Thy Neighbor’s Mortgage: Does Living in a Subprime Neighborhood Affect One’s Probability of Default?

This article focuses on the potential externalities associated with subprime mortgage origination activity. Specifically, we examine whether negative spillover effects from subprime mortgage originations result in higher default rates in the surrounding area. Our empirical analysis controls for loan characteristics, house price changes and alternative loan products. Our results indicate that, after controlling for these characteristics, the concentration of subprime lending in a neighborhood does not lead to greater default risks for surrounding borrowers. However, we do find that more aggressive mortgage products (such as hybrid adjustable rate mortgages and low/no‐documentation loans) had significant negative spillovers on other borrowers. Stated differently, the aggressive alternative mortgage designs were more toxic to the housing and mortgage market than previously believed.     

Does a Mandatory Reduction of Standard Working Hours Improve Employees' Health Status?

Most of the empirical evidence regarding the impact of reductions of standard working hours analyzes its effects on employment outcomes, family life balance, and social networks, but there is no empirical evidence of its effects on health outcomes. This study uses panel data for France and Portugal and exploits the exogenous variation of working hours coming from labor regulation and estimates its impact on health outcomes (from 39 to 35 hours a week and from 44 to 40 hours a week, respectively). Results suggest that the mandatory reduction of standard working hours decreased the working hours of treated individuals (and not the hours of individuals in the control group). Results also suggest that the fact of being treated generated a negative (positive) effect on young males’ (females’) health in France. No effects on health outcomes were found for Portugal.     

Does Employing Older Workers Affect Workplace Performance?

Using a panel of workplaces in Britain, we investigate the implications for businesses of employing older workers. Workplace labor productivity falls where the proportion of older or younger workers rises. These raw associations are attenuated somewhat after controlling for aspects of human capital. In contrast, there is no significant association between age shares and workplace financial performance, suggesting that any reluctance by employers to employ greater numbers of older workers may be misplaced.     

How Does Ranking Affect User Choice in Online Search?

This paper investigates whether a search engine’s ordering of algorithmic results has an important effect on website traffic. A website’s ranking on a search engine results page is positively correlated with the clicks that it receives. This could result from the search engine’s accurately predicting the websites relevance to users. Or it could result from users merely clicking on the highest ranked links, regardless of the website’s relevance. Using a unique dataset, we find that a website’s rank, not just its relevance, strongly and significantly affects the likelihood of a click. We also find evidence that rank influences CTRs partly by controlling access to the scarce attention of users, but primarily by substituting the reputational capital of the search engine for the reputation of individual websites.     

How Does Technological Regime Affect Performance of Technology Development Projects?

In this study, we examine how technological regime affects the performance of technology development projects (i.e., project quality, sales, and profit). Technological regime is defined as the set of attributes of a technological environment where the innovative activities of firms take place. Technological opportunity, appropriability of innovations, cumulativeness of knowledge and capabilities, and closeness of knowledge base to basic sciences (versus applied sciences) are attributes of technological regime. Using data from 381 firms across five industries, we show that high levels of technological opportunity, appropriability, and closeness of knowledge base to basic sciences are associated with higher project performance. Cumulativeness is associated with higher project quality, but not higher sales and profit. We also show that the effect of technological opportunity on project performance is moderated by two other determinants of technological regime: cumulativeness and nature of knowledge base. We find that cumulativeness has a negative moderating effect on the positive relationship between technological opportunity and project performance, while closeness of knowledge base to basic sciences positively moderates the effect of technological opportunity on project performance. We discuss the implications of our findings for new product development research and practice.     

How Does China's New Labour Contract Law Affect Floating Workers?

China's new Labour Contract Law took effect in January 2008 and required firms to give migrant workers written contracts, strengthened labour protections for workers and contained penalties for firms that did not follow the labour code. This article uses survey data of migrant workers in the Pearl River Delta before and after the law, and a retrospective question on when workers received their first labour contract to assess the effects of the law on labour outcomes. The evidence shows that the new law increased the percentage of migrant workers with written contracts, which in turn raised social insurance coverage, reduced the likelihood of wage arrears and raised the likelihood that workers had a union at their workplace.     

China’s business system and its future trajectory

Asia Pacific Journal of Management - We present a sketch of the existing Chinese business system and discuss what we see as the main challenges in its future evolution. We argue that China will...     

Who’s Navistar?

75年后,这个偏安于北美的巨人加快了其国际化步伐。从北京直飞美国芝加哥,再转机三个小时到亚特兰大,然后坐高速大巴3个小时,这才到达此行的目的地阿拉巴马州的汉斯维尔市,纳威司达(Navistar)集团发动机的另一个新的生产基地坐落于此。一路上,一个问号时不时地在脑海浮现:Who’s Navistar?     

How Does Mortgage Debt Affect Household Consumption? Micro Evidence from China

The high growth rate of mortgage debt in various emerging and developed economies has captured headlines following the financial crisis. In this article, we investigate how mortgage debt impacts household consumption behavior and various components of household consumption. Utilizing comprehensive household survey data from China, we show that households with a mortgage consume a higher portion of income than households without a mortgage. This is in line with the argument that having a mortgage reduces the uncertainty that the household faces regarding how much to save each month in order to be able to own a house, and this reduced uncertainty leads to lower monthly savings for the purpose of buying a house. We also find that among households with a mortgage, those who spend a larger share of their income on mortgage payments spend less on consumption, reflecting the crowding out effect of mortgage payments on household consumption. Furthermore, we show that a government policy of decreasing the maximum loan‐to‐value ratio has a significant impact on households’ consumption. The article offers the first evidence of the impact of growing mortgage debt on the consumption behavior of households, and will have implications for government policies that encourage mortgage borrowing.     

Does Wage Rank Affect Employees’ Well‐being?

How do workers make wage comparisons? Both an experimental study and an analysis of 16,000 British employees are reported. Satisfaction and well‐being levels are shown to depend on more than simple relative pay. They depend upon the ordinal rank of an individual's wage within a comparison group. “Rank” itself thus seems to matter to human beings. Moreover, consistent with psychological theory, quits in a workplace are correlated with pay distribution skewness.     

Does corporate ownership structure affect its strategy towards diversification?

We claim that there is a link between corporate control structure and managers’ strategy towards unrelated mergers and risk diversification. Companies with greater ownership concentration are less diversified. Evidence also shows that corporate diversification generally results in value loss while focussing is value increasing. This highlights the potentially detrimental effect of agency problems on corporate strategy. Copyright © 1999 John Wiley & Sons, Ltd.     

Just a Question of Selection? The Causal Effect of Profit Sharing on a Firm's Performance

Using German firm panel data, we analyze the productivity effects of profit sharing. Because selectivity should pose a severe problem in this context, we combine matching with a difference‐in‐differences approach. This method enables us to rule out potential bias. Our results suggest that selectivity does indeed matter. Firms with very special characteristics apply profit sharing. We find that these establishments are already more productive before they decide to implement profit sharing. Nevertheless, after accounting for selection, our results show that the introduction of profit sharing leads to a significantly higher productivity in these firms.     

How Does Market Making Affect Industrial Relations? Evidence from Eight German Hospitals

The introduction of market mechanisms matters for industrial relations. In the German hospital sector, national liberalization policies have put immense pressure on local management and worker representatives and led to the growth of a low‐wage sector. In case studies of eight hospitals, we find some locales where market making has led to union revitalization and mobilization, but this effect varies. Using an eight‐way comparison, we infer a configuration of three aspects of the local political economy — labour markets, politics and co‐determination rules — that together provide a well‐fitting explanation for both variation and change.     

When does a partner’s reputation impact cooperation effects in partnerships?

We examine how formal contracts moderate the relationship between a partner??s reputation and cooperation effects in public-private (P-P) partnerships. We base our analysis on differences between formal contracts, which require a series of legal agreements, and informal contracts, which may be implicit and/or unwritten. We argue that a partner??s reputation is more likely to impact cooperation effects in the context of strong formal or informal contracts. Using a sample of 244 partners from various P-P partnerships in the medical and healthcare fields in China, we find that the positive relationship between a partner??s reputation and cooperation effects is stronger given the existence of strong formal and/or informal contracts. We conclude that in China, where there is a weak legal system that rarely offers or enforces sufficient protections to contract signatories, it is safer to cooperate with a partner who has a good reputation. Such a reputation correspondingly enhances cooperation effects. Moreover, this relationship may be amplified when there are strong formal and/or informal contracts, all of which may be associated with cooperation between the public and private sectors.     

Does Credit Scoring Produce a Disparate Impact?

The widespread use of credit scoring in the underwriting and pricing of mortgage and consumer credit has raised concerns that the use of these scores may unfairly disadvantage minority populations. A specific concern has been that the independent variables that comprise these models may have a disparate impact on these demographic groups. By “disparate impact” we mean that a variable's predictive power might arise not from its ability to predict future performance within any demographic group, but rather from acting as a surrogate for group membership. Using a unique source of data that combines a nationally representative sample of credit bureau records with demographic information from the Social Security Administration and a demographic information company, we examine the extent to which credit history scores may have such a disparate impact. Our examination yields no evidence of disparate impact by race (or ethnicity) or gender. However, we do find evidence of some limited disparate impact by age, in which the use of variables related to an individual's length of credit history appear to lower the credit scores of older individuals and increase them for the young.     

How do Brands’ “Own Generics” Affect Pharmaceutical Prices?

This paper examines the price effects of generic drugs that are produced by brand-name drug firms and that are labeled, priced, and marketed to compete against independent generics. The strategy of introducing such “pseudo-generics” – also known as “authorized generics” – has raised some antitrust concerns. One defense of this strategy has been that the additional competition created by pseudo-generics should lead to lower prices. This paper develops a simple model to show that pseudo-generics can be expected to have exactly the opposite effect. It then examines empirical evidence on this point from the Canadian pharmaceutical market, showing that there appears to be a positive relationship between drug prices and the share of generic sales made by the brand’s own pseudo-generic.     

Paid and Unpaid Labour in Non‐Profit Organizations: Does the Substitution Effect Exist?

In non‐profit organizations (NPOs), volunteers often work alongside paid workers. Such a co‐production setting can lead to tension between the two worker groups. This article examines for the first time if and how volunteers influence the separation of paid employees, and thus it contributes to the debate over whether volunteers can substitute paid workers. Using Austrian data at the organizational level, we find a significant impact of volunteers on the separations of paid workers in NPOs facing increased competition. These findings support the assumption that a partial substitution effect exists between paid workers and volunteers.     

Will a supplier's origin make a difference to its business customers?

Whether companies are extending or defending international markets, decision makers often are advised to carefully consider their products' country-of-origin images for their marketing and sales activities. Although extensive research shows the dominant effect of country-of-origin images in consumer markets, some doubt arises when shifting to business markets. Here, image differences may weaken due to longstanding practices of market interaction between customers and suppliers, and the discriminatory power of country-of-origin image may fade. To shed light on this issue, the authors first propose the novel concept of the supplier-country-image (SCI). They develop a corresponding SCI measurement scale and empirically validate it. Their survey of 157 German and French purchasing agents from automotive and machinery manufacturers yields a database of 628 ratings for four supplier countries of origin: Germany, France, the United States, and Japan. The authors then use the scale to provide evidence that SCIs indeed vary when purchasing agents evaluate suppliers from different countries. These agents exhibit cross-national invariance in their SCI, such that the authors are able to use the German and French rater subsamples to create manifest SCI profiles for the four supplier countries of origin.