ACTIVITY STRATEGIES,AGENCY PROBLEMS,AND BANK RISK

We investigate whether diversification affects bank risk taking in the U.S. banking industry, and whether this relation is partially explained by agency theory. Our results show that U.S. banks with a relatively high share of noninterest income become riskier when moving toward non-interest-income-generating activities, especially activities from investment banking, proprietary trading, and so on. Diversification not only affects conditional average risk, but also the dispersion of risk. Moreover, diversified banks that received assistance from the Troubled Asset Relief Program (TARP) become riskier than diversified nonrecipients after TARP capital injections. Our main findings are robust to a battery of robustness tests. The results are partially explained under agency frameworks related to poor corporate governance.     

When does leverage hurt productivity growth? A firm-level analysis

In the wake of the global financial crisis, several macroeconomic contributions have highlighted the risks of excessive credit expansion. In particular, too much finance can have a negative impact on growth. We examine the microeconomic foundations of this argument, positing a non-monotonic relationship between leverage and firm-level productivity growth in the spirit of the trade-off theory of capital structure. A threshold regression model estimated on a sample of Central and Eastern European countries confirms that TFP growth increases with leverage until the latter reaches a critical threshold beyond which leverage lowers TFP growth. This estimate can provide guidance to firms and policy makers on identifying “excessive” leverage. We find similar non-monotonic relationships between leverage and proxies for firm value. Our results are a first step in bridging the gap between the literature on optimal capital structure and the wider macro literature on the finance-growth nexus.     

What if subordinates took care of managers’ mental health at work?

Managers’ mental health is increasingly a subject of concern. However, organizational interventions to reduce stress and promote mental health do not target managers, but rather employees. Numerous studies report a link between supervisory behaviors and subordinates’ mental health at work, and suggest that developing managers’ behavior is a promising avenue in enhancing subordinates’ mental health at work. Nonetheless, the literature has neglected the role and behaviors of subordinates in the prevention of their managers’ mental health problems. This article presents the results of a qualitative research study that inventories 38 specific work practices (observable behaviors) of subordinates, grouped into 12 competencies. Managers and subordinates identified these work practices as affecting work environmental stressors and promoting managers’ mental health at work. The results also point to a major gap between the specific working practices cited by managers and those cited by subordinates, who generally report practices in a passive way. The theoretical and practical repercussions and implications for organizational intervention and human resource management are discussed.     

Locating fire stations: An integrated approach for Belgium

This paper illustrates the potential of a decision-support system developed for Belgium by a consortium of universities and a private firm, in the framework of a public call made by the Ministry of the Interior. The system is designed to provide the Belgian emergency management administration with a complete decision-aid tool for the location of fire stations. The originality of the project is that it includes a risk-modeling approach developed at a national scale. This analysis involves a multiscale GIS that includes a thorough representation of the physical, human and economic spatial realities, a risk-modeling approach, an adequate optimal location and allocation model (taking into account both queuing and staffing problems). The final result is an interactive operational tool for defining locations, equipment allocations, staffing, response times, the cost/efficiency trade-off, etc. This flexible tool can be used in an assessment as well as a prospective context. It has been used to draw a national reorganization plan for fire stations that started being implemented in 2010.     

Trade Elasticities

Conventional aggregate trade elasticity estimates hardly vary across countries. We introduce an aggregate elasticity that is implied by theory: It is the value that equates the welfare gains from trade as implied by one‐ and multi‐sector versions of the model in Arkolakis et al. (American Economic Review, 102 (2012):94–130). These estimates are predicated on sector‐level values for trade elasticites, which we provide at three‐digit levels for 28 developed and developing countries. The values for this aggregate elasticity vary greatly across countries, and they do so because of countries' patterns of production and because a given sector‐level elasticity displays considerable cross‐country heterogeneity.     

Towards a better understanding of mobile banking: the impact of customer experience on trust and commitment

In the current context of ubiquitous connectedness through portable mobile devices and services, it is important to comprehend more fully the nature of consumer/bank interactions and relationships. At the same time, firms in the service sector are trying to provide customers with impactful positive experiences. This article examines the impact of mobile banking experience on trust and commitment based on the customer experience dimensions defined by Schmitt and expanded to include the negative aspect of the affective dimension. A total of 396 panellists of a recognized Canadian research firm responded to a self-administered online questionnaire. Findings demonstrate that the cognitive and negative affective dimensions of mobile experience impact trust, whereas the positive affective/sensory dimension influences commitment. The behavioural and social dimensions do not have significant impacts. This study enriches the theoretical corpus of knowledge in customer experience, relationship marketing and m-banking literature, lending practical implications for mobile services managers. Financial institutions, for example, should offer sensory mobile applications designed to appeal to the eye or to the touch (positive affective/sensory dimension), provide tools and information intended to arouse user curiosity and provoke reflection (cognitive dimension), while avoiding negative experiences which can lead to damaging feelings/emotions such as disappointment and anger (negative affective dimension).     

Customers' participation in product development through crowdsourcing: Issues and implications

This paper focuses on customers' participation in a product development process through crowdsourcing practices. Results from five case studies of consumer goods companies suggest that the implementation of crowdsourcing operations affects the components of an existing business model and requires rethinking the marketing function. Moreover, despite some organizational constraints and fears, crowdsourcing generates a win–win relationship, creating value for both firms and customers. However, the findings reveal two negative consumer reactions to crowdsourcing practices, i.e., feelings of exploitation and being cheated, that may jeopardize their success. The results suggest the need to establish an open business model based on crowdsourcing.     

Grabbed Urban Landscapes: Socio‐spatial Tensions in Green Infrastructure Planning in Medellín

Cities confronted with unsustainable development and climatic changes are increasingly turning to green infrastructure as an approach for growth and climate risk management. In this context, recent scholarly attention has been paid to gentrification, real‐estate speculation and resident displacement in the context of sustainability and green planning in the global North. Yet we know little about the environmental‐justice implications of green infrastructure planning in the context of self‐built settlements of the global South. To what extent do green infrastructure interventions produce or exacerbate urban socio‐spatial inequities in self‐built settlements? Through the analysis of a greenbelt project, an emblematic case of green infrastructure planning in Medellín, we argue that, as the Municipality of Medellín is containing and beautifying low‐income neighborhoods through grabbing part of their territories and turning them into green landscapes of privilege and pleasure, communities are becoming dispossessed of their greatest assets—location, land and social capital. In the process, community land is transformed into a new form of aesthetically controlled and ordered nature for the middle and upper classes and for tourists. By contrast, communities’ planning alternatives reveal how green planning can better address growth and climate risks in tandem with equitable community development.     

The Formation of Fairness Perceptions in the Cooperation between Entrepreneurs and Universities

For entrepreneurs who intend to exploit university‐owned technologies, a cooperative relationship with the university is critical. This study aims to better understand this entrepreneur–university cooperation. A key factor influencing the quality of this cooperation is the fairness perception of the entrepreneur. However, little is known about how these fairness perceptions are formed in this context. Therefore, to increase insight in entrepreneur–university cooperation, this study explores the formation of fairness perceptions by entrepreneurs who cooperate with universities (in so‐called university spin‐offs). This study assesses how the rules these entrepreneurs employ to form fairness perceptions differ from fairness rules that have been established in previous studies on organizational justice. The results show that, in addition to established fairness rules, there are also fairness rules that are more specific to this entrepreneurial setting. These specific rules complement the established fairness rules to provide a more comprehensive understanding of the formation of fairness perceptions by entrepreneurs cooperating with a university. Moreover, this study explores to what extent different entrepreneurs form fairness perceptions differently and finds that both experience and relational capital of the entrepreneurs within the university are two key sources of heterogeneity. Overall, this study contributes to the literature by conceptualizing how entrepreneurs form fairness perceptions in cooperating with universities and how this extends established wisdom in organizational justice theory. Moreover, the rules identified in this study provide clues for entrepreneurs who wish to improve their collaboration with universities, and may also apply to the relationships between entrepreneurs and large corporations and between entrepreneurs and venture capitalists.     

Impact of website characteristics on relationship quality: a comparison of banks financial cooperatives

This study seeks to investigate differences exhibited by bank customers and members of financial cooperatives respecting website characteristics (website design, convenience, information quality, ease of use and security/confidentiality) and their impact on online relationship quality (composed of trust, commitment and satisfaction). An online survey was conducted with 476 banking sector customers (banks and financial cooperatives), followed by a confirmatory factors analysis and multigroup analysis using EQS 6.2 software. Results evidence a significant difference in terms of website design and security/confidentiality. The impact of these variables on relationship quality proves significantly higher in the case of banks. This study submits that web strategies used by banks and financial cooperatives to develop online relationship quality may vary based on the type of organization.