Financial crisis and relative productivity dynamics in Korea: evidence from firm-level data (1992–2003)

We have estimated the relative TFP growth at firm level and analyzed the firm dynamics in view of entry and exit of firms in Korea during 1992–2003, which includes the turbulent financial crisis of 1997–1998. Following Pyo and Ha, Hitotsubashi J Econ 48(1): 67–81, (2007), we have adopted a gross output model rather than a value added model of relative TFP analysis. We have found that the cyclical variation of productivity growth plays a dominant role in the decomposition effects before and after the 1997 financial crisis in Korea. Productivity growth is modest before the crisis and strong after the crisis owing to the recovering market efficiency. There is the likelihood that the productivity growth of stayers during the post-crisis period was significantly higher than new entrants. The net entry effect is found to be more sensitive in small business and export-based firms than in large business and domestic market-based firms. Our findings suggest that Korean firms have recovered a modest level of technical change after its severe financial crisis owing to the improvement of management transparency and the build-up of market efficiency during the IMF-mandated restructuring process. But since the entry effect is estimated to be still negative in Manufacturing and the exit effect is negative in Service sector after the crisis, the Korean economy has not fully recovered its metabolism in the post-crisis period and still lacks a creative destructive process to resume another round of sustainable growth path.     

The equilibrium price of futures contracts: A result drawn from capital asset pricing model

A recent study shows that separation theorems in the stock and forward market literatures may not hold in an integrated financial market; therefore, the securities market may influence futures trading. This article investigates the securities market influence on the futures price. The result shows that although the futures price incorporates the investor's expectation about the future spot price, it generally is not a best estimate of the spot price. In addition, it is shown that the speculative activity can destabilize the cash market for some commodities, if initially, the underlying cash price is highly volatile.     

Which pathway to good ideas? An attention‐based view of innovation in social networks

Research Summary: This study introduces the notion of attention allocation in networks to argue that individuals with different types of network structure produce good ideas via different pathways. Using survey data on communication networks at a software company, we find that people with highly constrained networks generate good ideas by following a logic of interrogation, by which they focus their attention on information from a particular contact. Conversely, individuals with less constrained networks produce good ideas by following a logic of recombination, whereby they divide their attention to information coming from across multiple contacts. The results show that in highly constrained networks, interrogation is a more reliable pathway to good ideas than recombination. We discuss the implications of these findings for behavioral strategy, social networks, and innovation. Managerial Summary: People can develop good ideas when they recombine diverse information inputs shared by non‐redundant communication partners that span multiple local clusters. But, in an organization, most individuals are embedded in constrained networks of people who know each other and thus typically receive redundant information from work colleagues. This study suggests that they can innovate via a different pathway: through interrogation. We find that people who focus their attention on information coming from a particular person succeed at generating good ideas because they deeply interrogate local knowledge and develop domain‐specific insights.     

Review of consumer activism in Korea, 1910–1995: A political-economic approach

Consumer activism in Korea has a long history, starting from an anticolonial social movement and developing into one which targets consumers' interests at both individual and societal levels. As a social movement, consumer activism needs to be understood within a political and economic environment, particularly in Korea which has gone through dynamic changes both politically and economically. While understanding of the political environment sheds further light on governmental consumer policies as well as manifested consumer activism, eminent consumer problems and issues were acknowledged according to the stage of economic development. This political-economic approach deepens our understanding of the Korean consumer movement and provides a framework for analyzing consumer activism in other Eastern Asian countries which are experiencing similar political or economic developments.

---

Überblick über Verbraucheraktivismus in Korea von 1910 bis 1995: ein politischökonomischer Ansatz

Zusammenfassung Verbraucheraktivismus hat in Korea eine lange Geschichte, die als soziale antikolonialistische Bewegung begann und sich zu einer Bewegung entwickelt, die die Interessen der Verbraucher sowohl auf individueller Ebene wie auch auf gesellschaftlicher Ebene im Visier hat. Als soziale Bewegung muß Verbraucheraktivismus in einem politischen und ökonomischen Umfeld gesehen werden, insbesondere in einem Land wie Korea, das große politische und ökonomische Umwälzungen durchlaufen hat. Während ein Verständnis der politischen Umstände Erkenntnisse über staatliche Verbraucherpolitik, aber auch über sonstige Verbraucheraktivitäten, ermöglicht, ist es der Stand der wirtschaftlichen Entwicklung, der darüber bestimmt, welche Verbraucherprobleme und -themen in den Vordergrund rücken. Dieser kombinierte politisch-ökonomische Ansatz ermöglicht ein vertieftes Verständnis der koreanischen Verbraucherbewegung und bietet auch einen Bezugsrahmen für die Analyse der Verbraucheraktivitäten in anderen ostasiatischen Ländern, die eine ähnliche politische und ökonomische Entwicklung wie Korea erleben.

---

---

Kee-Choon Rhee is a Professor in the Department of Consumer & Child Studies, the Seoul National University, Seoul, Korea 151–741. Jinkook Lee is an Assistant Professor of Retail & Consumer Science, University of Tennessee, 1215 West Cumberland Avenue, Knoxville, Tennessee 37996-1900, U.S.A.The uthors thank Robert N. Mayer, Robert O. Herrmann, and Loren V. Geistfeld for their insightful comments.     

The return to value in Asian stock markets

This paper investigates the returns to value strategies in four Asian stock markets: Hong Kong, Korea, Singapore and Taiwan. Hong Kong, Korea and Singapore exhibit value premia while Taiwan shows value discounts. The impact of firm characteristics on value premia differs across the four markets. The robustness tests indicate that the value premia are time-varying. They become greater in the post-crisis period across all four countries, indicating that high volatility during the crisis period did understate the value premia. The value strategy's excess return is sensitive to the sample selection rule and the firm size and liquidity effects. With tighter sample selection criteria, value premia tend to decline, which indicates that both the firm size effect and the liquidity effect are important sources of value premia. Unequal weighting assigned to financial variables in constructing the Average Price Rank (APR) based on the overall performance of single-variable approach does not necessarily improve the results.     

Does Reputation Contribute to Reducing Organizational Errors? A Learning Approach

In this study I examine the effect of a firm's reputation for product quality on its effort in learning to reduce its product defect rate. Theoretical ideas on the motivation of learning associated with social aspiration levels and the self-serving bias combined with social categorization suggest that poor quality reputation firms are more likely than their counterparts with a good reputation to attend to potential product defects and consequently reduce their defect rate. However, a stream of research on the motivation of learning stemming from historical aspiration levels and slack search leads to a different argument: a reputation for good quality is more likely to provide firms with a motivation to avoid product defects. I build upon these two competing arguments and hypothesize that stronger motives for learning exist in situations where firms have either a weak or strong reputation for product quality. My study of product recalls in the US automotive industry highlights an inverted U-shaped relationship, indicating the liability of an intermediate reputation in reducing product defects.     

Time-Series Support for Balassa's Productivity-Bias Hypothesis: Evidence from Korea

In this paper we use the Johansen and Juselius cointegration technique and quarterly data over the period 1979–1993 to test the productivity-bias hypothesis between Korea and four of its major trading partners (Germany, Japan, the United Kingdom, and the United States). The results show that in all four cases the deviation of purchasing-power parity (PPP) from the equilibrium exchange rate has a long-run relationship with the productivity ratios, supporting the notion that as Korea becomes relatively more productive, the Korean won appreciates in real terms.