Corporate social responsibility: The debate revisited

Before gaining general acceptance, an idea that jolts individuals out of accustomed-behavioral patterns undergoes a slow evolution. What is interesting in the history of the corporate-social-responsibility doctrine is that, within roughly three decades, it has achieved a status almost coequal with the bottom-line philosophy which, in the past, provided legitimacy to corporate decision making.Nevertheless, debate over corporate responsibilities continues. Two factors explain why: 1) corporate performance is perceived by some as not matching corporate rhetoric and 2) the “battle of definitions” continues.The first factor will be determined within the next five years because the Reagan Administration, by curtailing government activities, places more responsibility on the private sector. The definitional issue of CSR and CSR² (responsibility versus response) is not likely to be resolved soon but the strengths of the “response model” do not equal the strengths of the “responsibility model.” Responsibility is a moral term and response a psychological one: the American people ask their leaders to behave as “virtuous agents.”Moral decision rendered in complex situations—and on behalf of countless others—will lead people to define “correctness” differently, as the “Poletown incident” in Detroit amply illustrates. The search, however, for a new credo and a new character for America business has begun—and will continue.     

Heterogeneity in performance within the bank holding company sector: Evidence and implications

The performance of banks affiliated with the holding company sector has been heavily investigated. Empirical studies have sought to determine if the alleged efficiency of holding companies does in fact exist; and if such efficiency outweighs the anticompetitive effects introduced into the banking structure. Research methodologies, nevertheless, have tended to view the holding company sector as homogeneous in its performance characteristics as compared to independent banking. In this study, however, it is found that there is considerable heterogeneity in performance within the holding company sector. The findings have implications for the direction of future research as well as the formation of public policy in banking.     

Monetary policy and the daily behavior of interest rates

It is possible that previous research has failed to detect significant variation in the ex-ante real interest rate because the Federal Reserve follows a policy designed to stabilize the real rate. If the Fed is successful, there will be little month-to-month variation in the real rate. Nonetheless, research to date has relied on monthly or quarterly data. This paper presents the results of new tests that use daily data in an attempt to detect short-term variation in the ex-ante real rate. Though the tests reveal that the real rate is not constant, most of the detected variation is related to reserve settlement on Wednesday.     

Polymorphism in competitive strategies: Trading stamps

This paper uses the example of trading stamps to examine a model of competitive nonprice marketing strategies. A concept borrowed from ethology, polymorphic equilibrium, is developed and used to explain salient features of trading stamp use by retail firms. The results contribute to an understanding of why virtually identical firms may optimally choose quite different competitive strategies. The paper also demonstrates the possibility of cyclical movements in the proportion of firms that adopt nonprice strategies such as the use of trading stamps.     

Increases in energy prices,costs of production,and plant size

A translog cost function is estimated for U.S. manufacturing in order to investigate plant size differences in responses to increases in energy prices. Smaller plants were more intensive users of energy in the early 1970s but were also better able to substitute out of energy and into other inputs during the first round of energy price increases. As a result, by the mid-1970s larger plants had become more intensive energy users. Thus, later energy price increases probably had a greater adverse impact on the production costs of larger plants in manufacturing.     

Scale economies,entry, and welfare

This study shows how scale economies, initial size differences among firms, potential competition, and adjustment costs may influence the entry of firms into a dynamic oligopoly. It also examines the effects of these factors on the final size distribution of firms in an industry, and on the welfare levels of consumers and producers. We find that low to moderate scale economies are insufficient for Cournot-Nash competition to drive small firms from the market. Only when scale economies are quite high will the distribution of firm sizes become degenerate. Potential competition and the size of incumbent firms' capital stocks are additional barriers to entry. The welfare conclusion is that there may be a government role to preserve potential competition, but also to dissuade small firms from entering certain markets where there are economies of scale.     

The determinants of occupational mobility patterns among blue-collar jobs

Barriers to mobility are commonly believed to partition blue-collar jobs into skilled, semiskilled, and unskilled components. This paper develops a model based in large measure on the classical gravity model for purposes of ascertaining mobility pattern determinants and for testing for the presence and form of mobility barriers. The model is implemented on a 1965–1970 sample data of male mobility among 60 intermediate-detailed blue- collar occupations. The empirical results reveal that mobility patterns in the blue-collar component conform well with neoclassical theoretical expectations. Very little support is found for the view that the blue-collar labor market is highly structured or segmented in its operations through the mobility process.     

Firms' acquisition decisions and Tobin's q ratio

We develop the hypothesis that Tobin's q ratio signals favorable opportunities for a firm to make acquisitions and then undertake an empirical test of this hypothesis within the context of a more general “multicausal” model. The results of this test support our hypothesis. The empirical study is also notable in that our data consists of a representative sample of large manufacturing firms (selection to the sample is not conditional upon merger activity) and the time period covered (1971–1978) postdates the conglomerate merger boom era of the 1960s.     

A note on the association between systematic risk and common stock and bond rating classifications

Relative risk classifications for both common stock and bonds are provided by several financial services, based upon their analysis of the financial and operating data of the issuer. Systematic risk, on the other hand, is a quantitative measure of relative risk based upon market-generated data. Using several multivariable statistical techniques and a sample of 443 listed companies, this note provides empirical evidence of the association between 1) systematic risk and common stock rankings, 2) systematic risk and bond ratings, 3) two popular common stock ranking classification systems, and 4) common stock rankings and bond ratings.     

A comparison of job analytic and conventional economic variables as explanations of occupational earnings differentials

Occupational carnings are analyzed in order to determine the relative importance of micro-oriented job analytic variables vis-a-vis more conventional market variables as explanatory factors of earnings differentials. Earnings functions are constructed in order to determine the extent to which these variables can explain occupational earnings differentials. These functions are analyzed by means of both ordinary least squares and ridge regression techniques. Job analytic variables were obtained from the Position Analysis Questionnaire (PAQ), which measures job characteristics that are similar to many job evaluation systems. When these approaches are combined, a comprehensive model can be estimated that reflects the responsibilities, experience, training, skills, job environment, and work regularity characteristics of different occupations as well as conventional economic factors. Although the job analytic variables measure potentially important differences between jobs, the conventional economic variables have greater explanatory power.     

Sales expectations and inventory changes in retail trade

In this paper a single equation inventory investment model is estimated for the United States retail sector. Monthly data for the 1970s are utilized. In estimating the model it is alternatively assumed that expectations were formed according to a seasonal model, to perfect foresight, and to a narrowly rational expectations model. We find that a model in which expected sales and the expected rate of inflation are narrowly rational can explain most of the variation in retail inventory investment during the time period studied. The results of the estimation imply that retailers have a relatively short forecast horizon, that they can react quickly to either unexpected sales or to a deviation of actual from desired inventory stocks, and that an increase in the real of interest has a statistically negative impact on retail inventory investment.     

Some evidence on the role of money illusion in labor supply behavior

The Keynesian idea that workers are subject to money illusion in their labor supply decisions is tested by estimating a labor supply function that includes the price level as an independent variable. The model is estimated with data drawn from various BLS publications and is aggregated by SMSA. The results indicate a significant negative supply response to price-level changes after controlling for the nominal wage rate, income, and the SMSA's unemployment rate. There is no significant difference between workers' supply response to the price level and the nominal wage rate, which suggests that workers are not subject to money illusion.     

The entrepreneur: A capable executive and more

In the United States, entrepreneurs have been cussed and discussed, glorified and vilified, declared to be social misfits and bastions of the private enterprise system. Early in the life cycle of an entrepreneur, he or she may have been classified as being “unable to relate to family or peers,” later as “unwilling and unable to submit to or work with authority” to “jungle fighter” to “robber barron” to “philanthropist.” 5A common but incorrect assumption is that if one cannot adjust to the corporate environment, he or she should pursue an entrepreneurial career. Whether or not one can adjust does not preclude the necessity for the development of the skills and techniques required of a competent executive. The authors hypothesize that an entrepreneur must be a capable executive, and in addition, must possess a number of psychological characteristics to a greater or lesser degree than their corporate counterparts.This does not imply that all entrepreneurs are alike any more than all managers or executives are alike. Nor that the presence of a higher or lower level of a psychological trait or characteristic is itself sufficient for success. There are a number of sociological, psychological, demographic, and economic factors that appear to impact on the decision to enter entrepreneurial occupations. Although neither the absolute level of the impact of a psychological trait nor the interrelationship of the combined factors on the final decision-making process are known, research has indicated that significant differences in the intensity level of psychological traits or characteristics exist between entrepreneurs and managers or executives.This article discusses those traits that entrepreneurs exhibit at significantly different levels than do their corporate counterparts; how these factors may influence the decision to enter entrepreneurial occupations: and how these same traits have the propensity, if ignored, to have a negative influence on both the entrepreneur's organization and personal life-style.Entrepreneurs tend to be 1) tolerant of ambiguous situations, 2) prefer autonomy (autonomy may be described as self-reliance, dominance, and independence), 3) resist conformity, 4) be interpersonally aloof yet socially adroit, 5) enjoy risk-taking, 6) adapt readily to change, and 7) have a low need for support. These factors can lead to serious problems in delegation and communication, two factors of paramount importance to a growing concern. They may also cause intense stress or loneliness for the entrepreneur. Fortunately, the traits of willingness to accept change and ability to adapt to it will help the entrepreneur to accept and respond to problems that arise due to poor delegation or communication. Coping methods and a tolerance of ambiguity will assist the entrepreneur in dealing with stress and loneliness. The main problem is to alert the entrepreneur to the potentiality of these problems—which is what this article attempts to do.     

Uncertainty,organizational form,and x-efficiency

When the firm is uncertain about the efficiency units of labor that it employs, some organizational forms—franchise, owner-operated, and multiplant firms— may be more profitable than others. As a result, particular organizational forms may dominate an industry with uncertain inputs. Conversely, various organizational forms may be selected by a company selecting producing units that will maximize the decision maker's expected utility of profits. This paper offers an alternative view of firm attributes associated with x-efficiency.     

Oil prices and world inflation

In this paper we attempt to address the nature of the causal relationships between oil prices and U.S. inflation. We use a procedure developed by Granger to assess “causality” or, more precisely stated, “informativeness.” Our results confirm that higher oil prices have increased the U.S. WPI. Our results also support OPEC's contention that their price increases have in part been a result of worldwide inflation.     

The role of incubator organizations in the founding of growth-oriented firms

The role of incubator organizations, those organizations where entrepreneur work before starting their own firms, is examined. Using a sample of 161 new, growth-oriented firms, the relationships of the new companies to their incubator organizations are considered, as well as the characteristics of the incubator organizations. 5The findings have implications for prospective entrepreneurs. Entrepreneurs in most industry categories do not change geographic location and, in most technical industries, usually start businesses related to what they did before. An individual's decision to join a particular organization results in a particular geographic location and in knowledge about a particular industry. The would-be founder located in an unpromising geographic area and getting experience in an industry offering few opportunities for company start-ups is unlikely to be able to start a growth-oriented technical firm, regardless of personal motivation. However, the prospective founder of a nontechnical firm appears to be less tied to the experience gained in an incubator organization.There are also implications for regional economic development. Because technically oriented start-ups are tied closely to the business of their incubator organizations and because most entrepreneurs don't move when starting, the possibilities for high-technology start-ups may be very limited in many geographic regions. There have been no studies, to date, on why some founders move when starting. Programs to attract entrepreneurs at the time of start-up may have promise, but, at least to date, there is not much evidence of entrepreneurs being mobile at this stage of their careers.Local and regional programs to attract branch facilities of larger corportions have a long history. The emphasis is usually upon attracting facilities that will offer the maximum number of blue-collar jobs. In contrast to this traditional approach, it might be beneficial to shift the emphasis to those facilities most likely to function as incubators. The greatest benefits might come from laboratories or divisions that would “seed” a region with people learning about promising technologies or industries.The role of universities in this process appears to be less direct than is often assumed. Based upon our sample, it appears that software and biotechnology/medical firms often have spun-off from universities or hospitals. However, in other industry categories, it is business firms that have primarily served as incubators. There are currently many experiments underway to create university-affiliated innovation centers or incubator centers intended to help aspiring entrepreneurs. Whether these will enable universities to function more effectively as incubators, spinning off students and faculty who start growth-oriented firms, remains to be seen.     

Labor market differentials and the expected gain from search

Several recent empirical studies have used the residuals from estimated earnings equations as explanatory variables in models of on-the-job search and quit behavior. It has often been argued that the coefficients on these “market differential” variables are biased downward because estimated residuals overstate the “true” quasi-rent or disincentive to search for alternative employment. This argument—that observed wages include implicit payments for workplace and person-specific characteristics not fully specified in earnings models— ignores an opposing bias associated with the value of being able to reject unattractive wage offers. As a consequence, there is no unambiguous a priori relationship between estimated wage residuals and the theoretical expected gain from search. Some evidence bearing on the relative magnitudes of the two biases is discussed.     

The optimal policy rule under rational expectations and multiplier uncertainty

This paper shows the role of macro policy under multiplier uncertainty when expectations are rational and the supply structure is affected by price level variance. Policy less is a function of price level variance and possibly of the expected price level. If the letter argument is omitted from the less function, optimal policy simply minimizes the horizontal variance of the aggregate demand curve. If it is not omitted, the level of policy depends on the responsiveness of the supply structure to price level variance, and there may be multiple local policy optima.     

Formulating a strategic portfolio of profitable retail market segments for commercial banks

A profit contribution study of commercial bank retail customers reveals systematic relationships with family life cycle, social stratification, and relative income class. The analysis leads to the conclusion that a bank's continued retail growth and profitability depend in a crucial way on its ability to attain a balanced portfolio of three key high profit market segments. To attain this mix, banks must intensify product development efforts oriented to the asset management needs of upscale customers during the later stages of the family life cycle. It is interesting to note that these three market segments are expected to attain the highest population growth rates in the decades ahead as the age distribution of the population changes.