Adaptive expectations and cobweb phenomena: Does heterogeneity matter?

This paper studies a cobweb-type commodity market characterized by a strictly monotone demand and supply, in which n types of firms operate. Types differ in a key parameter governing price expectations which are supposed to be adaptive. The unique steady state of the resulting economic dynamics is characterized in terms of stability and the impact of the number of firms types is studied: to this end the notions of structural and behavioural degree of instability, which are introduced in the paper, prove to be crucial in determining whether stability or instability prevail. The case of market integration is also considered and conditions to have stability (or instability) in terms of the original markets' parameters are given. The baseline structure is extended in two directions. The first extension assumes the point of view of an authority who is uncertain about the firms types. In this case the structural degree of instability determines how heterogeneity affects the probability of ending up with a stable outcome. The second extension consists in endogenizing the choice of predictors through a discrete choice-based evolutionary mechanism. In both cases the amount of the heterogeneity and its possible variations play a critical role in shaping the range of possible long-run outcomes of the model.     

Mutual fund flows and investors’ expectations in BRICS economies: Implications for international diversification

This paper empirically examines the relationship between different classes of mutual funds, measures of investors’ expectations and business cycle movements in the BRICS markets over the 1996Q1-2017Q3 period. Applying the Panel Vector Autoregressive (PVAR) model in a Generalized Method of Moments (GMM) setting, the results suggest a strong causal relationship between mutual fund flows and measures of investors’ future expectations. In particular, fund flows are forward-looking and assist in forecasting real economic conditions. Moreover, investors choose to invest in riskier funds when economic conditions are good, while they prefer safer options in poor economic situations. These findings have important implications for international diversification.     

Influencing upward: subordinates’ responses to leaders’ (un)awareness of their empowerment expectations

This study investigated when subordinates engage in upward influence behaviors to voice their opinions on empowerment practices to their leaders. Data were collected from 114 pairs of leader–subordinate dyads at a manufacturing firm. Based on cross-level polynomial regression and response surface analyses, the present study found that the less the leaders were aware of subordinates’ empowerment expectations, the more the subordinates engaged in upward influence behaviors, namely rational persuasion and inspirational appeals. Moreover, high leader–subordinate task interdependence and subordinate self-efficacy as moderators amplified the (in)congruent relationships. The results contribute to empowerment literature by providing valuable insight into the bottom-up influence in the empowerment process.     

Leader–member exchange and follower creativity: the moderating roles of leader and follower expectations for creativity

We examined leader and follower expectations for creativity as moderators in the relationship between leader–member exchange (LMX) and follower creativity. The results of a survey among 193 leader–follower dyads from two high-tech companies in mainland China show that LMX positively relates to follower creativity, and that leader and follower expectations for creativity moderate this relationship. Specifically, the relationship between LMX and follower creativity is positive and significant when either leaders or followers, or both leaders and followers, set high rather than low expectations for creativity, with the highest level of follower creativity observed when leaders and followers congruently hold high creativity expectations. In contrast, the LMX–follower creativity relationship is blurred when leaders and followers congruently hold low expectations for creativity. We discuss the relevance of these results from theoretical and professional perspectives.     

The importance of ‘fitting in’: collaboration and social value creation in response to community norms and expectations

Abstract

This article explores the effects of embeddedness in communities upon entrepreneurial practices. Based on the lived experiences of 10 craft entrepreneurs, this study reveals that within certain contexts, such as craft communities, entrepreneurs are expected to exhibit high levels of camaraderie and generosity, which leads them to create social value by supporting their peers and freely sharing their resources. Entrepreneurs achieve ‘fitting in’ not only by learning accepted norms, but also by performing strategic actions which allow them to temporarily adapt their conduct to meet the expectations of community members. Thus, this study exposes a largely concealed element of social entrepreneurial practice. This article also reveals that embeddedness in communities can lead entrepreneurs to collaborate with potential competitors. Craft entrepreneurs share their economic, cultural, social and symbolic capital in order to support and help revitalise their communities, to perpetuate their respective industries and to sustain a genuine interest in hand-crafted products. They consider such supportive behaviour a social responsibility that is shared among community members and a task that is passed from one generation to the next. Thus, this article reveals that collaboration and social value creation can be embraced in response to community norms and expectations.