Tempering effects of (dependent) background risks: A mean-variance analysis of portfolio selection

In a mean variance framework, we analyse risk taking in the presence of a (possibly) dependent background risk, exemplified in a linear portfolio selection problem. We first characterise the comparative statics of changes in the distribution and dependence structure of the background risk. For unfair, undesirable and loss-aggravating increases in background risks (both dependent and independent), we then present necessary and sufficient restrictions on preferences such that greater background uncertainty leads to reduced risk taking. With mean-variance preferences, these restrictions boil down to simple conditions on the marginal rate of substitution between risk and return. They can be easily related to familiar notions such as risk vulnerability, properness or standardness.     

Do the poor benefit from globalization regardless of institutional quality?

Despite significant progress towards the Millennium goals, more than one billion people live on less than 1.25 US dollars per day. Previous research suggests that globalization stimulates poverty reduction, but does not investigate what role institutions play in this relationship. Theoretically, globalization could act as either a complement or a substitute to institutional quality in reducing poverty. We find that the poverty-reducing effect of globalization is stronger when institutions are weak. In particular, increasing social globalization reduces poverty more when corruption is high and democratic accountability is low. Thus, globalization has the power to reduce poverty even in countries with low institutional quality.     

The customer value proposition: evolution,development, and application in marketing

The customer value proposition (CVP) has a critical role in communicating how a company aims to provide value to customers. Managers and scholars increasingly use CVP terminology, yet the concept remains poorly understood and implemented; relatively little research on this topic has been published, considering the vast breadth of investigations of the value concept. In response, this article offers a comprehensive review of fragmented CVP literature, highlighting the lack of a strong theoretical foundation; distinguishes CVPs from related concepts; proposes a conceptual model of the CVP that includes antecedents, consequences, and moderators, together with several research propositions; illustrates the application of the CVP concept to four contrasting companies; and advances a compelling agenda for research.     

A theory of social license when regulatory pressure is jointly produced by an EPA and an NGO

We develop a model in which social pressure on a firm to behave well is jointly produced by a state regulator (EPA) and an NGO. The EPA and NGO differ in how they trade-off business versus environmental interests and also have access to different instruments in pursuit of their objectives. In particular, while the EPA will typically have the tools for detecting misbehaviour, the NGO can influence the intensity of social hostility directed towards those found to have misbehaved. EPA and NGO efforts may be strategic complements or substitutes, depending upon circumstances. We present a taxonomy of outcomes in the game between EPA and NGO in the spirit of Fudenberg and Tiroles’s (Am Econ Rev Pap Proc 74(2):361–366, 1984) classic taxonomy of business strategies. We also consider strategic delegation from NGO supporters to an NGO that has tastes over environmental and business interests different to their own.     

The origins of terrorism: Cross-country estimates of socio-economic determinants of terrorism

Prior research has concluded that socio-economic development does not significantly affect terrorism. We take an alternative view. First, we note that a country's socio-economic circumstances affect terrorists' behavior through terrorism's opportunity costs. We argue that this reasoning also holds for the case of supreme value terrorism. Then, we run a series of negative binomial regressions for 110 countries between 1971 and 2007 to test the hypothesis that poor socio-economic development is conducive to terrorism. We find that socio-economic variables indeed matter to terrorism, contrary to other results. Our findings imply that countries can benefit from economic development and growth in terms of a reduction in terrorism.     

The social value of income information in a model with market power and endogenous variety

The present paper analyzes the value of public information in a general equilibrium economy with imperfect competition. The welfare effects of an improved information system for perfectly competitive economies have been extensively investigated in the published literature. Schlee (2001) shows that the value of information is always negative in exchange economies if an efficient risk sharing mechanism exists. In contrast, in economies with production, better information reduces welfare provided consumers are sufficiently risk-averse ( Eckwert and Zilcha 2000, 2003 ). In the present paper it will be shown that this result is robust if the production sector exhibits monopolistic competition in the Chamberlinian sense. Even so, the inefficiency of equilibria adds further potential for positive welfare effects of improved information. A model is presented where the degree of market imperfection is positively linked to the value of information. If the markup on competitive prices is sufficiently high, the value of information is positive; that is, better information increases economic welfare.     

Dynamic hedging of paper with T bill futures

Despite the growing importance of the commercial paper market there is no empirical work investigating the hedging performance of dynamic hedging strategies versus traditional static hedging strategies. This article proposes a dynamic hedging model for commercial paper that takes advantage of time dependencies present in the joint density of commercial paper and T-bill futures. The hedging effectiveness of the dynamic model is compared to that of the static regression model. There is clear evidence that dynamic hedging is superior to static hedging in terms of both total variance reduction and expected utility maximization. These results hold even when transactions costs are explicitly taken into account. © 1998 John Wiley & Sons, Inc. Jrl Fut Mark 18:925–938, 1998     

The development of critical capabilities in foreign subsidiaries: disentangling the role of the subsidiary’s business network

Within business literature in general, capabilities have advanced to the prime determinant of the corporation’s economic rents. Within international business literature, it is further assumed that multinational corporations can enhance their pool of capabilities through foreign subsidiaries. Foreign subsidiaries are seen as means to assimilate new capabilities from their local, external network and integrate these capabilities into the multinational corporation. Data from more than 2000 foreign subsidiaries shows that some foreign units actually are endowed with superior capabilities which are useful for other corporate entities. It is argued that the development of critical capabilities within these subsidiaries is driven not only by internal corporate actors, but also by external actors. The analysis provides evidence that the role of different internal and external network partners for capability development varies according to the functional activity under consideration. Thus, subsidiaries benefit from various internal and external network actors in very different ways. The contribution ends with some conclusions and some avenues for future research.