Culture and Economic Systems

A bstract .   Applying a cluster analysis to the results of the World Value Study, this article shows that the OECD nations have five distinct patterns of cultural characteristics. Moreover, these five cultural systems are almost the same as a classification of economic systems that have been derived from a cluster analysis of their economic institutions. A comparison of the cultural characteristics of East and West Germany suggests that the economic system has relatively little influence on the cultural systems. Instead, in a democracy, where the economic system is not imposed by force, the cultural characteristics are more likely to determine the economic system, rather than the reverse.     

Moneyless exchange: Attitudes of participants in Australian community barter systems

Community-based barter systems, known as LETS, appear to have become in-stitutionalised, that is accepted as an alternative exchange system across Australia and in other Western countries. LETS are non-profit enterprises, which allow members of a community to exchange goods and services without cash. A search of the literature reveals that very little empirical investigation has been conducted on these systems. Hence, the purpose of this study is to provide insight on the motivations for the establishment of these systems and to contribute to the literature on community-based barter. This paper reports the findings of a survey of 371 members of Australian LETS. The findings indicate that LETS are most attractive to the unemployed and those with low household incomes. LETS have been established to empower and build cohesive communities; the benefits of membership are both economic and psycho-social, and include a better quality of life, increased freedom and opportunities for using skills. The disadvantages of membership in LETS include limited trading opportunities and some trading problems. While pricing varies across transactions, most members report that they generally buy and sell within the system at the equivalent of the cash price. The success of LETS is based on the establishment and maintenance of good trading relationships and these systems are expected to continue irrespective of the economic climate.     

Different institutional behavior in different economic systems: Theory and evidence on diverging systems worldwide

The paper reviews and criticizes the past and current state of comparative studies of economic systems (CSES) for the lack of an analytical framework to back them. An analytical framework is formulated that allows for a changing distribution and interaction of agents along the subsystems, each of which is characterized by distinct and intrinsic institutional rules. The framework studies the convergence of agents and institutions toward the dominant subsystem and behavioral type. The focus is on three subsystems – household, firm and state settings – and the intrinsic behavioral types that are associated with these, namely social sharing, profit maximization, and rent acquisition, respectively. A fourth prototype is proposed.In this paper, we deduce and support the positioning of country groups along the prototype systems by empirical evidence and compare these with CSES literature on the varieties of capitalism. We also address the question as to why and how different paths emerged for alternative systems, their comparative economic performances, and their future global outlooks in the context of projected displacements of current leading countries by newcomer leading countries which possess different economic systems and different behavioral profiles.     

THE ROLE OF THE SERVICE SECTOR IN THE ECONOMY OF METROPOLITAN GENEVA, 1975–1985

Modern production systems are characterized by the growth of service industries and the increasing interdependence between services and the production of goods. Further, current research is becoming increasingly concerned with the strategic role of certain service functions in the process of economic growth. In this paper we examine these phenomena in the specific context of the economic structure and evolution of metropolitan Geneva. We begin by presenting an alternative typology of economic activity, and then employ this typology to examine three aspects of Geneva's economic structure: its configuration in 1985; its evolution over the period 1975–1985; and intrametropolitan shifts of economic activity. Finally, we compare Geneva to other metropolitan areas and cities in Switzerland, France, and Canada, in order to demonstrate the universality of the processes taking place.     

Pure and randomized equilibria in the stochastic von Neumann–Gale model

The paper examines the problem of the existence of equilibrium for the stochastic analogue of the von Neumann–Gale model of economic growth. The mathematical framework of the model is a theory of set-valued random dynamical systems defined by positive stochastic operators with certain properties of convexity and homogeneity. Existence theorems for equilibria in such systems may be regarded as generalizations of the Perron–Frobenius theorem on eigenvalues and eigenvectors of positive matrices. The known results of this kind are obtained under rather restrictive assumptions. We show that these assumptions can be substantially relaxed if one allows for randomization. The main result of the paper is an existence theorem for randomized equilibria. Some special cases (models defined by positive matrices) are considered in which the existence of pure equilibria can be established.     

A SHOCK ABSORPTION INDEX FOR INOPERABILITY INPUT–OUTPUT MODELS

Recent disasters have underscored the importance of enhancing resilience in economic systems. In this work, we propose a novel shock absorption index, which provides a measure of the ability of an economic system to tolerate disruptions. It is assumed that there are externally defined initial levels of system failure or disruption, as well as maximum allowable levels of inoperability for each sector. The shock absorption index is defined as the largest fraction of the anticipated initial disruption that can be absorbed by the predefined robustness limits. It provides an overall measure of the robustness of an economic system towards a disruptive event, which is driven by both the economic structure and the individual robustness of different sectors. The results of two case studies illustrate policy-making insights in identifying and prioritizing risk management strategies for critical systems.     

Recent advances in financial networks and agent-based model validation

We introduce the papers appearing in the special issue of this journal associated with the WEHIA 2015. The papers in issue deal with two growing fields in the in the literature inspired by the complexity-based approach to economic analysis. The first group of contributions develops network models of financial systems and show how these models can shed light on relevant issues that emerged in the aftermath of the last financial crisis. The second group of contributions deals with the issue of validation of agent-based model. Agent-based models have proven extremely useful to account for key features economic dynamics that are usually neglected by more standard models. At the same time, agent-based models have been criticized for the lack of an adequate validation against empirical data. The works in this issue propose useful techniques to validate agent-based models, thus contributing to the wider diffusion of these models in the economic discipline.     

A SURVEY OF THE ECONOMICS OF PATENT SYSTEMS AND PROCEDURES

The last several decades have seen increases in patenting activity worldwide, as well as growing issues related to patent quality. In response to these quality issues a recent patent literature has emerged, that investigates the behavior and incentives of patent examiners, applicants, and third parties. In this paper, we provide an overview of patent procedures, patent systems and a survey of the new economic literature on patent systems. Both theoretical and empirical papers are considered. Policy implications coming from this literature are presented.     

Structuration of precarious employment in economically constrained firms: the case of Dutch agriculture

Precarious employment practices such as short‐term contracts, low pay and lack of voice have undesired outcomes for workers, because these impede employees in their ethical rights to freedom, well‐being and equality. Still, precarious employment practice is common in sectors with restrained economic conditions, such as Dutch agriculture. However, in every restrained industry, examples of more socially responsible employment management are reported. The question why some firms develop more socially responsible employment systems when economic conditions predict the use of low cost, precarious employment systems is central in this article. Structuration theory provides a lens to understand how employers position their employment practice in the wider (institutionalised) social context. Insight in the reproduction circuits that link employers' actions with their social context (product, market, institutions and policies, demographics) can reveal where, at a sector level, change to avoid unethical employment practice could start.     

Saaty's consistency analysis: An application to problems in static and dynamic input-output models

Saaty's priority analysis has given us a set of rules to assign weights (priorities) to a multiple of objects in a consistent way. The method has been shown to have great potential for economic application, especially in applied input-output work. In this paper we show that much stronger links exist between priority theory and input-output analysis than observed in the literature thus far. As we shall show, application of Saaty's instrumentarium to the Leontief framework opens the way for a new type of consistency analysis. In static models the dual output and price systems are shown to be consistent, in the sense that both can be described in terms of the same pairwise comparison matrix. In dynamic analysis, these dual systems are shown to be generally inconsistent, the only exception being the case of von Neumann growth.     

Sufficient conditions for dynamic path controllability of economic systems

In this paper sufficient conditions for target path controllability of dynamic economic systems in state-space representation are discussed. These conditions, though stronger than necessary, are much easier to verify than the well-known (but complicated) necessary and sufficient conditions for target path controllability. It is demonstrated that the computational gain in terms of practical application of the technical conditions is substantial. For example, by means of these conditions it is possible to prove the target path controllability of Buiter's 1979 rational expectations model of an open economy — a problem which has been an unresolved one up to now.     

Measuring the efficiency of European education systems by combining Data Envelopment Analysis and Multiple-Criteria Evaluation

Education is considered an important factor of economic growth, employment and social inclusion. However, the economic crisis has put the need to achieve educational goals in the most efficient way ever more to the fore. The main objective of this paper is to assess the spending efficiency of European compulsory educational systems, creating a ranking of countries based on the efficiency scores of their systems using a number of standard variables from the literature. To this end, we also present a methodological innovation that combines Data Envelopment Analysis (DEA) with discrete Multiple Criteria Evaluation (MCE), two methods that we consider complementary if used for providing a performance analysis. Moreover, both methods identify a set of common variables which are associated with higher levels of efficiency in educational systems (e.g. some characteristics of teachers, the stock of adults’ human capital and lower expenditures per student). The results show that findings using DEA are largely confirmed by MCE.

     

Contrasting Institutional and Performance Accounts of Environmental Management Systems: Three Case Studies in the UK Water & Sewerage Industry*

abstract This paper presents results from a longitudinal, qualitative study into the adoption of environmental management systems (EMS) in three companies in the UK water & sewerage industry. Based on institutional theory and the literature on EMS, four factors related to the adoption of EMS are identified: external and internal institutional forces, environmental performance issues, and economic performance issues. While previous literature has often assumed a balance of performance and institutional factors or a preponderance of performance factors, the results of this study indicate that institutional forces are the predominant drivers. The results further indicate that environmental performance issues become less important over time, whereas institutional drivers and economic performance rationales increase in importance over time. While conforming to institutional pressures can result in improved economic performance of a company, adoption of environmental management systems mostly on the basis of institutional and economic factors has wider repercussions for the state of corporate environmental management and progress towards greater ecological sustainability of business.     

Productivity and computers in Canadian banking

Canadian banks have invested millions in computer systems in the last two decades. Yet the banks and outside observers have been uncertain that these investments have had net benefits. In this paper, unique data collected directly from a bank is used to investigate the impact of these investments on bank output, input and productivity. Using data from 1974–1987, a translog cost model is estimated. Both capital and labor are divided into information and noninformation inputs. The results are generally consistent with economic theory. The attempt to separate technical change from possible scale effects is very sensitive to alternative specification. Overall there has been some productivity growth associated with the changing computer technology. However, many of the benefits seem to have accrued to the customer and have not directly lead to gains for the bank.     

Quantifying the economic cost of children: a note on intertemporal equivalence scales

Static economic models based on complete demand systems are inadequate for estimating unconditional equivalence scales; in order to capture the effects of demographic changes on consumer behaviour, a life-cycle dynamic model is taken into account. In literature, studies have presented and evaluated longitudinal equivalence scales and intertemporal cost of children but these cannot be applied in practice when equivalence scales are utilised in poverty or income distribution analyses. This paper proposes intratemporal equivalent income scales, which are within period index numbers incorporating intertemporal consumer behaviour.     

Stability in the inefficient use of forecasting systems: A case study in a supply chain company

Computer-based demand forecasting systems have been widely adopted in supply chain companies, but little research has studied how these systems are actually used in the forecasting process. We report the findings of a case study of demand forecasting in a pharmaceutical company over a 15-year period. At the start of the study, managers believed that they were making extensive use of their forecasting system that was marketed based on the accuracy of its advanced statistical methods. Yet most forecasts were obtained using the system’s facility for judgmentally overriding the automatic statistical forecasts. Carrying out the judgmental interventions involved considerable management effort as part of a sales & operations planning (S&OP) process, yet these often only served to reduce forecast accuracy. This study uses observations of the forecasting process, interviews with participants and data on the accuracy of forecasts to investigate why the managers continued to use non-normative forecasting practices for many years despite the potential economic benefits that could be achieved through change. The reasons for the longevity of these practices are examined both from the perspective of the individual forecaster and the organization as a whole.     

Fiscal centralization versus decentralization: Growth and welfare effects of spillovers, Leviathan taxation, and capital mobility

This paper develops an endogenous growth model with spillovers of public goods, Leviathan taxation, and mobile capital to examine the relative merits of centralized and decentralized fiscal systems for economic growth and social welfare. We show that a decentralized system dominates a centralized system in terms of economic growth; however, the difference in social welfare between a decentralized and a centralized system is non-monotonic and displays a hump-shaped relationship with respect to capital mobility. Since higher capital mobility induces stronger tax competition, this finding implies that there is an optimal degree of tax competition; some tax competition is desirable, but fierce tax competition may be harmful. We also show that there is a critical level of spillovers of public goods above which centralization dominates decentralization in terms of social welfare, as in previous studies; however, if spillovers are below this critical level, capital mobility also matters in the welfare comparison between centralized and decentralized systems.     

Sequential Decision-making in Interdependent Sectors with Multiobjective Inoperability Decision Trees: Application to Biofuel Subsidy Analysis

Decision-making involving large-scale systems often involves considerations for temporal changes, interdependencies in organizational structures, multiple competing objectives, and risk and uncertainty, among others. In this paper we develop a risk-based methodology, the Multiobjective Inoperability Decision Tree (MOIDT). It integrates several dimensions of decision-making processes associated with interconnected systems in terms of: (i) evaluation of sequential policies; (ii) analysis of interdependencies; (iii) treatment of multiple objectives and their tradeoffs; and (iv) characterization of uncertainties. To demonstrate the integration of these four components, we present a case study to analyze the impact of government policies towards mass-scale biofuel production. Using a multi-period decision framework, the analysis utilizes economic input–output data to model the probabilistic demand adjustments for sectors that will likely be affected by biofuel policies.     

The growth paradox,sustainable development,and business strategy

Economic growth is a two-edged sword. Expanding economies and industries create wealth and employment, but global economic expansion is having unprecedented deleterious impacts on vital planetary systems. Despite this, the core strategic goal of all economies and many businesses continues to be the pursuit of ongoing economic growth. To resolve this paradox, a reconceptualization of firm-level growth is presented. I describe and discuss the organizational characteristics of the growth paradox and follow this with a metatheoretical review of economic, organizational, and ecological perspectives on growth. From this review, a typology of firm-level strategy is developed that radically reconceptualizes business growth as developmental activity primarily concerned with social–ecological flourishing. The features of this typology and its implications for business strategy are discussed according to three principles that emerged from the analysis: multidexterity, resilience thinking for design, and inclusive balance (embeddedness). Together, these strategy principles form the prerequisite management competencies needed for the development, implementation, and evaluation of sustainable business strategies. Transformative firm-level responses to the growth paradox are needed if sustaining forms of organizational growth are to be achieved and this paper presents a novel integrative framework for informing those strategies.     

The Tracking of Environmental Costs: Motivations and Impacts

Abstract

Most accounting systems separately capture and accumulate one portion of the overall environmental costs of firms, while the remainder is embedded in other cost pools, such as general overhead costs or administrative costs. Little empirical evidence has been provided to explain the impacts of cost accounting systems that make a larger portion of firms' total environmental costs visible. The aim of this study is to conceptually and empirically examine the relationships among the tracking of environmental costs (TEC) by firms, their environmental motivations, and the impacts in terms of environmental and economic performance. Using survey data from a large sample of manufacturing firms, the results suggest two main conclusions. First, the TEC has an indirect influence on economic performance through environmental performance. Second, this indirect effect is influenced by the environmental motivations of the firm. More specifically, this indirect effect is greater (lesser) for firms whose motivations are predominately business-oriented (sustainability-oriented).