Competition and Cooperation in the Small Firm Sector

This paper examines the nature of economies of scale in the small firm sector and aims to provide new insight into the economic efficiency of small firm industrial districts. The theoretical analysis identifies the role played by collective external economies of scale that are realised through cooperation over input activities. Using game theory it is shown that cooperation can emerge both as a result of rational profit maximising behaviour and as a result of institutional and cultural environments that encourage cooperation and trust. The implications for industrial policy are discussed in the concluding section.     

On the Competition of Asymmetric Agents

Abstract. Rank-order tournaments are usually implemented in organizations to provide incentives for eliciting employees' effort and/or to identify the agent with the higher ability, for example in promotion tournaments. We close a gap in the literature by experimentally analyzing a ceteris paribus variation of the prize spread – being the major design feature of tournaments – in a symmetric and an asymmetric setting. We find that effort significantly increases with the prize spread as predicted by standard theory. However, only for sufficiently large prize spreads weak players competing against strong players strain themselves all the more and sorting of agents is feasible.     

The complex dynamics of smallholder technology adoption: the case of SRI in Madagascar

This article explores the dynamics of smallholder technology adoption, with particular reference to a high‐yielding, low external input rice production method in Madagascar. We present a simple model of technology adoption by farm households in an environment of incomplete financial and land markets. We then use a probit model and symmetrically censored least squares estimation of a dynamic tobit model to analyze the decisions to adopt, expand, and disadopt the method. We find that seasonal liquidity constraints discourage adoption by poorer farmers. Learning effects—both from extension agents and from other farmers—exert significant influence over adoption decisions.     

Further Evidence on the Capital Structure of REITs

This study examines the determinants of real estate investment trust (REIT) capital structure decisions from 1990 to 2008. Using a broad sample of 2,409 firm‐year observations, we find that asset tangibility is positively related to leverage, whereas profitability and market‐to‐book ratios are negatively related. Additional evidence suggests that firm debt capacity varies systematically with the unique operating and financing mechanisms employed by REITs. These results are robust across both aggregate firm debt levels and marginal security issuance decisions. Finally, our results provide further insight into competing capital structure theories, generally supporting empirical predictions derived from the market timing and trade‐off theories, although failing to support pecking order theory predictions.     

The legitimacy of strategic alliances: an institutional perspective

Drawing on an institutional perspective, this paper suggests that strategic alliances serve an important legitimating function for firms and that this role, mediated by alliance governance structure and partner selection preferences, has a significant influence on firm and alliance performance. A theoretical framework is proposed that identifies five types of legitimacy associated with strategic alliances and the specific conditions under which legitimation may be an important outcome of strategic alliances. Propositions are developed to explain when firms are most likely to enter into alliances for legitimacy purposes and how the legitimating role of strategic alliances contributes to firm and alliance performance. The paper concludes with a summary and implications of a legitimacy‐based view of alliances. Copyright © 2007 John Wiley & Sons, Ltd.     

Diversification with American Depository Receipts: The Dynamics and the Pricing Factors

This paper studies the role of American Depository Receipts (ADRs) in international diversification by using a sample of 113 ADRs from eight foreign countries over 1980–1994. We find that investing in ADRs offers significant improvement in the risk-return trade-off. The effectiveness of ADRs as a vehicle for long-term international diversification is further examined by performing cointegration analysis between ADR and the respective market portfolios. Consistent with Webb, Officer and Boyd (1995), we also find that the movements of ADR and the foreign market are highly correlated. Moreover, the pricing factors of ADRs are further investigated in a GARCH framework.     

Liquidation Distributions to Members in Worlds With and Without Par Values

Although par values of shares were abolished by the Corporations Law Reform Act 1998, they continue in use where agreements predating this Act, or legal doctrine underpinning the agreements, depend on them. One such doctrine, the principle of equality, is invoked in winding-up if agreements about distributions to members fail or do not exist. This paper examines how the principle of equality may be implemented in the post-commencement period. It considers shares that had par values, now abolished but potentially revivable, and no-par shares issued after commencement. The major theme is that par value abolition has undermined the case law on the equality principle, and that oncesettled law has become uncertain.     

Rationalizing Northern Ireland Hospital Services Towards Larger Providers: Best-Practice Efficiency Studies and Current Policy

This article explores the relative efficiency of Northern Ireland hospitals, and in particular the efficiency of small hospitals relative to their large counterparts, employing a technique called data envelopment analysis. The empirical analysis revealed that larger hospitals displayed higher cost efficiency, higher allocative efficiency and higher technical efficiency than their smaller counterparts. These results support Northern Ireland's recent strategy of concentrating hospital services in six large hospitals, supported by medium sized hospitals, and closing or restructuring smaller hospitals.     

Does an employer training levy work? The incidence of and returns to adult vocational training in France and Britain

We examine two different policy regimes towards continuing vocational training for the adult workforce: policy in France has been interventionist, using an employer training levy since the 1970s, whereas British policy has relied largely on individual initiatives for training investment by employers and workers. We begin with a review of the theory of vocational training, indicating why market failure and underprovision are the likely outcome and signalling types of corrective policy that might be adopted. We set up hypotheses about the likely impact of policy in France relative to Britain to provide a framework for evaluation. We present a detailed comparison of the two systems in observed training incidence and the returns to training captured by workers and employers, drawing on a wide range of econometric studies. We conclude with an assessment of the employer training levy in France and suggest ways it could be modified if adopted in Britain.