Transition towards and of sustainability—Understanding sustainability as performative

Our purpose is to explore the concept of “sustainability” when understood from a performative perspective, i.e. as a concept that is filled with meaning across time. Drawing on a 10 year-long study of the digital footprint of Stockholm Royal Seaport, claimed to be northern Europe's largest sustainable urban development district, we show that “sustainability” emerged as the project became associated with particular places, projects, histories, and technologies. This means that “sustainability” was local in that it was situated in the particular spatial context of the project; temporal in that it was situated in a particular time; and political in that it expressed particular values and perspectives. The study contributes to explaining why “sustainability” remains—and always will remain—a contested concept, which is why sustainability transitions are complex. Consequently, we suggest that the transition towards sustainability always involves the transition of sustainability, something that needs to be acknowledged in order for a transition to actually become sustainable.     

R&D Cuts and Subsequent Reversals: Meeting or Beating Quarterly Analyst Forecasts

Abstract

Among firms that meet or beat earnings expectations, we find that cuts to R&D spending are more prevalent in Q4 relative to other interim quarters. This is consistent with the relative costs of real-activities management (accruals-based earnings management) decreasing (increasing) in Q4 due to the annual audit. More importantly, we find that the subsequent reversal of such R&D cuts is more prevalent and economically more significant following Q4 cuts relative to the reversals that follow cuts in other interim quarters. Our findings suggest that examination at the quarterly level (rather than annual level) lends new insights into the current debate regarding the prevalence of potentially value-destroying R&D cuts that managers make. Indeed, our findings suggest that some cuts may merely be temporary deferrals of R&D outlays.     

A new necessary condition for Nash implementation

In this paper we formulate a family of conditions called `B_k-monotonicity' that are necessary for Nash implementation, where k is a natural number that indexes a particular condition, and where the condition only becomes more restrictive as k increases. B_k-monotonicity is in general a stricter condition than Maskin monotonicity, and can be used to show that certain social choice correspondences that satisfy Maskin monotonicity cannot be Nash implemented.     

The long-run performance of diversifying firms

The corporate diversification literature presents a puzzle. Short-horizon event studies report positive abnormal returns around the announcement of a diversifying event, while studies that examine diversified firms find evidence that diversified firms are worth less than specialized firms (a diversification discount). If diversification is value destroying, perhaps the destruction occurs over longer periods than have been previously tested. This paper tests the hypothesis that diversifying firms have negative long-run abnormal performance following diversification by examining a sample of specialized firms that have a diversifying event from 1978 through 1998. The firms are tracked for up to five years past their diversification year. There is evidence that value is destroyed for small firms that diversify but enhanced for larger firms that diversify.

WHAT HAPPENS AFTER SUCCESS: THE PERILS OF EXCELLENCE*

This article examines how past performance influences the way an organization evolves, makes decisions, and adapts to its environment. It argues that compared to other periods of history, those that follow a lengthy interval of success will reveal companies that are especially apt to: (1) exhibit inertia in many aspects of structure and strategy-making process; (2) pursue immoderation, that is, adopt extreme process orientations; (3) manifest inattention, that is, reduce intelligence gathering and information processing activity; and (4) demonstrate insularity by failing to adapt to changes in the environment. an empirical analysis of the long-term histories of 36 companies provides tentative support for these notions.     

Mechanisms that efficiently verify the optimality of a proposed action

The best known achievement of the literature on resource-allocating mechanisms and their message spaces is the first rigorous proof of the competitive mechanism's informational efficiency. In an exchange economy withN persons andK+1 commodities (including a numeraire), that mechanism announcesK prices as well as aK-compenent trade vector for each ofN−1 persons, making a total ofNK message variables. Trial messages are successively announced and after each announcement each personprivately determines, usingprivate information, whether she finds the proposed trades acceptable at the announced prices. When a message is reached with which all are content, then the trades specified in that message take place, and they satisfy Pareto optimality and individual rationality. The literature shows that no (suitably regular) mechanism can achieve the same thing with fewer thanNK message variables. In the classic proof, all the candidate mechanisms have the privacy property, and the proof uses that property in a crucial way. ‘Non-private’ mechanisms are, however, well-defined. We present a proof that forN>K,NK remains a lower bound even when we permit ‘non-private’ mechanisms. Our new proof does not use privacy at all. But in a non-private mechanism, minimality of the number of message variables can hardly be defended as the hallmark of informational efficiency, since a non-private mechanism requires some persons to know something about the private information of othersin addition to the information contained in the messages. The new proof of the lower boundNK invites a new interpretation of the competitive mechanism's informational efficiency. We provide a new concept of efficiency which the competitive mechanism exhibits and which does rest on privacy even whenN>K. To do so, we first define a class ofprojection mechanisms, wherein some of the message variables are proposed values of the action to be taken, and the rest are auxiliary variables. The competitive mechanism has the projection property, with a trade vector as its action and prices as the auxiliary variables. A projection mechanism proposes an action; for each proposal, the agents then use the auxiliary variables, together with their private information, to verify that the proposed action meets the mechanism's goal (Pareto optimality and individual rationality for the competitive mechanism) if, indeed, it does meet that goal. For a given goal, we seek projection mechanisms for which theverification effort (suitably measured) is not greater than that of any other projection mechanism that achieves the goal. We show the competitive mechanism to be verification-minimal within the class of private projection mechanisms that achieve Pareto optimality and individual rationality; that proofdoes use the privacy of the candidate mechanisms. We also show, under certain conditions, that a verification-minimal projection mechanism achieving a given goal has smallest ‘total communication effort’ (which is locally equivalent to the classic ‘message-space size’) among all private mechanisms that achieve the goal, whether or not they have the projection property.     

Making unilateral trade liberalisation beneficial to the poor

In this paper, we investigate the impacts of unilateral import liberalisation by a representative South Asian developing economy, Nepal, and demonstrate those conditions required to make the impacts ‘pro-poor.’ Applying the Computable General Equilibrium model to Social Accounting Matrix data, we conclude that import liberalisation is growth-enhancing but that, unfortunately, the rich benefit more than do the poor. We envisage a restructured but plausible model economy that requires a transformational period of ten years, and simulate unilateral trade liberalisation but, in the context of a dynamic model. We conclude that improvement in efficiency parameters, reorganisation of investment patterns, along with reallocation of factors of production by both household group and activity type are required to make growth accrued by import liberalisation ‘pro-poor’ in developing economies such as that of Nepal.     

Why Everyone Should Read George's 'Progress and Poverty': On the Classic's Centenary, the Specialists Find This 19th Century Best Seller Still Very Timely

Abstract . When one urges that everyone read a classic, Progress and Poverty, now on the centenary of its publication, it is not only because in a democracy the voting citizen decides basic questions of economic policy, but because it appeals to the moral sense of economics students as well as other social scientists. Is it not important that legislation affecting living standards and culture be just, as well as scientifically sound? And that economists, along with other social scientists, master communication technique as Henry George did, so that they can share the fruits of their investigations? Part of the ability to get something done about what is perceived as a problem must rest on the ability to communicate, As Joseph Schumpeter showed, George's proposal that the economic rent of land be collected in lieu of taxes that burden labor and capital was economically sound and his criticism of a tax system that penalizes industry and thrift and rewards speculation is now “obvious wisdom,”     

On Limits of Uniquely Best Linear Estimators

In a general linear model, it is shown that all admissible linear estimators are limits of linear estimators that are uniquely best at some point in an extended parameter set. The principal result shows that a linear estimator that is uniquely best at a pointW ₂ among multiple linear estimators that are best at a pointW ₁ is the limit of uniquely best estimators at points approachingW ₁ along the line joiningW ₁ andW ₂. Research supported in part by U.S.A.F. Aerospace Research Laboratories under contract F33615-71-C-1463, summer 1973, and in part by Grant DMS-9104811 from the National Science Foundation.     

Structural vs. atheoretic approaches to econometrics

In this paper I attempt to lay out the sources of conflict between the so-called “structural” and “experimentalist” camps in econometrics. Critics of the structural approach often assert that it produces results that rely on too many assumptions to be credible, and that the experimentalist approach provides an alternative that relies on fewer assumptions. Here, I argue that this is a false dichotomy. All econometric work relies heavily on a priori assumptions. The main difference between structural and experimental (or “atheoretic”) approaches is not in the number of assumptions but the extent to which they are made explicit.     

Henry George and the Institution of Private Property in Land: A Property Rights Approach

Abstract . Conflicting statements concerning whether the implementation of Henry George's single tax proposal would destroy the institution of private property in land have appeared in the literatures of economics and other disciplines. A number of writers have implied that the taxation of Ricardian rent is equivalent to land nationalization. In the main, followers of George have denied that the single tax would abolish private property in land. Their claim is based on the fact that land titles would remain in private hands under the single tax. Since the whole question of private property is beset with ideological difficulties, a property rights approach is applied to this issue in an attempt to resolve the controversy. The conclusions are that the actual implementation of George's system would not destroy private property in land and that it is incorrect to equate the single tax with land nationalization.     

On economies of scope in communication

A classic puzzle in the economic theory of the firm concerns the fundamental cause of decreasing returns to scale. If a plant producing product quantityX at costC can be replicated as often as desired, then the quantityrX need never cost more thanrC. Traditionally the firm is imagined to take its identity from a fixednon-replicable input, namely a ‘top manager’; as more plants or divisions are added, the communication and computation burden imposed on the top manager (who has information not possessed by the divisions) grows more than proportionately. Decreasing returns are experienced as the top manager hires more variable inputs to cope with the rising burden. Suppose it turns out, however, that when the divisions are assembled, and are given exactly the same totally independent tasks that they fulfilled when they were autonomous, then asaving can be achieved if they adopt a joint procedure for performing those tasks rather than replicating their previous separate procedures. Then the top manager's rising burden must be shown to be particularly onerous—otherwise there may actually beincreasing returns. We show that for a certain model of the information-processing procedure used by the separate divisions and by the firm, there may indeed be such an odd unexpected saving. The saving occurs with respect to the size of the language in which members of each division, or of the firm, communicate with one another, provided that language is finite. If instead the language is a continuum then the saving cannot occur, provided that the procedures used obey suitable ‘smoothness’ conditions. We show that the saving for the finite case can be ruled out in two ways: by requiring the procedures used to obey a regularity condition that is a crude analogue of the smoothness conditions we impose on the continuum procedures, or by insisting that the procedure used be a ‘deterministic’ protocol. Such a protocol prescribes a conversation among the participants, in which a participant has only one choice, whenever that participant has to make an announcement to the others. The results suggest that a variety of information-processing models will have to be studied before the traditional explanation for decreasing returns to scale is understood in a rigorous way.     

Core equivalence with differentiated commodities

This paper presents improved core equivalence results for atomless economies with differentiated commodities in the framework of Ostroy and Zame (1994). Commodity bundles are elements of the space $M\left(K\right)$ of signed Borel measures on a compact space $K$ of commodity characteristics. Ostroy and Zame provide two sufficient conditions for core equivalence: It is sufficient that markets are “physically thick”, so that there are many suppliers of every commodity, or that markets are “economically thick”, so that consumers are sufficiently willing to substitute commodities with a similar composition for each other. The sufficient conditions in Ostroy and Zame (1994) all imply that there are “many more agents than commodities”, an idea of Aumann that was formalized and discussed in Tourky and Yannelis (2001) and Greinecker and Podczeck (2016). We generalize the framework in Ostroy and Zame (1994) and weaken their sufficient conditions to not imply the presence of “many more agents than commodities”. In particular, we drop the requirement that $K$ is metrizable from the basic model, the requirement of an uniform bound on endowments from the condition of “physically thick markets”, and the requirement that preferences are weak${}^1$-continuous from the condition of “economically thick markets”. Core equivalence still holds, showing that “many more agents than commodities” are not needed for core equivalence in models of commodity differentiation.     

Consistent likelihood-based estimation of a star-shaped distribution

We consider the classical problem of nonparametrically estimating a star-shaped distribution, i.e., a distribution function F on [0,∞) with the property that F(u)/u is nondecreasing on the set {u : F(u) < 1}. This problem is intriguing because of the fact that a well defined maximum likelihood estimator (MLE) exists, but this MLE is inconsistent. In this paper, we argue that the likelihood that is commonly used in this context is somewhat unnatural and propose another, so called ‘smoothed likelihood’. However, also the resulting MLE turns out to be inconsistent. We show that more serious smoothing of the likelihood yields consistent estimators in this model.     

Thanks for the memories: baseball veterans' end-of-career salaries

It is well-established that a baseball player's salary is based on his performance, experience, star status, bargaining power, mobility and his team's ability to pay. This paper focuses on veteran players who are on the brink of retirement and on the determinants of their salaries. It is found that a veteran's end-of-career peak salary depends upon how his career performance, that his most recent performance is irrelevant unless he has spent his entire career with one team, and that the average veteran's salary peaks after 9 years in the Majors. A corollary inference is that general managers recognize and reward player performance over the long haul in comparison with others who have played at that player's principal position, and with a nod to how history will evaluate that player. © 1998 John Wiley & Sons, Ltd.     

Disproportionate Black and Hispanic Unemployment in U.S. Metropolitan Areas: The Roles of Racial Inequality, Segregation and Discrimination in Male Joblessness

Abstract . Three common hypotheses about disproportionate Black and Hispanic unemployment among metropolitan males are tested, using data from the 1980 Population and the 1977 Economic Censuses. It is found that Black and Hispanic male unemployment is higher relative to that of Whites where jobs are most suburbanized and the minority population least so. This supports the view that segregation which separates minorities from job location elevates minority unemployment. It is also found that relative levels of Black, but not Hispanic, unemployment correlate positively to the minority percentage in metropolitan populations. This is consistent with the view that potential White gains from discrimination are greater where the Black (but not Hispanic) population is larger. Finally, both Blacks and Hispanics experience more disproportionate unemployment where their percentage of high school graduates is low relative to Whites, though this is less true for areas with larger Black populations. This suggests that job skill differentials also play some role in disproportionate minority unemployment.     

Leaders as HR sensegivers: Four HR implementation behaviors that create strong HR systems

While the problem of the gap between espoused and implemented HR practices has been widely recognized in the past, consideration of the role that leaders, and particularly direct managers, play in implementing HRM has not been well defined. In an effort to close this gap, we argue that more attention needs to be paid to the critical role of managers, as they are the ones who shape employees' climate perceptions by interpreting and providing meaning about the intended messages of HR practices as they relate to the specific job expectations of employees. In particular, we identify four HR implementation leader behaviors for facilitating a strong HR system. We expect that when leaders verbally articulate the intended meanings and expectations, role model desired behaviors, reinforce preferred behaviors, and assess followers' interpretations of the provided meanings so that further adjustments can be made in the meaning-making process, that cohesive climate perceptions that drive a strong HR system will ensue.     

The negative impact of R&D capitalization: A value relevance approach

Abstract

Accounting for R&D costs is an open issue. SFAS N°2 mandates that all R&D costs must be immediately expensed. IAS 38 requires capitalization of R&D costs if they meet certain criteria. Recent research papers show the value relevance of capitalized R&D. We test the value relevance of R&D reporting in a sample of 197 French firms between 1993 and 2002. The French context provides an interesting field for R&D value relevance studies because both accounting treatments of R&D costs (expensing and capitalization) are allowed. Unlike previous studies, we find that capitalized R&D is negatively associated with stock prices and returns. This negative coefficient on capitalized R&D implies that investors are concerned with and react negatively to capitalization of R&D. We also find that the firms choosing to capitalize (successful) R&D are smaller, more highly leveraged, less profitable and have less growth opportunities. Taking into account these characteristics, our robustness checks confirm that capitalized R&D is not associated with higher prices and is related to lower returns.     

Can indeterminacy resolve the cross-country correlation puzzle?

Are productivity shocks the only driving force of international business fluctuations? In this paper I argue that another source of uncertainty—changes in market expectations or ‘sunspots’ – is also important. One major shortcoming of existing IRBC models is the ‘cross-country correlation puzzle’: models tend to generate cross-country consumption correlations that are too high and output, investment and employment correlations that are too low when compared to the data. I show that with empirically supported level of increasing returns, an otherwise standard model possesses multiple, indeterminate convergent paths to the steady state, which allow for sunspots to influence the economy. The model displays time series properties that in many ways match the data better than the conventional model. It is especially successful in generating realistic consumption and output correlations.