The foundations of trust: macro and micro

This comment on Beugelsdijk's (2006) critique of trust and itsmeasurement argues that it misses the mark, and that there isneither a theoretical nor an empirical foundation for thinkingthat the macro and micro foundations of trust or its measurementare different from each other. Generalised trust is more thana simple illusion hiding behind institutional structures.     

Free revealing and the private-collective model for innovation incentives

A central tenant of open innovation is free revealing of the detailed workings of novel products and services, so that others may use them, learn from them, and perhaps improve them as well. We explain that innovators frequently do freely reveal proprietary information and knowledge regarding both information-based products and physical products they have developed. We explain why free revealing can make good economic sense for innovators and for society as well. The article develops the case for free revealing in terms of a 'private collective' model of innovation incentives.     

Implementation and Renegotiation

The paper characterizes the choice rules that can be implemented when agents are unable to commit themselves not to renegotiate the mechanism.     

The environment and system-response capability

Just as the economic environment can be viewed as having evolved through three stages (perfect competition, imperfect competition, oligopoly), so the wider sociocultural environment has evolved. And each phase has its appropriate behaviour pattern, for individuals and for organisations. The author argues fthat we are now making the transition to a fourth, turbulent, type of environment. The conventional responses are no longer adequate, and indeed cause dissonances which lead to the loss of the stable state. The new environment requires a new response pattern.     

The Information Content of Just-in-Time Inventory System Adoption Announcement

This paper examines the stock market reaction and analysts' earnings forecast revisions associated with just-in-time (JIT) inventory system adoption announcements. The stock market reaction is positive, however, analysts do not revise their earnings forecasts when firms announce a JIT adoption. The results of the paper show mixed support for the hypothesis that JIT is viewed by markets as a costly capital expenditure intended to increase the net cash flows of the firm and mixed support for the hypothesis that JIT is viewed by markets only as an accounting change.     

The Moderating Effects of Virtuality on the Antecedents and Outcome of NPD Team Trust

The fundamental dynamics of virtual and traditional face-to-face teams may be very different. The purpose of this study is to empirically examine and assess the moderating effects of virtuality on the antecedents and outcome of trust, where virtuality is measured along a continuum from face to face (no virtuality) to fully virtual rather than the more common approach of dichotomizing teams into two groups (i.e., face to face and virtual). The sample includes 116 different new product development teams from a variety of industries. The antecedents of trust that are studied are familiarity, goal clarity, training, relationship conflict, and process conflict. The outcome of trust is analyzed by determining how the impact of trust on cooperation changes as the level of virtuality changes. Primary findings are as follows: (1) Relationship conflict can be more detrimental to virtual teams than face-to-face teams because it is very difficult for team members of virtual teams to resolve their interpersonal disputes; (2) goal clarity is more important for face-to-face teams and less important for virtual teams in creating trust among team members; and (3) the impact of trust on cooperation is less for virtual teams than face-to-face teams. The primary implication for researchers and practice of these findings is that the role and importance of trust in virtual teams needs to be reevaluated. Managers using virtual teams need to realize that interpersonal relationships in virtual teams do not evolve in the same manner as face-to-face teams and may require different management techniques to be successful.     

Markov Perfect Equilibrium: I. Observable Actions

We define Markov strategy and Markov perfect equilibrium (MPE) for games with observable actions. Informally, a Markov strategy depends only on payoff-relevant past events. More precisely, it is measurable with respect to the coarsest partition of histories for which, if all other players use measurable strategies, each player's decision-problem is also measurable. For many games, this definition is equivalent to a simple affine invariance condition. We also show that an MPE is generically robust: if payoffs of a generic game are perturbed, there exists an almost Markovian equilibrium in the perturbed game near the initial MPE. Journal of Economic Literature Classification Numbers: C72, C73.     

TIME IS OF THE ESSENCE? AN EMPIRICAL APPLICATION OF THE COROLLARY OF THE COASE THEOREM

Applying the corollary of the Coase Theorem to the development market developed in Lai et al. (2007a) , we evaluate the proposition that procedural steps to use resources are not contingent on property rights assignment, unless the associated transaction costs are positive or property rights are ambiguous. Using aggregate statistics regarding planning applications for residential use, property prices, construction costs, share prices, interest rates, and application success rates in Hong Kong from 1985 to 2005, we evaluated, using regression techniques, the null hypothesis that there was no change in the relationship between readiness for submission of planning applications and property prices in response to changes in the time limits imposed on planning permissions . The relationship was more pronounced or strengthened (less obvious or weakened) when time limits were first imposed and shorter (longer). This can be explained in terms of the transaction costs of switching resource allocation according to the time limit.