CAPITALIZATION AND THE THEORY OF LOCAL PUBLIC FINANCE: AN INTERPRETIVE ESSAY

Abstract. The Tiebout hypothesis that consumer mobility and interjurisdictional competition leads to efficient provision of local services has provoked much controversy and debate in recent years. This article summarizes the opposing and conflicting viewpoints on this subject and presents a synthesis of the theoretical and empirical literature. The basic conclusion of this literature is that only under very restrictive assumptions will foot-voting and interjurisdictional competition ensure allocative efficiency in the local public sector. Nevertheless, the Tiebout mechanism offers important insights for public policy debates on the assignment of taxes and services and the design of equalization grants. Oates' suggestion that capitalization of fiscal differentials into residential property values provides an empirical test of the Tiebout hypothesis also generated an intense debate on the theoretical validity of this procedure and a heightened interest in its empirical applications. This debate is evaluated and an overview is given of the leading empirical approaches to test the efficiency and equity implications of the Tiebout mechanism. Controversial empirical issues such as the choice of the tax price term, the level of aggregation and econometric estimation problems are highlighted in this part of the survey.     

FINANCIAL REGULATION,THE STATE AND THE MARKET: IS THE FINANCIAL SERVICES AUTHORITY AN UNNECESSARY EVIL?

The most successful stock exchanges developed without detailed regulation by the state. This article examines the role of the FSA in regulating stock market activity and finds that the justification for a statutory regulator is very weak. Indeed, one of the functions of a stock exchange is the development of a safe (private) regulatory environment for those using the exchange. Stock exchanges should be allowed to compete on the basis of the regulatory services they provide as it is only through a process of competition that regulation can be improved.     

PUBLIC SERVICES MANAGEMENT: ACTIVITIES, INITIATIVES AND LIMITS TO LEARNING

Private sector-style management initiatives to ensure UK public services managers’ learning from private sector management practice are examined, and their rationale questioned. The lack of a coherent, systematic and agreed view of what constitutes ‘management’ and ‘managerial work’ in the private sector is discussed. It is argued that there are reasons for believing that the particular character and organizational contexts of public services will require different managerial behaviours. The manner in which experimental managerial initiatives in some public services have shifted into mandatory innovations is examined. Such innovations can be incompatible with the values of those managing in the public service, who frequently fail to recognize the advantages of late innovation, incrementalism and circumspection. In public services particularly, many managerial activities are the province of ‘non managerial’ staff. Though frequently not considered, the values of these de facto managers may be central to the progress of such innovations. It is further argued that risk-taking as applied in a business context is inappropriate to the degree that public services managers must be concerned with the common weal, equity and accountability. The article concludes with a detailed research agenda to support the need to recognize public services management as a rich and varied area of managerial behaviour in its own right. Its character and variation warrants further investigation as a basis for formulating more appropriate management concepts against which to measure public services managers’ behaviour and performance.     

TOP MANAGEMENT TURNOVER AND CEO SUCCESSION: AN INVESTIGATION OF THE EFFECTS OF TURNOVER ON PERFORMANCE

One strategic action which is often taken by firms in need of a turnaround is to bring in a new chief executive officer (CEO). Many observers argue, however, that having done this the new CEO must replace large numbers of top managers in order to effect a change in the firm's interactions and subsequent performance. Critics of this perspective insist that just the opposite is true. Substantial levels of turnover may only serve to further disrupt the organization decreasing performance still more. This controversy is addressed in the following study using a sample of 84 firms all of which experienced CEO succession during the year 1980. Analyses rely on a three-year-period pre-succession and three-year period post-succession. Three hypotheses are proposed. First, poor performance prior to CEO succession leads to greater turnover afterward. Second, that turnover is curvilinearly related to performance after the succession. And, finally, that successor type (i.e. whether the CEO was an inside or outside candidate) is related to the level of turnover in upper level management positions in the post-succession period. the results from tests of these hypotheses are presented, and the implications of these findings are discussed.     

ORGANIZATIONAL STRUCTURING: AN EMPIRICAL ANALYSIS OF THE RELATIONSHIPS AND DIMENSIONS OF STRUCTURES IN CERTAIN FINNISH COMPANIES

The relationships of structure and structural factors at a general level are examined on the basis of data from a Finnish sample of mostly small and medium-sized industrial organizations. the sample, which consists of shoe and clothing firms, is homogeneous in terms of basic technology and industrial environment. the structural relationships are analysed from the point of view of size so that the interaction or concurrence of size and specialization is seen as a primary determinant of the systems of structural relationships. Some additional contextual variables are included in the analysis. Further, the factors or dimensions of structure reported are built on the basic variables of coordination and control. the factors are managerial supervision, the administrative component in general, including the clerical component, which is of particular importance, and impersonal mechanisms.     

EDUCATION AND ENTREPRENEURSHIP SELECTION AND PERFORMANCE: A REVIEW OF THE EMPIRICAL LITERATURE

Abstract This paper provides a review of empirical studies into the impact of formal schooling on entrepreneurship selection and performance in industrial countries. We describe the main effects found in the literature, we explain the variance in results across almost a hundred studies, and we put the empirical results in the context of related economic theory and the much further developed literature in labor economics (studying the rate of return to education among wage employees). Five main conclusions result from this meta‐analysis. First, the impact of education on selection into entrepreneurship is insignificant. Second, the effect of education on performance is positive and significant. Third, the return to a marginal year of schooling is 6.1% for an entrepreneur. Fourth, the effect of education on earnings is smaller for entrepreneurs than for employees in Europe, but larger in the USA. Fifth, the returns to schooling in entrepreneurship are higher in the USA than in Europe, higher for females than for males, and lower for non‐whites or immigrants. In conclusion, we offer a number of suggestions to move the research frontier in this area of inquiry. The entrepreneurship literature on education can benefit from the technical sophistication used to estimate the returns to schooling for employees.     

PERFORMANCE APPRAISAL AND THE EMERGENCE OF MANAGEMENT*

This article addresses the debate concerning the study of management. Arguing that definitions of management have suffered from conceptual obscurity, it advocates that an understanding of management must address relational, constitutive and political dimensions of its operation. the work of Michel Foucault, particularly the concept of power/knowledge and his ascending analysis of power, offers such an approach. the relevance of Foucault for recasting the study of management is illustrated through an analysis of performance appraisal systems introduced into UK universities.     

AN EMPIRICAL ANALYSIS OF THE CHANGING ROLE OF THE GERMAN BUNDESBANK AFTER 1983

A cointegrated VAR model describing a small macroeconomic system consisting of money, income, prices, and interest rates is estimated on split sample data before and after 1983. The monetary mechanisms are found to be significantly different. Before 1983 the money supply is controllable and expansion or contraction of money supply has the expected effect on prices, income, and interest rates. After 1983 the conventional mechanisms no longer seem to work. The empirical analysis points to the crucial role of the bond rate in the system, particularly for the more recent period.     

PRIVATISATION AND EFFICIENCY IN THE UK WATER INDUSTRY: AN EMPIRICAL ANALYSIS*

ABSTRACTS The post-privatisation structure of the UK water industry involves the separation of environmental services from other outputs previously produced under an integrated system by the publicly-owned water authorities. This paper examines the extent to which the integrated authorities benefitted from joint production. Estimating a dynamic multi-product cost function from pooled cross-section, time-series quality adjusted data drawn from the accounts of the water authorities for the period 1979/80–1987/88, prior to privatisation, significant elements of joint production are found. Divestiture of the industry, arguably justified on other criteria, implies the loss of substantial areas of cost complimentary.     

THE 364 ECONOMISTS AND THE 1981 BUDGET: AN EXAMINATION OF THE EMPIRICAL EVIDENCE

Earlier this year we passed the 25th anniversary of the letter to The Times from 364 economists protesting about government economic policy in general and the 1981 Budget in particular. In a recent publication, Stephen Nickell, then a member of the Monetary Policy Committee of the Bank of England, defended the letter. This article contends that Nickell's argument was wrong. This is not merely a matter of historical interest, it is important that the issues are understood if mistakes are not to be made in economic policy in the future.     

PUBLIC R&D POLICIES AND PRIVATE R&D INVESTMENT: A SURVEY OF THE EMPIRICAL EVIDENCE

The importance of R&D investment in explaining economic growth is well documented in the literature. Policies by modern governments increasingly recognise the benefits of supporting R&D investment. Government funding has, however, become an increasingly scarce resource in times of financial crisis and economic austerity. Hence, it is important that available funds are used and targeted effectively. This paper offers the first systematic review and critical discussion of what the R&D literature has to say currently about the effectiveness of major public R&D policies in increasing private R&D investment. Public policies are considered within three categories, R&D tax credits and direct subsidies, support of the university research system and the formation of high‐skilled human capital, and support of formal R&D cooperations across a variety of institutions. Crucially, the large body of more recent literature observes a shift away from the earlier findings that public subsidies often crowd‐out private R&D to finding that subsidies typically stimulate private R&D. Tax credits are also much more unanimously than previously found to have positive effects. University research, high‐skilled human capital, and R&D cooperation also typically increase private R&D. Recent work indicates that accounting for non‐linearities is one area of research that may refine existing results.     

ETHNIC DIVERSITY,PUBLIC SPENDING,AND INDIVIDUAL SUPPORT FOR THE WELFARE STATE: A REVIEW OF THE EMPIRICAL LITERATURE

We review the empirical literature that studies the effect of ethnic diversity on public spending and on individual support for the welfare state. The survey puts a particular focus on the fast‐growing literature that uses experiments to study the effects of ethnic diversity. Many of these studies have appeared since the pioneering survey by Alesina and La Ferrara and have not been covered by a survey before.     

THE CORPORATE PERFORMANCE CONUNDRUM: A SYNTHESIS OF CONTEMPORARY VIEWS AND AN EXTENSION

What characterizes superior organizational performance? The question has always fascinated practitioners and academic researchers, and a string of recent bestsellers attests to the current prominence of performance as an organizational issue. This article brings together recent perspectives on performance and provides some further conclusions of its own based on analysis of a new database. Articles on 74 companies rated by Business Month as being one of the five best-managed companies during each of the 15 years in the 1972–86 timeframe were content analysed in an effort to isolate the key strategic and organizational factors associated with superior corporate performance. Results indicate that superior performance is associated with a broad product line accompanied by geographic diversity, an emphasis on planning coupled with sound financial controls and reporting systems, a high level of commitment to product and process innovation, investments in modernization of manufacturing facilities, a reputation for superior quality and customer service, and progressive human resource management practices. These findings are compared and contrasted with the conclusions of other recent studies and implications of the findings for management are discussed. Far from being the result of applying any particular formula, superior performance is found to require a diverse mix of competencies and values.     

PSYCHOLOGICAL DIMENSIONS OF PERSONAL RESPONSIBILITY FOR PUBLIC MANAGEMENT: AN OBJECT RELATIONS APPROACH

The use of object relations theory is introduced to examine the assumption of personal responsibility by public managers. This orientation to examining administrative behaviour enhances our appreciation of the psychological dimensions of personal experience, and the influence of that experience on the public administrator's ability to take responsibility for the consequences of his actions. This approach provides a set of clear guideposts that will help organizational observers to differentiate responsible administrative tendencies from irresponsible ones. the paper presents two divergent administrative sets of roles to illustrate the psychological and social characteristics of personal responsibility, the ‘as if performer’ and the ‘participant observer’. the ‘as if performer’ is found to be more congruent with bureaucratic organizational demands, while the ‘participant observer’ is more congruent with democratic essentials.     

STRATEGY UNDER THE MICROSCOPE: STRATEGIC MANAGEMENT AND IT IN FINANCIAL SERVICES*

This article subjects the organizational theory literature on corporate strategy to critical scrutiny, arguing that both the ‘rational’and ‘processual’approaches to strategy generate analyses that are ahistorical and theoretically undeveloped. In their place, but focusing specifically on the financial services, we offer an alternative genealogically informed analysis. This indicates how the historical development of strategy discourses and practices are discontinuous and uneven across countries, sectors, companies and specialist spheres. In addition it suggests that corporate strategy has considerable impact on inter-organizational relations and both ‘internal’(i.e. management and employees) and ‘external’(i.e. consumers) members of the organization. the article seeks to illustrate its arguments both at the sectoral level by examining the development of strategic discourse in banks and insurance companies and at the organizational level by providing some case study material on IT strategy in a life insurance company.     

COMBINING REVEALED AND STATED PREFERENCE DATA TO ESTIMATE THE NONMARKET VALUE OF ECOLOGICAL SERVICES: AN ASSESSMENT OF THE STATE OF THE SCIENCE

Abstract This paper reviews the marketing, transportation and environmental economics literature on the joint estimation of revealed preference (RP) and stated preference (SP) data. The RP and SP approaches are first described with a focus on the strengths and weaknesses of each. Recognizing these strengths and weaknesses, the potential gains from combining data are described. A classification system for combined data that emphasizes the type of data combination and the econometric models used is proposed. A methodological review of the literature is pursued based on this classification system. Examples from the environmental economics literature are highlighted. A discussion of the advantages and disadvantages of each type of jointly estimated model is then presented. Suggestions for future research, in particular opportunities for application of these models to environmental quality valuation, are presented.     

THE POLITICS AND COMPLEXITY OF TRADE UNION RESPONSES TO NEW MANAGEMENT PRACTICES

Miguel Martinez Lucio and Syd Weston, who are Lecturers in Human Resource Management at the Cardiff Business School, emphasise that, in seeking to understand trade union responses to HRM and new management practices, it is important to take into account their traditions and internal decision-making processes as well as external influences. They suggest, in particular, that it is possible to identify three main ‘clusters’ of opinion which have emerged in recent years and which go to make up the complex position of the TUC. They go on to argue that, as unions learn more about HRM and new management practices, they will tend to exert a more significant influence on the form and implementation of such initiatives.