Entrepreneurial Saving Practices and Reinvestment: Theory and Evidence

We use a novel enterprise survey to gauge the relationship between saving instruments and entrepreneurial reinvestment. We show that while most informal saving practices are not associated with a lower likelihood of reinvestment when compared with formal saving practices, there is a significantly lower association of saving within the household with the likelihood of reinvesting profits than other savings form, most importantly, formal saving forms. This result is robust to the model specification and controlling for a large array of variables including district‐level fixed effects. We also provide empirical tests to address reverse causation and omitted variable concerns. Our work contributes to the debate on the implications of different saving instruments in developing countries and expands the entrepreneurial financing constraints literature by focusing on internal rather than external funding constraints.     

Arbitrage Opportunities in Diverse Markets via a Non-equivalent Measure Change

We study arbitrage opportunities in diverse markets as introduced by Fernholz (J Math Econ 31:393–417, 1999). By a change of measure technique we are able to generate a variety of diverse markets. The construction is based on an absolutely continuous but non-equivalent measure change which implies the existence of instantaneous arbitrage opportunities in diverse markets. For this technique to work, we single out a crucial non-degeneracy condition. Moreover, we discuss the dynamics of the price process under the new measure as well as further applications.Both authors gratefully acknowledge financial support by the National Centre of Competence in Research “Financial Valuation and Risk Management” (NCCR FINRISK). The NCCR FINRISK is a research program supported by the Swiss National Science Foundation. The first author also thanks Credit Suisse Group for financial support.     

Co‐creation in Radical Service Innovation: A Systematic Analysis of Microlevel Processes

This empirical paper presents the results of a detailed case‐study investigation of co‐creation in radical service innovation. The rationale for the paper is that detailed interventions must be tracked to offer a realistic account of how co‐creation occurs. This provides a strong empirical contribution to the emerging body of scholars developing the co‐creation paradigm, predominantly characterized by conceptual advances in service‐dominant logic. Our focus is on radical service innovation, which is disruptive in the sector. The overall aim of the paper is to unravel the nature of microlevel processes of co‐creation in radical service innovation. The study adopts sequential analysis to examine co‐creation. Patterns of sequences of actions and interactions associated with 40 incremental developments, involving multiple actors, are investigated. These co‐created innovative developments underpin the emergence of a radical telematics‐based motor insurance service. The findings suggest that the co‐creation path is not simple or uni‐faceted, and the paper unravels the nature of complex patterns of activities and interactions, Our in‐depth systematic analysis illuminates a combination approach with two main patterns of sequences: one dominated by ad‐hoc and enduring independent innovation activities by network actors and one dominated by lead‐firm innovation and interaction activity. The findings advance knowledge of the way co‐creation occurs in radical service innovation. The study results suggest that managerial attention be placed to, first, finding ways to induce independent innovative behavior from network partners and, second, to the development of interaction mechanisms to foster sharing and visualization of such innovation advances.