The relationship between governance structure and risk management approaches in Japanese venture capital firms

This paper attempts to understand what drives Japanese venture capital (JVC) fund managers to select either active managerial monitoring or portfolio diversification to manage their firms' investment risks [J. Bus. Venturing 4 (1989) 231]. Unlike U.S. venture capitalists that use active managerial monitoring to gain private information in order to maximize returns [J. Finance 50 (1995) 301], JVCs have traditionally used portfolio diversification to attenuate investment risks [Hamada, Y., 2001. Nihon no Bencha Kyapitaru no Genkyo (Current State of Japanese Venture Capital), Nihon Bencha Gakkai VC Seminar, May 7]. We found that performance pay is positively related to active monitoring and that management ownership is positively related to active monitoring and negatively related to portfolio diversification. The managerial implication of our study is that venture capitalists should be as concerned about the structure of their incentive systems for their fund managers as they are for their investee-firm entrepreneurs. Agency theory says that contingent compensation is a self-governing mechanism for individual effort that is difficult to measure and verify. When properly applied, equity ownership and performance-based pay can have powerful influencing effects on the strategic choices of managers.     

A theory of innovation for process-based innovations such as nanotechnology

Many see Nanotechnology as the technology that will underlie the next Schumpeterian wave creating new opportunities for wealth and job creation. Further it is a process based or materials technology. Yet all currently used models of innovation are based on assembled products or service products and these simply do not recognize the differences in materials products nor the “enabling” nature of Nanotechnologies. If nanotechnology is poised to become the economic engine of this millennium and if current models of innovation, which are utilized, by policy makers and firm based strategist alike are based on technology product paradigms that are dissimilar to the realities of nanotechnology and other process-based technologies then there is cause for concern.Here the authors provide a model and supporting cases demonstrating a new process or materials based innovation model that is based on the tight coupling between product and process innovation of not only Nanotechnology-based products but other process-based products. This is an important finding, because it identifies and remedies a gap in the literature associated with earlier process and product innovation models. For process-based products like materials, food, chemicals and nanotechnologies any change to the manufacturing processes results in significant changes in end product features. The implications of this model to practice are considered.     

Who produces for whom in the world economy?

Abstract For two decades, the share of trade in inputs, also called vertical trade, has been dramatically increasing. In reallocating trade flows to their original input‐producing industries and countries, this paper suggests a new measure of international trade: ‘value‐added trade’ and makes it possible to answer the question ‘who produces for whom?’ In 2004, 27% of international trade was vertical trade. The industrial and geographic patterns of value‐added trade are very different from those of standard trade. Value‐added trade is relatively less important in regional trade but the difference is not more important for Asia than for America.     

The Cost Efficiency of Real Estate Investment Trusts: An Analysis with a Bayesian Stochastic Frontier Model

Using a stochastic frontier methodology that incorporates Bayesian statistics, this paper analyzes the cost efficiency of real estate investment trusts (REITs) by observing the deviations of the measured costs of individual REITs from a defined efficient cost frontier. Using 1995–1997 data, we extend the previous research in this area and measure REIT efficiency more precisely by isolating random measurement error from the overall deviations from the efficient cost frontier. We calculate the magnitude of each REIT's managerial inefficiency, the industry inefficiency, and returns to scale. In addition, we assess specific characteristics of REITs for their contribution to inefficiency by calculating the odds ratio that a REIT with a specific characteristic is more efficient than a REIT with an alternative characteristic. The results show that, for the years studied, REITs are relatively cost efficient with most REITs facing increasing returns to scale. Additionally, the REIT's use of debt and the REIT's management style significantly affect the cost performance of REITs during the aforementioned time period. Finally, diversification across property types, as measured, does not seem to influence REIT cost efficiency.     

Estimation of semiparametric locally stationary diffusion models

This paper proposes a class of locally stationary diffusion processes. The model has a time varying but locally linear drift and a volatility coefficient that is allowed to vary over time and space. The model is semiparametric because we allow these functions to be unknown and the innovation process is parametrically specified, indeed completely known. We propose estimators of all the unknown quantities based on long span data. Our estimation method makes use of the property of local stationarity. We establish asymptotic theory for the proposed estimators as the time span increases, so we do not rely on infill asymptotics. We apply this method to interest rate data to illustrate the validity of our model. Finally, we present a simulation study to provide the finite-sample performance of the proposed estimators.     

Tradeoffs between sensory attributes and organic labels: the case of orange juice

Researchers have investigated the role of sensory attributes and organic labels on consumers’ preferences and perceptions of food, but few has examined whether sensory attributes are relevant for consumers who prefer organic food and the extent to which sensory attributes influence consumer's marginal willingness to pay for organic food. The objective of this study is to determine how sensory attributes and organic label work together to influence consumer's stated preference and marginal willingness to pay for orange juice. To achieve this, we conducted a blind sensory evaluation of two orange juices followed by a discrete choice experiment to determine the extent to which consumer's stated preference for orange juice labelled as organic is affected by sensory experience preceding the choice experiment. Random parameter logit models and latent class conditional logit models are used to explain stated preference. Results indicate that the effect of sensory attributes on consumer's marginal willingness to pay differed by organic juice and conventional juice.     

Public Sector Organizational Failure: A Study of Collective Denial in the UK National Health Service

Journal of Business Ethics - This paper argues that public sector organizational failure may be best understood from a perspective of collective denial. The rise of this phenomenon is examined...     

The Relationships of Informal High Performance Work Practices to Job Satisfaction and Workplace Profitability

Recent empirical evidence reveals considerable divergence between management reports and employee reports regarding organizational high performance work practices (HPWPs). This divergence implies that employees may not participate in some HPWPs that are formally present in their organizations, but also, that employees may participate in HPWPs that are not formally present in their organizations. In this study, we examine the implication of the latter case (i.e., employee participation in “informal” HPWPs) for employee‐level and organization‐level outcomes. Our analyses, using data from the Statistics Canada Workplace and Employee Survey, suggest that employee participation in informal HPWPs is associated with enhanced job satisfaction and workplace profitability in a similar way as employee participation in formal HPWPs is associated with these outcomes.