Resaleable debt and systemic risk

Many debt claims, such as bonds, are resaleable; others, such as repos, are not. There was a fivefold increase in repo borrowing before the 2008–2009 financial crisis. Why? Did banks’ dependence on non-resaleable debt precipitate the crisis? In this paper, we develop a model of bank lending with credit frictions. The key feature of the model is that debt claims are heterogenous in their resaleability. We find that decreasing credit market frictions leads to an increase in borrowing via non-resaleable debt. Such borrowing has a dark side: It causes credit chains to form, because, if a bank makes a loan via non-resaleable debt and needs liquidity, it cannot sell the loan but must borrow via a new contract. These credit chains are a source of systemic risk, as one bank’s default harms not only its creditors but also its creditors’ creditors. Overall, our model suggests that reducing credit market frictions may have an adverse effect on the financial system and even lead to the failures of financial institutions.     

Advantageous Selection in Crop Insurance: Theory and Evidence

We extend the recently proposed multi‐dimensional asymmetric information model to show that advantageous selection could be present in crop insurance with two types of coverage: (i) multiple perils (e.g. a multi‐peril, ‘all risk’ policy), and (ii) a specific named peril (or set of perils). Our theoretical model suggests that certain characteristics of an insured farmer (or farm) under both types of coverage can be sources of advantageous selection. Farmers who advantageously select are more likely to purchase insurance coverage and less likely to realise a loss. A supplementary empirical analysis, based on data from the Philippine crop insurance market, illustrates how sources of advantageous selection can be identified econometrically.     

The plurality of co-existing business models: Investigating the complexity of value drivers

Business models are key tools to provide a means of operationalizing theories about firm and industry level strategies, and to understand the nature of value drivers and the role of marketing in these processes. In this paper we assess empirical evidence for a plurality of co-existing business models within firms by developing a typology of business models in a single industry, the New Zealand Wine industry. We examine the co-existence of the types of models using in-depth analysis of seven case firms that vary in size and ownership. Our findings show how value creation is done in the context of interactions and they provide support for multiple business models that co-exist alongside each other with varying degrees of separation. Plurality better explains the complexity of value drivers and strategies for firms in this rapidly changing industry environment, where businesses are under extreme financial pressure. Our findings challenge assumptions that firms have (or should have) a single business model thus allowing a plurality of approaches within a single firm or industry that shifts the focus from implementing strategy A or B or C, to implementing strategy A and B and/or C.     

Share Tenancy, Ownership Structure, and Prevented Planting Claims in Crop Insurance

A conceptual model based on opportunity cost and expected utility principles establishes linkages between the likelihood of prevented planting claims in crop insurance and existing share leasing arrangements/internal farm business structures. Results of heteroskedastic probit estimation procedures indicate that simpler internal business structures and more dominant farmer–tenant leasing position can increase the probability of submitting a prevented planting claim.     

Union Participation, Job Satisfaction, and Employee Turnover: An Event-History Analysis of the Exit-Voice Hypothesis

This study examines the exit-voice hypothesis by applying event-history analysis to data from a sample of 674 unionized public school teachers from 405 schools. Union participation (i.e., voice) and job satisfaction had significant negative main effects on turnover. In contrast to the original formulation of the exit-voice hypothesis, a test for interaction revealed that union participation had significant negative effects on quit behavior for members displaying both low and high satisfaction.
  The existing conclusions regarding the role of unions in reducing employee quits by providing voice mechanisms implicitly assume that union members actually use these mechanisms. Mechanisms such as attending union meetings and serving on a committee provide opportunities for members to express how they feel about their wages and working conditions. In this article we examine the influences of union participation and job satisfaction on individuals' decisions to quit working for an organization using event-history analysis. Unlike existing research, the present study focuses on member participation in a range of union activities (i.e., voting in union elections, attending union meetings, serving in a union office or on a committee, and seeking assistance from the union) to analyze the effect of union voice on employee quits. ¹ We further investigate how union participation and job satisfaction may interact to influence employee turnover over time, controlling for demographic, job-related, environmental, and contextual variables across 405 research sites.     

Clinical Assessment Methods in Negotiation Research: The Study of Narcissism and Negotiator Effectiveness

Field studies suggest that individual differences are strong determinants negotiator effectiveness, but their impact has yet to be adequately documented (Thompson 1990). We argue that the lack of empirical confirmation is attributable to methodological limitations of the dominant paradigm. This paper shows the usefulness of psychodynamically-oriented constructs and clinical assessment methods. The study contrasts the negotiation experience of individuals high and low in narcissistic functioning, a core psychodynamic variable, and the deep-seated character trait that underlies the interpersonal orientation construct. Implications of this approach for the design of personality assessment and negotiation research are explored.     

Strategic purity: A multi‐industry evaluation of pure vs. hybrid business strategies

Twenty‐five years of empirical research has failed to resolve a basic strategy question. Does strategic purity pay? Most theorists believe strategic purity—the extent to which a business pursues one type of generic strategy over another—contributes to better performance. By defining the strategy space consistent with the theory, and employing improved design and methods, our study of 2,351 businesses finds a significant relationship between strategic purity and performance. Purity does appear to pay. Some variations in strategic purity and performance relationship were observed across four major industry sectors: manufacturing, construction, retail, and business services. But in all instances pure strategies never did less well, and often did better than hybrid strategies. Copyright © 2007 John Wiley & Sons, Ltd.