual Property Rights

The Measures of the General Administration of Customs of the People＇s Republic of China for Implementing the Regulations of the People＇s Republic of China on Customs Protection of Intellectual Property Rights discussed and passed at the executive meeting of the General Administration of Customs（GAC） on Feb.17,2009 is hereby promulgated,which take effects on July 1,2009.The Measures of the General Administration of Customs of the People＇s Republic of China for Implementing the Regulations of the People＇s Republic of China on Customs Protection of Intellectual Property Rights promulgated by No.114 Decree of the GAC on May 25,2004 shall be repealed simultaneously.     

Based on the big market of the Construction Industry Promote the Development of Building Materials

Currently,thebuildingmaterialsindustryofChinaconsistsofbuildingmaterials,nonmetalmineandproductsandnewinorganicnonmetalmaterialsinsome80kindsand1,400specifications.Inthelastfewyears,thebuildingmaterialsindustryinChinahaswitnessedrapiddevelopmentandobtainedgreatsuccess.In1996,thetotaloutputvalueofbuildingmaterialsindustryhitRMB320billion,up3.17foldsover1990,oranaverageannualgrowthof21.2percent;theoutputofcementwas490milliontons,up2.34foldon1990oranaverageannualgrowthof15.19percent;theoutputof…     

The influence of the CEO’s business education on the performance of hybrid organizations: the case of the global microfinance industry

Microfinance institutions (MFIs) are typical examples of hybrid organisations, meaning organisations pursuing both a financial and social logic. This study examines the question of whether financial and social performance improves when an MFI’s chief executive officer (CEO) has a business education. We apply the random effects instrumental variable regression method to examine the influence of the CEO’s business education on the MFI’s financial and social performance. Our panel dataset that includes 353 MFIs from across the globe indicates that ‘only’ 55% of the MFIs have a CEO with a business education. The empirical results indicate that MFIs with CEOs who have a business education perform significantly better, financially and socially, than MFIs managed by CEOs with other types of educational backgrounds. The findings suggest that CEOs with a business education seem better at managing the much-debated tradeoff between providing small loans and producing healthy financial results.     

The “end game” of the enlargement of the European Union

The process of enlargement would be facilitated if the EU and the candidates were less concerned about the date of accession and more keen to focus their efforts instead on identifying ways, on the one hand, to translate collective benefits into individual national benefits so that all member states would support enlargement and, on the other, to assess the readiness of the candidates with more precise criteria. Because of the nature of the negotiations, these two apparently unrelated problems are de facto interconnected. One way for the successful completion of the accession negotiations is for these two issues to be formally de-linked. The author, who is also acting as advisor to the Chief Negotiator of a candidate country, writes here in a strictly personal capacity. He wishes to acknowledge the very helpful comments received from Edward Best, Rita Beuter, Frank Bollen, Tom Casier and Antti Kuosmanen. Naturally, he is solely responsible for the views expressed in this paper.     

Influence of Policy is Strengthened; The Price Competition in the Car Market Will Continue

At present economical middle-grade cars are still the main products of thecar market, this year the price competition of this type of car is the fiercest. To sum up, there are two characteristics for the price reduction of middle-gradecars: 1. collective price reduction : Because there are various types of cars nowadays, the influence between each brand product is more obvious, and one smallaction will influence all the others. In March, the prices of Chery “Fengyun”series were reduced by 15% on an average.