Self‐managed work teams: An efficiency‐rationale for pay compression

This paper uncovers a novel mechanism through which pay dispersion can have a negative effect on firm performance, even in the absence of equity or fairness considerations. We use a stylized model of a self‐managed work team to show that, when team‐work involves heterogeneous tasks, the provision of incentives to exert effort conflicts with the provision of incentives to share information relevant for decision‐making. Pay dispersion deteriorates information sharing as it induces workers to conceal “bad news” to maintain their coworkers motivation. The practical implications of our theory are that team empowerment should go hand in hand with pay compression and that empowerment should be avoided when team production involves strongly heterogeneous tasks.     

A rationale for law of technological substitution

This paper links the popular S-shaped curves often used to represent the path of technological substitution with the evolutionary model of a self-organizing industrial system. In particular, the empirical Fisher-Pry law of technological substitution is given a conceptual rationale by treating technological innovations as structural fluctuations which affect an industry's growth path as defined by a set of non-linear differential equations. In so doing, the paper draws heavily on the articles by Allen and Batten.     

Can inflation data improve the real‐time reliability of output gap estimates?

Potential output plays a central role in monetary policy and short‐term macroeconomic policy making. Yet, characterizing the output gap involves a trend‐cycle decomposition, and unobserved component estimates are typically subject to a large uncertainty at the sample end. An important consequence is that output gap estimates can be quite inaccurate in real time, as recently highlighted by Orphanides and van Norden ( 2002 ), and this causes a serious problem for policy makers. For the cases of the US, EU‐11 and two EU countries, we evaluate the benefits of using inflation data for improving the accuracy of real‐time estimates. Copyright © 2004 John Wiley & Sons, Ltd.     

The Hazard Rate of Foreign Direct Investment: A Structural Estimation of a Real‐option Model*

The hazard rate of investment is derived within a real‐option model, and its properties are analysed so as to directly study the relation between uncertainty and investment. Maximum likelihood estimates of the hazard are calculated using a sample of multinational enterprises (MNEs) that invested in Central and Eastern Europe over the period 1990–98. Employing a standard, non‐parametric specification of the hazard, our measure of uncertainty has a negative effect on investment, but the reduced‐form model is unable to control for nonlinearities in the relationship. The structural estimation of the option‐based hazard is instead able to account for the nonlinearities and exhibits a significant value of waiting, although the latter is independent of our measure of uncertainty. This finding supports the existence of alternative channels through which uncertainty can affect investment.     

‘Riding along on the crest of a wave’: tracking the shifting rationale for non‐union consultation at FinanceCo

This article seeks to evaluate why, within the context of a fast‐moving and turbulent business environment, certain staple employee involvement (EI) practices remain so enduring. Using case study research, the article tracks the shifting justification for non‐union consultation in a medium‐sized clearing bank. It is demonstrated that the underlying motive is contingent and dynamic, changing periodically in response to a variety of stimuli. Developing Marchington et al.'s influential metaphor, it is argued that such ‘long‐wave’ involvement is related to the flexibility of the consultative process. The malleability of the intervention is seen to complement quite disparate business objectives contributing to its longevity. More broadly, the study underlines the need to build micro‐, macro‐ and sector‐level analyses into explanatory models of EI.     

Utility functions for Debreu's ‘excess demands’

Given an arbitrary function x: $\text{R}$^l→$\text{R}$^l satisfying Walras law and homogeneity, Debreu decomposed x into the sum of l ‘individually rational’ functions x(p)=Σ^l_k=1[uvbar|x]^k(p). Here we find explicit utility functions u^k, constructed on the basis of a simple geometric intuition, which give rise to Debreu's excess demands [uvbar|x]^k(p).     

Enabling or “real” power and influence in leadership

On the theme of personal development, this conceptual article aims to provoke thought about power and influence in leadership by means of a short excursion into character depictions in J.R.R. Tolkien's The Lord of the Rings ( 1966 ). It is said of mythopoeic literature, the genre of Tolkien's work, that the very simplicity of the lens “pares away distractions,” “opens the way to unexpected connections, … [and] draws attention to alternative modes of being and thinking” (Greene, 1994 , p. 457). Taking the liberty of perceived applicability of Tolkien's literary genius to motifs on leadership, this article provokes thinking on what constitutes “real” power and influence in leadership. It is contended that demonstrating real power and influence in leadership lies not in coercive tactics of wielding power over others but in withholding usurping power to work with and enable others to achieve worthwhile ends. Three suggested markers of enabling or real power and influence in leadership are explored. Each one contains an element of paradox. The proposed markers suggest, in turn, that enabling or real power and influence does not usurp but serves, that it sublimates self‐interest for the interests of others and the intended goal, and that it positions for growth for the self and others and fosters true engagement in leadership. The article offers some empirical evidence as to the efficacy of the proposed markers for effective leadership and suggests a further research strategy to test the proposed markers empirically.     

A unified approach to standardized‐residuals‐based correlation tests for GARCH‐type models

In this paper, we propose a unified approach to generating standardized‐residuals‐based correlation tests for checking GARCH‐type models. This approach is valid in the presence of estimation uncertainty, is robust to various standardized error distributions, and is applicable to testing various types of misspecifications. By using this approach, we also propose a class of power‐transformed‐series (PTS) correlation tests that provides certain robustifications and power extensions to the Box–Pierce, McLeod–Li, Li–Mak, and Berkes–Horváth–Kokoszka tests in diagnosing GARCH‐type models. Our simulation and empirical example show that the PTS correlation tests outperform these existing autocorrelation tests in financial time series analysis. Copyright © 2008 John Wiley & Sons, Ltd.     

A Simple Improvement of the IV‐estimator for the Classical Errors‐in‐Variables Problem

Two measures of an error‐ridden variable make it possible to solve the classical errors‐in‐Variable problem by using one measure as an instrument for the other. It is well known that a second IV‐estimate can be obtained by reversing the roles of the two measures. We explore the optimal linear combination of these two estimates. In a Monte Carlo study, we show that the gain in precision is significant. The proposed estimator also compares well with full information maximum likelihood under normality. We illustrate the method by estimating the capital elasticity in the Norwegian ICT‐industry.     

A Gaussian approximation scheme for computation of option prices in stochastic volatility models

We consider European options on a price process that follows the log-linear stochastic volatility model. Two stochastic integrals in the option pricing formula are costly to compute. We derive a central limit theorem to approximate them. At parameter settings appropriate to foreign exchange data our formulas improve computation speed by a factor of 1000 over brute force Monte Carlo making MCMC statistical methods practicable. We provide estimates of model parameters from daily data on the Swiss Franc to Euro and Japanese Yen to Euro over the period 1999–2002.     

A Shared‐Cost‐Profit Model of Teaching Materials for Higher Education

In this article, I assess the cost‐value crisis facing institutions of higher education; as the cost of higher education grows, students grow increasingly skeptical of the value of their degrees. The COVID‐19 pandemic has accelerated this crisis as institutions across the country have been forced to move to a fully or partially online model of instruction. In an effort to reduce costs, institutions have increased the number of low‐paid, part‐time adjunct faculty teaching introductory courses and have promoted the use of free and open online educational resources (OER). Both solutions lack sustainability and do little to solve the “value” question of higher education. I demonstrate how a shared‐cost‐profit model could address both issues of sustainability and value.     

Understanding employee preferences for investing in employer stock: evidence from France

In this article, we broaden the focus of existing research on employee stock purchase plans by analysing employee preferences for investing in employer stock as a construct distinct from actual investment behaviour. In our analysis of original survey data in a sample of 900 employees in four French companies, we find that employee preferences are influenced by two common cognitive heuristics (representativeness and familiarity), organisational commitment, the perceived quality of corporate communications about these plans and perceived managerial commitment to employee ownership. We did not find, however, that risk aversion, turnover intentions or perceived employee involvement in decision making influenced preferences for investing in employer stock. Our findings have both theoretical and practical implications for understanding and operating these types of employee benefit plans, which are becoming more common across the globe.     

A number‐of‐modes reference rule for density estimation under multimodality

We consider kernel density estimation for univariate distributions. The question of interest is as follows: given that the data analyst has some background knowledge on the modality of the data (for instance, ‘data of this type are usually bimodal’), what is the adequate bandwidth to choose? We answer this question by extending Silverman's idea of ‘normal‐reference’ to that of ‘reference to a Gaussian mixture’. The concept is illustrated in the light of real data examples.     

Adjusting for Non‐Response in Population‐Based Case‐Control Studies

In this paper we discuss the analysis of data from population‐based case‐control studies when there is appreciable non‐response. We develop a class of estimating equations that are relatively easy to implement. For some important special cases, we also provide efficient semi‐parametric maximum‐likelihood methods. We compare the methods in a simulation study based on data from the Women's Cardiovascular Health Study discussed in Arbogast et al. (Estimating incidence rates from population‐based case‐control studies in the presence of non‐respondents, Biometrical Journal 44, 227–239, 2002).     

A Skew‐normal copula‐driven GLMM

This paper presents a method for fitting a copula‐driven generalized linear mixed models. For added flexibility, the skew‐normal copula is adopted for fitting. The correlation matrix of the skew‐normal copula is used to capture the dependence structure within units, while the fixed and random effects coefficients are estimated through the mean of the copula. For estimation, a Monte Carlo expectation–maximization algorithm is developed. Simulations are shown alongside a real data example from the Framingham Heart Study.     

The Network‐Performance Relationship in Knowledge‐Intensive Contexts—A Meta‐Analysis and Cross‐Level Comparison

This study examines the generalizability of the network‐performance relationship across individual and group levels, focusing on knowledge‐intensive contexts. Drawing on a meta‐analytical approach, we synthesize the results of 102 empirical studies to test whether network characteristics such as centrality, brokerage, and tie strength similarly influence the job performance of individuals and groups. Results show that while there are no differences in the direction of the network‐performance relationship across levels, there are substantial differences in magnitude. Individual performance profits more strongly from a high number of direct connections, whereas groups reap higher benefits from brokerage positions. Additional analyses reveal that the network measurement method, tie content, and performance criteria function as moderators of the network performance relationship, but their influence is consistent neither across network characteristics nor across levels. By meta‐analytically comparing and contrasting the network‐performance relationship for individuals and groups, we contribute to multilevel research on networks and organizations. Particularly, we move toward the development of a multilevel homology theory of networks. Implications for theory, practice, and future research are discussed. © 2017 Wiley Periodicals, Inc.     

Value investing versus other investment strategies: A volatility spillover approach and portfolio hedging strategies for investors

Motivated by the incessant demand for portfolio diversification, this study examines the connectedness between value and diverse types of stocks (growth, momentum, ESG, high beta, classic S&P 500, volatility). The applied methodology encompasses the time-varying parameter vector autoregressive (TVP-VAR) extension of the Diebold and Yilmaz (2012) framework for the period from 03/31/2011 to 03/31/2021. Results show moderate volatility transmissions among the sampled assets, which tend to escalate during periods of turmoil, such as the European Sovereign Debt Crisis, the plunge in oil prices and the COVID-19 outbreak. Growth and ESG stocks play an indispensable part in the transmission mechanism. Moreover, we investigate the hedging ability of value stocks within a portfolio containing other stocks, by estimating hedge ratios and optimal weights with the usage of conditional variance estimates (DCC-GARCH). The empirical findings reveal that value stocks can adequately hedge against the risk deriving from the volatility of the remaining investment instruments, especially in the case of high beta and volatility stocks. Thus, this analysis provides portfolio managers and investors with valuable insights in order for them to hedge their stock portfolios effectively.     

A rationale for planning: Implications from the economic theory of the firm

This paper undertakes the development of a foundation for a theory of why firms plan. The theory of the firm literature provides a useful starting-point and provides insight into the factors which have an effect on the planning function of the firm. Those factors include transactions costs, uncertainty and asset-specificity. The fact that some firms should not plan even in the face of uncertainty and transactions costs emphasizes the importance of the relative magnitudes of various costs and demonstrates the relevance of standard economic analysis for the study and practice of business planning. Examples illustrate the role of planning for human, financial and physical resources.