Capabilities, innovation and competitive advantage

This special issue was aimed at advancing the literature examining the role of capabilities in innovation-based competitive strategy. Whilst the innovation literature has over the years moved away from its ‘product innovation’ pre-occupation to capture the role of other forms of innovation in value creation, the capability view has progressed from its ‘rigid’ or ‘static’ view to a ‘dynamic’ view in an effort to capture market dynamism. Despite the recent theoretical advancements the dynamic capability view still lacks a strong empirical base. Contributors to the capability literature over the recent years have adopted multiple research methods to capture capabilities that include cross-sectional designs, case studies and longitudinal studies. Within this backdrop, the articles that were selected for this special issue covers both conceptual and empirical approaches to examine the relationship between capabilities and technical and non-technical innovations and performance outcomes. This essay provides a future research agenda to advance this promising research field. It highlights the need for clearer conceptualizations and development of measures of dynamic capabilities, environmental conditions that underpin the development of dynamic capabilities within the firm and research into the much debated relationship between dynamic capabilities and competitive advantage and organizational performance.     

Design von Informationsfeedback in Regelenergiemärkten

Information feedback is a much debated issue on balancing power markets: which information on past auctions should be published and when? The article analyzes advantages and disadvantages of different feedback policies applied to the example of the Swiss balancing power market. Our main conclusion is that the publication of the marginal bid is usually recommendable. This is often not the case for additional information (e.g. extramarginal bids). However, the answer depends on the specific market design and the market structure.     

Integrated production planning with sequence-dependent family setup times

This paper proposes an integrated optimization model of aggregate production planning (APP), family disaggregation planning, and family scheduling problems in hierarchical production planning (HPP) systems considering sequence-dependent family setup times. The model obtains the optimal production plan for each product type and product family in each period, together with the globally optimal production sequence of product families in all planning periods. The proposed model is tested with randomly generated experimental data consistent with what is prevalent in the manufacturing industry and its results are compared with those of the traditional HPP models. Our results show that the integrated model realizes greater cost savings.     

Increasing the relevance of mathematical approaches to demographic history

In this short paper we comment on recent efforts at formally modelling the interplay between demography and cultural evolution. We draw attention to the fact that, although these efforts are to be applauded, much work has already been done in this area, and that this work is being ignored. We build a case for tighter collaboration between different social science disciplines concerned with human behaviour and long-term demography, and argue that mathematical models must be paired with empirical data.     

Economy-wide implications of biofuel production in Zambia

ABSTRACT

Potential biofuel demand in South Africa is estimated to increase to 1550 million litres by 2025 due to mandatory blending rates. Land and water constraints, however, limit the ability for domestic production. Zambia, due to its abundance in land, suitable climate, supportive set of bioenergy incentives and close geographical location to South Africa, has the potential to meet this increase in demand. Using a dynamic recursive computable general equilibrium model, we estimate the macro- and socio-economic impacts of bioethanol production in Zambia from three potential crops: sugarcane, cassava and sweet sorghum. The results show that the development of a single product bioethanol industry has the potential to increase economic growth without negatively affecting overall food security. Further expansion of the industry to multiple products results in larger gains to growth and welfare.     

The evolution of Indian accounting standards: Its history and current status with regard to International Financial Reporting Standards

This paper addresses the adoption and applicability of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) to India. Specifically, the paper highlights some major areas where the country lacked harmonization with IAS in 1993 and the rapid congruence with IAS in the decade that followed. The attempt to achieve congruence with IAS appears to be more a by-product of the country's rapid economic growth rather than its catalyst. However, continued growth and the attraction of foreign capital to domestic ventures will depend on the transparency of the financial dealings. The Institute of the Chartered Accountants of India, (ICAI), India's standard setting body, is increasingly attempting to provide this transparency by revisions and additions to accounting standards, and by Exposure Drafts which aim to bring India more in line with International Financial Reporting Standards.     

The Theory of Differential Overqualification: Does it Work?

The theory of differential overqualification, developed by Robert Frank (1978),claims that married women in smaller labour markets have a higher risk of workingin jobs for which they are overqualified. This stems from the problem of dual jobsearch for couples which is much more difficult to optimize than single job search.Here, for several reasons husbands tend to first optimize their individual job search.Their wives are `tied movers' or `tied stayers' in the sense that their job search isundertaken under the condition that the job search of their husbands is optimized.This leads especially in smaller labour markets to a higher risk of a mismatchbetween formal qualifications and job requirements. The only specific empiricaltest of this theory, until now, has been performed by McGoldrick and Robst (1996) . Their results, using US data, do not support the theory. Using Germanpanel data (GSOEP), we also test the theory of differential overqualification.Unlike previous studies we control for commuting distances and our own resultsprovide some mixed support for the differential overqualification hypothesis.     

Die Komponenten des Rückganges der Ausländerbeschäftigung

Summary During the crisis of 1974/75 the number of foreign workers in Western European countries has been reduced. This has caused a new discussion about the benefits and drawbacks of the employment of foreign workers. Whatever the attitude towards this problem may be, it is useful to decompose the reduction of foreign labour into categories. First of all a certain amount of foreign labour will be reduced due to a general decrease of overall employment. This influence may be called proportionality effect. The share of foreign workers in the different branches of the economy allows the calculation of a structural effect. Both of them measure influences, which concern foreigners as well as nationals. Only the remaining influence is specific to foreigners. It may again be split into a reduction effect and a substitution effect. The former ist concerned with that part of total reduction of foreign workers, which corresponds to the decrease of employment, i.e. employment reduction by dismissal of foreign workers. The latter pertains to that part of reduction, which exceeds the decrease of employment, i.e. by this magnitude domestic labour has been substituted for foreign labour.The application of this model to the years 1974 and 1975 shows no proportionality effect (1974 it is even positive), a limited structural effect, but a high reduction effect. The substitution effect is considerable in 1974 but of minor importance in 1975. So foreign labour in Austria served actually as cyclical buffer but mainly by reduction and only partly by substitution.     

Distribution,efficiency and incentives in organizations

This paper formulates incentives for individual workers in competitive firms in general equilibrium. Piece-rates and rewards for relative performance can elicit efficient effort in equilibrium, but workers benefit from collusion to reduce effort and consumption and expropriate capitalists by lowering the rental, while employers may choose equilibria with excessive ‘effort’. When there is uncertainty about true individual effort, prizes and limited penalties for best and worst performance can support efficient solutions, while income-risk declines as the size of the team grows. If penalties are prohibited, ex post inequality is multiplied and welfare declines.