Governance and strategy of entrepreneurial networks: an introduction

This special issue focuses on empirical and theoretical papers that help us to better understand the strategy and governance of entrepreneurial networks, such as franchise chains, alliances, and cooperative networks. The following central themes are covered: (I) Which formal governance mechanisms do entrepreneurial networks use in order to reduce transaction cost/agency cost and to increase strategic value? (II) What is the role of relational governance mechanisms (such as information exchange and social ties) for the performance outcomes in franchise chains and cooperatives? (III) Which alliance strategies do entrepreneurial firms pursue to realize a competitive advantage, and what is the impact of resources and capabilities on performance outcomes of entrepreneurial firms. To address these issues, insights from organizational economics (transaction cost theory, agency theory, signaling theory), strategic management perspectives (resource-based, knowledge-based and organizational capabilities theory), entrepreneurship theory and the relational governance view are used.     

A Tribute to Our Founding Father,Professor Bernard J. “Bud” LaLonde

This editorial pays tribute to the founding editor of the Journal of Business Logistics, Professor Bernard J. “Bud” LaLonde, who passed away recently. Professor LaLonde's influence on the field—and the individuals that compose it—is immeasurable. We reflect on his career, achievements, and motivations for creating JBL. Further, we attempt to build on his proud legacy with an introduction of articles featured in the current issue.     

Labour market effects of retraining for the unemployed: the role of occupations

We analyse the impact of retraining for unemployed low-skilled job-seekers in Germany. This extensive training programme leads to a formal vocational degree, which is often required to access certain professions. Applying statistical matching methods, we find that on average, after a period with large lock-in effects, retraining strongly increases the employment probability of participants, especially women. We add to the literature by estimating the employment effects for different occupations for which participants are trained. Our results show that there are substantial differences depending on the occupation. As the composition of trained occupations differs for men and women, segregation could be a driver of higher employment effects for women. However, comparisons of men and women trained for the same occupations reveal that even after controlling for segregation, women profit more from retraining. While caseworkers are instructed to choose professions with high labour demand, other aspects, such as working conditions, preferences and aptitudes of participants, should be crucial in the choice of a suitable occupation. An individual assessment of the suitability of an occupation could therefore improve the overall effectiveness of the programme.     

The revenue potential of a financial transaction tax for US financial markets

This paper estimates the revenue potential of a financial transaction tax (FTT) for US financial markets. We focus on analyzing the revenue potential of the Inclusive Prosperity Act that was introduced in the US House of Representatives in 2012 and the US Senate in 2015. The tax rates stipulated in this Act include 0.5% (50 basis points (bps)) for all stock transactions, 0.1% (10 bps) for all bond transactions and 0.005% (0.5 bps) on the notional value of all derivative trades. We examine three sets of evidence to generate potential revenue estimates: 1) the levels of transaction costs in US financial markets over time and within the range of financial market segments; 2) the extent of trading elasticities under various trading conditions; and 3) the current level of trading activity in US financial markets. Based on this evidence, we conclude that a US FTT operating at the tax rates stated above would generate about $220 billion per year, equal to about 1.2% of the current US GDP.     

Cognitive bubbles

Smith et al. (Econometrica 56(5):1119, 1988) reported large bubbles and crashes in experimental asset markets, a result that has been replicated many times. Here we test whether the occurrence of bubbles depends on the experimental subjects’ cognitive sophistication. In a two-part experiment, we first run a battery of tests to assess the subjects’ cognitive sophistication and classify them into low or high levels. We then invite them separately to two asset market experiments populated only by subjects with either low or high cognitive sophistication. We observe classic bubble and crash patterns in markets populated by subjects with low levels of cognitive sophistication. Yet, no bubbles or crashes are observed with our sophisticated subjects, indicating that cognitive sophistication of the experimental market participants has a strong impact on price efficiency.     

Regional wages and market potential in the enlarged EU: an empirical investigation

This article empirically analyses the link between market potential and regional wages in the enlarged EU. We contribute to the existing literature in several ways: (1) we analyse the link between market potential and wages for the EU27 and (2) deconstruct total market potential into several geographical components and analyse their respective contributions to explaining the geographical wage structure. We correct for existing spatial autocorrelation and endogeneity by using an instrumental variable generalized spatial two-stage least squares (IV GS2SLS).     

Cross-border commuting and consuming: an empirical investigation

This article contributes to our understanding of cross-border activity in general and the determinants of cross-border trade in particular by focusing on the part of cross-border sales that arise due to work-related cross-border crossings of households. We analyse empirically how cross-border consumption expenditures vary across product and services categories as well as household characteristics using representative household survey data of cross-border commuters to Luxembourg. In total, these households spend an estimated 17% of their gross annual income across the border, contributing about 10% to the total household final consumption expenditure (HFCE) in Luxembourg. Cross-border expenditure is linked to individual- and household-related characteristics and to distance between home and work. Cross-border commuters systematically exploit arbitrage opportunities that arise because of existing price level (index) differences between the country of work and the country of residence.     

Estimation of relative risk aversion across time

This article examines relative risk aversion in the framework of a three-moment asset pricing model that accounts for skewness. Accounting for skewness in calculating risk aversion gives a more accurate series of estimates of risk aversion and helps to reconcile the wide disparity in risk coefficients found in past literature. Risk aversion coefficients are calculated from 1926 to 2014 using stock market returns. This procedure results in a time series of data that can be related to other variables such as real interest rates and changes in demand for various asset classes.     

Price clustering on the Shanghai Stock Exchange

We investigate price clustering of intraday trades and negotiated block trades on the Shanghai Stock Exchange (SSE) from 2003 to 2009. Prices of traded assets tend to cluster on certain final digits, such as 0 and 5. In Chinese culture, 8 is associated with good luck and 4 with death so these numbers may be attractive or avoided. We find that price clustering on the final digit of 0 is significantly higher during the morning call auction and early in the trading day. We find no evidence of price clustering for the digit 8, but there is a significant dearth of prices ending in the inauspicious number 4. Price clustering is significantly higher for negotiated block trades, for which about 28% end with 0. Multivariate analysis shows that price clustering is lower for more liquid firms, but higher for firms with higher return volatility, a higher price level, or when the market is volatile. Our evidence supports the costly negotiation hypothesis. Our results also support the attraction hypothesis in that we document significant price clustering at round numbers and even numbers even after controlling for factors that are associated with price uncertainty.     

The rise of economics in competition policy: A Canadian perspective

Competition policy in Canada and elsewhere has changed remarkably over the last 50 years—in large measure due to advances in economics. In this article, we trace the impact of developments in industrial organization on the three central areas of competition policy: cartels, single firm conduct and mergers. We focus on Canadian competition policy but draw comparisons with developments in the United States and Europe.