The evolution of growth intentions: Toward a cognition-based model

This research examines the relationship between growth intentions, cognitive style, and perceived competitive conditions, with a focus on whether and why intentions change over time. Drawing on qualitative data from a sample of 30 entrepreneurs over a five-year span, we find that entrepreneurs' cognitive style moderates the relationship between perceptions of the competitive environment and growth intentions. Entrepreneurs with differing cognitive styles vary in their approaches toward formulating and revising growth intentions. Relative to analytic entrepreneurs that exhibit greater stability in their intentions, holistic entrepreneurs are prone to greater variations in growth intentions. The findings have implications for future research, practice, public policy, and entrepreneurship training and development.     

Discussion of “Dynamic performance measurement with intangible assets”

Carona (2008) investigates the roles of nonfinancial performance indicators and long-term commitments in an incentive contracting setting. The paper develops a multiperiod agency model in which nonfinancial performance indicators are shown to be valuable in providing the agent with desirable incentives. The relative importance of nonfinancial measures depends on the level of commitment that the principal and the agent can sustain. While long-term contracts are more efficient than short-term contracts, the analysis shows that a sequence of overlapping medium-term contracts can be as efficient as long-term contracts. In this discussion, I provide a brief review of the related streams of literature and discuss the paper’s contributions to them. The discussion also illustrates the intuition behind the paper’s main findings through a simple example and raises questions for future research.     

Education and Public Policy

This article surveys the literature on education as a matter of public policy. We present international comparisons of expenditure on education and then discuss the contribution of education to economic growth, distinguishing between growth accounting and regression approaches, but concluding that the picture is still confused. We assess the risky nature of investment in higher education and also discuss the link between educational experience and social class. We show that this, when studied in aggregate, accounts for less than half of the persistence of earnings between fathers and sons but it nevertheless does a good job of relating fathers’ and sons’ occupations. Finally, we look at the link between education and earnings in the UK. For most subjects, the private return to university education has held at over 15 per cent p.a. despite the introduction of fees. However, some subjects offer a negative return.     

Better Late than Early: Vertical Differentiation in the Adoption of a New Technology

After the initial breakthrough in the research phase of R&D, a new product undergoes a process of change, improvement, and adaptation to market conditions. We model the strategic behavior of firms in this development phase. We emphasize that a key dimension to this competition is the innovation that leads to product differentiation and quality improvement. In a duopoly model with a single adoption choice, we derive endogenously the level and diversity of product innovations. We demonstrate the existence of equilibria in which one firm enters early with a low-quality product while the other continues to develop the technology and eventually markets a high-quality good. In such an equilibrium, no monopoly rent is dissipated and the later innovator makes more profits. Incumbent firms may well be the early innovators, contrary to the predictions of the "incumbency inertia" hypothesis.     

Nash implementation through elementary mechanisms in economic environments

This paper identifies a class of mechanisms, called elementary mechanisms, which are (in a precisely defined sense) the “simplest” mechanisms that can implement efficient outcomes in economic environments. The class of social choice correspondences that can be implemented by elementary mechanisms is completely characterized in a variety of different economic contexts.     

The Interpretation of Information and Corporate Disclosure Strategies

This paper analyzes a setting in which a firm's manager can credibly disclose facts, but not their valuation implications. Consequently, he is uncertain as to how those disclosed facts will be interpreted by investors. Introducing such uncertainty affects the manager's disclosure strategy in two important ways. First, it becomes a function of the market's prior valuation of the firm since that valuation provides a clue as to how future disclosures are likely to be interpreted by investors. Second, the disclosure strategy is no longer characterized, in general, by a single good news/bad news partition of the manager's private information.     

The stability and efficiency of directed communication networks

Abstract. This paper analyzes the formation of directed networks where self-interested individuals choose with whom they communicate. The focus of the paper is on whether the incentives of individuals to add or sever links will lead them to form networks that are efficient from a societal viewpoint. It is shown that for some contexts, to reconcile efficiency with individual incentives, benefits must either be redistributed in ways depending on “outsiders” who do not contribute to the productive value of the network, or in ways that violate equity (i.e., anonymity). It is also shown that there are interesting contexts for which it is possible to ensure that efficient networks are individually stable via (re)distributions that are balanced across components of the network, anonymous, and independent of the connections of non-contributing outsiders.     

Trade Openness and Labor Force Participation in Africa: The Role of Political Institutions*

Trade liberalization is usually expected to lead to greater economic activity including higher labor force participation rates. Using data from forty‐eight Sub‐Saharan African countries over the period 1985–2012, we explore the impact of trade openness on labor force participation rates (LFPR), and examine how political institutions such as democracy, political rights, and civil liberties can play a role in driving this relationship in the above group of low‐income countries. The estimated marginal impact of openness on LFPR shows that LFPR is increasing with the level of institutional quality. In particular, political institutions are critical in enhancing the benefit from openness. Our conclusions are similar for male and female participation rates although the magnitudes of the former are higher, thus confirming that improving institutions can generate greater labor market benefits from trade in poor countries.     

Managing gray markets through tolerance of violations: a transaction cost perspective

Exclusive territory distribution arrangements are commonly observed in many markets. Once deployed, such arrangements are often subject to gray market activity, in the form of unauthorized sales which violate assigned restrictions. Interestingly, however, firms frequently choose to tolerate violations, rather than pursuing complete enforcement (i.e., by terminating violators) or abandoning exclusivity entirely. We draw from the literature on transaction cost economics to propose that tolerance of gray market activity is a function of a firm's ability to detect violations, and of the existence of credible threats and commitments. We also draw on the traditional literature on exclusive territories to suggest that minimizing distributor free-riding on services, which influences the decision to use exclusive territories in the first place, continues to be a concern after deployment. We collect micro-level data and test our predictions through a survey of managers who were responsible for the distribution decisions in their respective companies. Our results suggest that tolerance of violations is influenced both by transaction cost and free-riding considerations. © 1998 John Wiley & Sons, Ltd.