Industrial Policy and Competitive Advantage. Edited by David B. Audretsch

Small Business Economics -     

Capitalizing on capabilities

By making the most of organizational capabilities--employees' collective skills and fields of expertise--you can dramatically improve your company's market value. Although there is no magic list of proficiencies that every organization needs in order to succeed, the authors identify 11 intangible assets that well-managed companies tend to have: talent, speed, shared mind-set and coherent brand identity, accountability, collaboration, learning, leadership, customer connectivity, strategic unity, innovation, and efficiency. Such companies typically excel in only three of these capabilities while maintaining industry parity in the other areas. Organizations that fall below the norm in any of the 11 are likely candidates for dysfunction and competitive disadvantage. So you can determine how your company fares in these categories (or others, if the generic list doesn't suit your needs), the authors explain how to conduct a "capabilities audit," describing in particular the experiences and findings of two companies that recently performed such audits. In addition to highlighting which intangible assets are most important given the organization's history and strategy, this exercise will gauge how well your company delivers on its capabilities and will guide you in developing an action plan for improvement. A capabilities audit can work for an entire organization, a business unit, or a region--indeed, for any part of a company that has a strategy to generate financial or customer-related results. It enables executives to assess overall company strengths and weaknesses, senior leaders to define strategy, midlevel managers to execute strategy, and frontline leaders to achieve tactical results. In short, it helps turn intangible assets into concrete strengths.     

Toward an Understanding of Donor Loyalty: Demographics,Personality, Persuasion,and Revenue

Donor loyalty is linked to revenue generation in nonprofit organizations. This study utilized a consumer-based marketing approach to donors and their contributions via examining loyalty to nonprofit organizations. Through a detailed literature review that identified five specific hypotheses, tested using a secondary analysis of a large survey, and the design and implementation of a second (online) survey, this article empirically assesses donor loyalty and provides findings that develop the literature, support practice, and identify areas of future research. The results demonstrate the linkages between donor loyalty and revenue, and provide a deeper understanding of the relationship of demographic factors, preference for consistency, materialism, and maximization to donor loyalty. Notably, the results clearly illustrate that habitual switchers donate substantially less than loyal donors. A series of areas for future research are identified and a number of recommendations are provided to practitioners vis-à-vis understanding their donors and enhancing their revenues through donations.     

The Discretionary Economy

Some critics allege that many if not most economists are subject to "Panglossian tendencies" — that is, they are too quick to make excuses for apparently dysfunctional aspects of the status quo. This paper examines theoretical welfare economics as a possible exemplar of "Panglossian tendencies." A major focus is on the absence from both the pedagogic and the professional literatures of two key concepts bearing upon the evaluation of Pareto efficiency and social welfare maximization as competing criteria of economic policy analysis: the "isowelfare function" and the "supra-welfare region." These concepts are explicated herein using the familiar Edgeworth-Bowley box diagram illustrating the twoindividual, two-good pure exchange model. A higher level of awareness and appreciation among economists of these concepts might serve the beneficial purpose of downgrading the perceived significance of Pareto efficiency as an operational criterion of economic performance.     

Export Growth,Capacity Utilization,and Productivity Growth: Evidence from the Canadian Manufacturing Plants

Aggregate labor and multifactor productivity growth slowed substantially post‐2000 in the Canadian manufacturing sector. To examine the source of the decline, this paper proposes a decomposition method that delves deeper into the two micro‐components of aggregate productivity growth: a within‐plant component and a between‐plant component. The decomposition builds on earlier work by Jorgenson and his collaborators that decomposes aggregate productivity growth into its industry components, but applies it to the plant level and introduces non‐neoclassical features of the plant‐level economic environment. It finds that the preponderance of the aggregate labor and multifactor productivity growth slowdown is due to the pro‐cyclical nature of productivity growth arising from capacity utilization. Almost all of the aggregate productivity growth slowdown is driven by exporters, as exporters experienced large declines in labor productivity growth in the post‐2000 period as a result of large declines in their capacity utilization.     

The Accounts of the Consett Iron Company, 1864–1914

This paper presents an analysis of the accounts of the Consett Iron Company for the years 1864 to 1914. This particular company has been chosen for analysis because of its economic significance during that period, and because of the high level of disclosure of accounting policies provided in its reports. The paper describes the process leading to the preparation of a standard set of accounts, including profit and loss appropriation account, balance sheet, and flow of funds statement. Particular emphasis is placed on identifying the extent to which capital expenditure was ‘hidden’ by being immediately written off against profit. The paper argues that the flow of funds approach is particularly useful in dealing with company accounts of this period because it removes the need to make assumptions about appropriate depreciation patterns.     

Research Opportunities for Neural Networks: The Case for Credit

This article identifies research opportunities in the use of artificial neural networks in credit scoring and related business intelligence situations, particularly as they have been emerging in the global economy. In the literature review, particular attention is paid to commercial lending credit risk assessment and consumer credit scoring. Investors and auditors need models that can predict whether a customer will stay viable. Lenders must manage their credit risk to maximize profits and cash flow, while minimizing losses. As the global economic recession continues, investors are tightening their investment belts and need models that help them make better investment decisions, while lenders must strengthen lending practices and better identify both good and bad credit risks. Artificial neural networks may help firms improve their credit model development, and thereby their credit decisions and profitability. Such technology may also help improve development in emerging economies. Copyright © 2016 John Wiley & Sons, Ltd.