Yuan and marketing: The perception of Chinese owner-managers

Entrepreneurship researchers point to the lack of any substantial assessment of the state of research into entrepreneurship in regions other than North America. Thus, to advance entrepreneurship research and build an indigenous model, this paper attempts to explain Yuan or external locus of control [cf. Rotter, J. B. (1966). Generalized expectancies for internal versus external control of reinforcement. Psychological Monographs, 80 (Whole No. 609)], in the context of Chinese owner-managers. This paper undertakes a narrative analysis of the interviews conducted with 48 Chinese, 26 Hong Kong and 28 Taiwanese owner-managers and/or chief marketing executives of small and medium enterprises about how Yuan affects their marketing practices. Four dimensions of Yuan (e.g., association, quality, matching and attitude) were identified. A two-dimensional model using the optimal scaling method was applied to determine the interdependence of the four dimensions. Four groups, namely Yuan accepters, anti-Yuan-ers, stuck in the middlers, and dedicated Yuan believers, emerged. The results suggest that Yuan believers tend to exhibit higher company performance.     

Nurturing All-round Engineering and Product Designers

This paper discusses how a curriculum should be revised to nurture all-round engineering and product designers to meet new social and industrial needs. It first reviews the limitations of the current engineering and product design education, and argues that it is biased either towards the acquisition of engineering and technological knowledge and skills but not critical thinking skills; or towards the nurturing of so-called creative thinking, while ignoring the conducting of in-depth investigations. This paper uses Hong Kong as a case study to further identify new social and industrial needs. To meet these needs, it proposes the consideration of `Eight Cs' for the engineering and product design curriculum, that is: Competent, Comprehensive, Compulsory, Critical, Creative, Curious, Collaborative, and Continuous. This revised version was published online in July 2006 with corrections to the Cover Date.     

Interaction effects of globalization and institutional forces on international HRM practice: Illuminating the convergence‐divergence debate

In the face of globalization, scholars continue to debate about whether a convergence in human resources practices will prevail, or a trend of divergence perspective will persist. Building on institution theory, this article helps to explicate this debate by examining how globalization may interact with different dimensions of local institutional forces to lead to convergence, divergence, or crossvergence in international HRM practices for enhanced performance. We also present useful propositions for guiding future empirical research and theory development on the interaction between globalization and different forms of local institutional forces, which in turn influence the formation of successful international HRM practices. © 2011 Wiley Periodicals, Inc.     

A stochastic differential game for optimal investment of an insurer with regime switching

We introduce a model to discuss an optimal investment problem of an insurance company using a game theoretic approach. The model is general enough to include economic risk, financial risk, insurance risk, and model risk. The insurance company invests its surplus in a bond and a stock index. The interest rate of the bond is stochastic and depends on the state of an economy described by a continuous-time, finite-state, Markov chain. The stock index dynamics are governed by a Markov, regime-switching, geometric Brownian motion modulated by the chain. The company receives premiums and pays aggregate claims. Here the aggregate insurance claims process is modeled by either a Markov, regime-switching, random measure or a Markov, regime-switching, diffusion process modulated by the chain. We adopt a robust approach to model risk, or uncertainty, and generate a family of probability measures using a general approach for a measure change to incorporate model risk. In particular, we adopt a Girsanov transform for the regime-switching Markov chain to incorporate model risk in modeling economic risk by the Markov chain. The goal of the insurance company is to select an optimal investment strategy so as to maximize either the expected exponential utility of terminal wealth or the survival probability of the company in the ‘worst-case’ scenario. We formulate the optimal investment problems as two-player, zero-sum, stochastic differential games between the insurance company and the market. Verification theorems for the HJB solutions to the optimal investment problems are provided and explicit solutions for optimal strategies are obtained in some particular cases.     

Pricing and managing risks of European-style options in a Markovian regime-switching binomial model

We discuss the pricing and risk management problems of standard European-style options in a Markovian regime-switching binomial model. Due to the presence of an additional source of uncertainty described by a Markov chain, the market is incomplete, so the no-arbitrage condition is not sufficient to fix a unique pricing kernel, hence, a unique option price. Using the minimal entropy martingale measure, we determine a pricing kernel. We examine numerically the performance of a simple hedging strategy by investigating the terminal distribution of hedging errors and the associated risk measures such as Value at Risk and Expected Shortfall. The impacts of the frequency of re-balancing the hedging portfolio and the transition probabilities of the modulating Markov chain on the quality of hedging are also discussed.     

Does social capital foster sustainable investment?

How do country-level societal norms affect financial investments? We provide evidence that mutual funds managed in high social capital countries are inclined to consider environmental, social and governance filters in their portfolios, especially when acquiring new stocks and investing abroad. We argue that social capital nurtures the investment preferences of retail investors, whose demand incentivizes fund managers to respond in kind. Such impact is more pronounced in individualistic and high–power distance societies, suggesting that the social cohesion benefit of social capital complements altruistic inclinations in the former and provides mechanisms to punish unsustainable investment behaviour in the latter.     

Dynamic mean–variance problem with frictions

Finance and Stochastics - We study a dynamic mean–variance portfolio selection problem with return predictability and trading frictions from price impact. Applying mean-field type control...