Explaining cross-country variations in the prevalence of informal sector competitors: lessons from the World Bank Enterprise Survey

To advance understanding of informal sector entrepreneurship, the aim of this paper is to evaluate and explain the cross-country variations in the prevalence of informal sector competitors. To do so, World Bank Enterprise Survey (WBES) data is reported from 142 countries. This reveals that 27% of formal enterprises view competition from the informal sector as a major constraint on their operations, although this varies from 72% of formal enterprises in Chad to no formal enterprises in El Salvador. To explain these cross-country variations, four competing theories are evaluated which variously view informal sector entrepreneurship and enterprise to be more prevalent when there is either: economic under-development (modernisation theory); high taxes and state over-interference (neo-liberal theory); too little state intervention (political economy theory), or an asymmetry between the laws and regulations of formal institutions and the unwritten socially shared rules of informal institutions (institutional theory). A multilevel probit regression analysis confirms the modernisation and institutional theories, but not the neo-liberal and political theories. Beyond economic under-development, therefore, it is not too much or too little state intervention that is associated with the prevalence of informal sector competition but rather, whether the laws and regulations developed by governments are in symmetry with the norms, values and beliefs of entrepreneurs. The paper concludes by discussing the theoretical and policy implications of these findings.

     

Rental prices in Germany: A comparison between migrants and natives

This paper deals with the question of whether migrants pay a rent premium for apartments of comparable quality and neighborhood characteristics. We use a two-step selection-correction model augmented by a control function to account for nonrandom neighborhood choice. The estimation sample is a uniquely assembled panel comprising the Socio-Economic Panel (SOEP), information on household and apartment characteristics, as well as georeferenced data describing neighborhood quality. Our estimates reveal that people with migration backgrounds are not penalized in the German local rental market in terms of higher rental payments.     

Pinning and Promotion: How Local Television Stations Are Using Pinterest for Branding and Audience Connectivity

Over the past decade, social media have become an increasingly important component in the ways broadcasters communicate with their audiences. A relative newcomer to that mix is the social network Pinterest, which enables followers to post photos and other types of visuals based on topics of interest. A content analysis examined how 85 local television stations are using that social network for promotion and branding. Results showed that, rather than promotion, use of Pinterest primarily revolves around lifestyle content, including postings by stations and interactivity by followers.     

Endogenous Product Differentiation,Market Size and Prices

This paper provides a framework to understand how market size affects firms' investments in product differentiation in a model of monopolistic competition. The theory proposes that consumers' love of variety makes them more sensitive to product differentiation efforts by firms, which leads to more differentiated products in larger markets. The framework also predicts an inverted U ‐shaped effect of trade liberalization on product differentiation, with trade liberalization leading to more differentiated products when starting from autarky but then leading to less differentiated products as the countries approach free trade.     

Employment Protection,Threat and Incentive Effects on Worker Absence

This article provides new evidence on the effect of changes in employment protection on worker absence. We use novel multi‐organization data to examine changes in worker absence as workers move from temporary to permanent employment contracts. We demonstrate a robust positive effect of employment protection on sickness absence. It has also been suggested that the impact of employment protection on absence and effort is due to a fear of dismissal. We also provide evidence that suggests that temporary workers' absence is influenced by incentives to attain jobs with protection that is unrelated to threat of dismissal. This has not been considered in earlier research. This channel of employment protection effects has important policy implications.     

Your Governance or Mine?

In response to criticism directed at the resource sector's corporate governance, this paper examines the corporate governance and underlying firm characteristics of resource development stage entities (DSEs) relative to a size‐matched sample of non‐resource firms. We find that resource DSEs have different governance characteristics in the measures of board independence, chair/CEO duality and CEO cash bonuses. Furthermore, there are differences in the information environment measures of analyst following, debt levels, stock market return and stock turnover. Considering we document substantial differences in underlying firm characteristics, corporate governance differences are likely appropriate to the mining industry and should not be uniformly labelled as ‘bad’. Our results suggest that media rankings based on corporate governance scores may not accurately portray the resource sector. Overall, our results are of interest to Australian investors and regulators and contribute to a broader understanding of contextually contingent corporate governance.     

Unrelated question model with two decks of cards

In this paper, we propose a new unrelated question model for estimating the prevalence of a sensitive characteristic within a population by utilizing two decks of cards. The resultant estimator is then compared to its competitors as to efficiency and as to protection of respondents. A real data application analyzing e-cigarette use among college students is considered.     

Firm Investment decisions in the post‐conflict context

Economic and political transition can occur through peaceful or violent means. Violent transition disrupts the incentive for firms to make productive investments. This paper studies the determinants of profit reinvestment for firms in post‐conflict transition economies. Results indicate that while access to finance is an important determinant of reinvestment during transition, it is not as important in the post‐conflict context. However, property rights protections, in particular institutions of contract enforcement, are a more important determinant of profit reinvestment for firms operating in the post‐conflict environment than for firms in general. This indicates that obstacles to investment are context specific.     

Instrumental client relationship development among top-ranking service professionals

Informal client contact forms a crucial part of the daily routine of service professionals, in particular among top-ranking professionals working for consultancy and accountancy firms. In this paper, we investigate how 34 service professionals develop informal client contact, by studying their networking styles. Our study shows many similarities in informal client contact between two groups of service professionals grouped by gender, but we also found subtle differences in what we coin instrumental and expressive relations. Contrary to gender stereotypes, we found that female service professionals tended toward instrumental networking styles, using professionalism and distance and allowing the high quality of their work compensate for network deficits, contingent upon their clients’ gender. Male service professionals drew on expressive relations to develop emotional bonding with their male clients in particular, but nonetheless toward instrumental purposes. Our study contributes to service industries literature by theoretically and empirically establishing the different informal networking styles between top-ranking service professionals, and the role of emotional bonding in particular. In doing so, the paper helps to better understand the intricacies of informal client contact as a critical dimension of the professional services industry.     

Suspicion and Perceptions of Price Fairness in Times of Crisis

Times of crisis bring about increased demands on businesses as shortages, or unexpected but significant, business costs are encountered. Passing on such costs to consumers is a challenge. When faced with a retail price increase, consumers may rely on cues as to the motive behind the increase. Such cues can raise suspicion of alternative motive (e.g., taking advantage of the consumer) affecting consumers’ judgments of price fairness. This research investigates two triggers of suspicion: salience of alternative motives, and behavior judged to be out-of-character for the business. Results of the two studies within crisis contexts indicate that suspicion is created when alternative motives are salient and when a retailer acts out-of-character. Multiple group analyses revealed that suspicion induced negative affect and subsequent perceptions of price fairness. When suspicion was present, more negative feelings toward the retailer and judgments of price unfairness resulted.