SOCIAL COHESION, INSTITUTIONS, AND GROWTH

We present evidence that measures of "social cohesion," such as income inequality and ethnic fractionalization, endogenously determine institutional quality, which in turn causally determines growth.     

Experimental Test of a Q-Sort Procedure for Prioritizing R&D Projects

Abstract— In this study, fifteen managers and scientists experimented with the use of a Q-sort procedure for evaluating and prioritizing thirteen research projects. Q-sorting is a psychometric method for classifying items according to the opinions of a group of persons, and for evoking group consensus on these classifications. The procedure focuses on the rather natural individual opinion/group decision making process that must take place in project selection/evaluation. In general, the participants thought that Q-sorting was too imprecise to yield final decisions. However, progress was made toward organizational consensus, and the participants felt the procedure was valuable for facilitating scientist/scientist and the scientist-manager communications within the project evaluation process. It was therefore concluded that Q-sorting may be a valuable aid to the heuristic idea-exchange process that should accompany any formal project selection exercise. The results here suggest that Q-sorting may be a good procedure to facilitate the use of a mathematical project selection model.     

Carrot or Stick? Contract Frame and Use of Decision‐Influencing Information in a Principal‐Agent Setting

A fundamental management accounting issue is how to incorporate decision‐influencing information (e.g., an ex post state signal) into employment contracts. Our experiment examines the effects of contract framing on such information use in a principal‐agent setting. In each of 40 rounds, participants (as employer and worker) negotiate a contract that specifies pay depending on an ex post state signal. State‐signal pay is framed as either a bonus or a penalty over two groups. The results show that the bonus frame facilitates information use, because of worker loss aversion. Although both groups initially underweigh the state signal, the bonus group quickly converges toward the optimal weight, whereas the penalty group persistently underweighs the state signal.     

Integrating Human Resource and Technological Capabilities: The Influence of Global Business Strategies on Workplace Strategy Choices

Treating workplace strategies as the integration of human resource and technological capabilities, a typology of workplace strategy emphases is developed. The choice among these alternative workplace strategy emphases is treated as a function of market‐positioning priorities and the multinational scope of firms. Accordingly, a multinomial choice model is specified, which is tested against a sample of firms in the U.S. automotive supplier industry. The model obtains substantial empirical support. Among the findings is evidence consistent with the proposition that due to cross‐border, isomorphic constraints, multinational companies are less likely than national companies to pursue workplace strategies emphasizing human resource capabilities, choosing instead to favor the diffusion of workplace strategies emphasizing technological capabilities.     

Stock Returns and Real Activity: A Century of Evidence

This paper analyzes the relation between real stock returns and real activity from 1889–1988. It replicates Fama's (1990) results for the 1953–1987 period using an additional 65 years of data. It also compares two measures of industrial production in the tests: (1) the series produced by Babson for 1889–1918, spliced with the Federal Reserve Board index of industrial production for 1919–1988, and (2) the new Miron and Romer (1989) index spliced with the Federal Reserve Board index in 1941. Fama's findings are robust for a much longer period—future production growth rates explain a large fraction of the variation in stock returns. The new Miron-Romer measure of industrial production is less closely related to stock price movements than the older Babson and Federal Reserve Board measures.