Imperfect Labor Mobility and Unemployment in LDCs: Reply

In a recent paper (Parai and Beladi 1997; PB hereafter), we have analyzed the implications of growth and trade policies for a small open economy facing imperfect labor mobility and unemployment of the Harris-Todaro variety. We have used the Casas (1984) specification of the labor immobility phenomenon for a Harris-Todaro type economy, and have shown that most of the results in Harris-Todaro framework remain unaltered even under imperfect labor mobility, provided that the elasticity of labor mobility parameter exceeds a critical minimum value. On the optimal tariff issue, Gilbert and Mikic (1997; GM hereafter) find our results counterconventional. In GM's view, the nonconventional result in PB is due to our simplification of the labor mobility specification given by Casas. In this note, we offer our response to GM's comments.     

The Elusive Underpinnings of U.S. Venturesomeness (If Not Prosperity)*

This article explores the question of how the U.S. economy has managed to maintain (or even increase) its lead over other nations in per capita income and the average productivity of its workforce. The answer provided in the author's recent book is that such productivity depends on the greater willingness and effectiveness of U.S. consumers and businesses in making use of innovations in products and business processes. But this begs the question: What accounts for the increase in the innovative capabilities or effectiveness of U.S. consumers and businesses, both over time and relative to that of their global counterparts? After starting with the conventional “supply‐side” focus on low taxes, limited regulatory barriers, and strong property rights, the author goes on to shift the main emphasis to the following six “institutional” contributors to U.S. prosperity:

• ? Breadth of participation: the modern U.S. economy draws, to a greater extent than either its global competitors or the U.S. of a century ago, on the contributions of far more individuals both as developers and as users of new products.
• ? Organizational diversity and specialization: the evolution of new forms of organization in the U.S., from small venture capital‐backed firms to huge public corporations with dispersed ownership, has enabled the system to use the contributions of many individuals more effectively.
• ? Changes in common beliefs and attitudes: greater receptiveness to technological change has accelerated the adoption of new products in all countries, but especially in the U.S.
• ? Increased pressure for growth: the “grow or die” imperative faced by U.S. businesses has encouraged them to look for help from new technologies.
• ? The professionalization of management and sales functions—a distinctively U.S. phenomenon whose beginnings can be traced to IBM in the 1920s—has improved the capacity of modern U.S. organizations to develop markets and use new products.
• ? The expansion of higher education, to a far greater extent in the U.S. than elsewhere, has increased the supply of individuals with habits and attitudes that improve their ability to develop and use innovations.

     

Moving up in taste: Enhanced projected taste and freshness of moving food products

Can implied motion enhance consumer judgment of food freshness and taste? Freshness plays an important role in determining anticipated taste. Different perceptual cues may influence judgments of freshness. While some cues such as coloring and bruising play an obvious role, the authors argue that cues that on face value appear unrelated to freshness may also influence judgments of freshness. Specifically, the authors argue that humans have learned to relate movement to food freshness, and that this leads perceived motion to generate enhanced judgments of freshness, and, consequently, projected taste. This proposition is demonstrated in four studies. The studies show that the inclusion of implied motion in food pictures leads to elevated judgments of freshness and projected taste.     

The appreciative democratic voice of DEA: A case of faculty academic performance evaluation

Data envelopment analysis (DEA) is in fact more than just being an instrument for measuring the relative efficiencies of a group of decision making units (DMU). DEA models are also means of expressing appreciative democratic voices of DMUs. This paper proposes a methodology for allocating premium points to a group of professors using three models sequentially: (1) a DEA model for appreciative academic self-evaluation, (2) a DEA model for appreciative academic cross-evaluation, and (3) a Non-DEA model for academic rating of professors for the purpose of premium allocations. The premium results, called DEA results, are then compared with the premium points “nurtured” by the Dean, called N bonus points. After comparing DEA results and N bonus points, the Dean reassessed his initial bonus points and provided new ones – called DEA-N decisions. The experience indicates that judgmental decisions (Dean's evaluations) can be enhanced by making use of formal models (DEA and Non-DEA models). Moreover, the appreciative and democratic voices of professors are virtually embedded in the DEA models.     

Bootstrap finance: the art of start-ups

Entrepreneurship is more popular than ever: courses are full, policymakers emphasize new ventures, managers yearn to go off on their own. Would-be founders often misplace their energies, however. Believing in a "big money" model of entrepreneurship, they spend a lot of time trying to attract investors instead of using wits and hustle to get their ideas off the ground. A study of 100 of the 1989 Inc. "500" list of fastest growing U.S. start-ups attests to the value of bootstrapping. In fact, what it takes to start a business often conflicts with what venture capitalists require. Investors prefer solid plans, well-defined markets, and track records. Entrepreneurs are heavy on energy and enthusiasm but may be short on credentials. They thrive in rapidly changing environments where uncertain prospects may scare off established companies. Rolling with the punches is often more important than formal plans. Striving to adhere to investors' criteria can diminish the flexibility--the try-it, fix-it approach--an entrepreneur needs to make a new venture work. Seven principles are basic for successful start-ups: get operational fast; look for quick break-even, cash-generating projects; offer high-value products or services that can sustain direct personal selling; don't try to hire the crack team; keep growth in check; focus on cash; and cultivate banks early. Growth and change are the start-up's natural environment. But change is also the reward for success: just as ventures grow, their founders usually have to take a fresh look at everything again: roles, organization, even the very policies that got the business up and running.     

Family Firms’ Corporate Social Performance: A Calculated Quest for Socioemotional Wealth

This study investigates the engagement of family firms in corporate social responsibility. We first compare their corporate social performance (CSP) to non-family firms. Then, following recent evidence on the heterogeneity of family firms, we examine two factors that may influence CSP within family firms: the level of family control and the governance orientation of the country in which they operate. This research is based on a theoretical framework which considers both agency and socioemotional wealth (SEW) influences on family firms CSR engagements. Overall, we find that family firms exhibit lower CSP than non-family firms. But when focusing on family firms, our analyses show a curvilinear relationship between family control and CSP. At lower levels of control, family owners invest more in social initiatives to protect their SEW. Beyond a threshold level of control that we estimate at 36 % in our sample, economic considerations prevail over SEW and social performance starts decreasing. We also find that family firms operating in stakeholder-oriented countries are more attentive to social concerns than those operating in more shareholder-oriented countries.     

Perceived justice and customer loyalty in the retail banking sector in the UAE

In this study, the impacts of the three dimensions of justice (distributive, interactional, and procedural) on customers’ post-complaint behaviour (ie exit vs loyalty) of both conventional and Islamic banks in the UAE were investigated. The results showed that interactional justice (eg courtesy) and distributive justice (eg refund) play predominant roles, since they impact both positive and negative emotions and the exit-loyalty behaviour of customers regardless of the type of bank (conventional or Islamic). The results show, however, that procedural justice (eg timeliness) has no impact on either negative or positive emotions and the exit-loyalty behaviour of either conventional bank customers or Islamic bank customers. The results were interpreted in terms of cultural context and in terms of managerial implications for conventional and Islamic banks that are mostly dealing with complaint handling and employee training. The limitations of this study are also discussed at the end.     

The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World*

Many observers have warned that the next stage of globalization—the offshoring of research and development to China and India—threatens the foundations of Western prosperity. But in this article, the author explains why the doomsayers are likely to be wrong. Using extensive field studies on venture capital‐backed businesses to examine how technology is really used to create value in modern economies, this article explains how and why scientific advances abroad generally contribute to prosperity at home, and why trying to maintain the U.S. lead by subsidizing more research or training more scientists is likely to do more harm than good. When breakthrough ideas have no borders, a nation's capacity to exploit cutting‐edge research regardless of where it originates is the key to its economic competitiveness. “Venturesome consumption”—that is, the willingness and ability of businesses and consumers to use products and technologies derived from scientific research in the most effective ways—is far more important than having a share of the research. And for this reason, well‐developed and “venturesome” economies like the U.S. benefit disproportionately from scientific innovations abroad. To cite just one example discussed at length in this article, the success of Apple's iPod owes much to technologies that were developed largely in Asia and Europe. The proven ability of the United States to remain at the forefront of the global “innovation game” reflects the contributions of many players—not just a few brilliant scientists and engineers, but literally millions of U.S. entrepreneurs, managers, financiers, salespersons, and, to a very large degree, U.S. consumers. As long as their venturesome spirit remains alive and well, advances abroad should not be feared but welcomed.