Forgive or buy back: an experimental study of debt relief

In recent years, debt relief has once again been pushed to the forefront of political and economic interest. The general consensus is that with less debt burden poor countries suffering from debt overhang will be able devote more resources towards investment thereby promoting their own growth and thus benefit their creditors in the long run. An open question is which mechanism is best to relieve debt burden. In this paper, we adopt experimental methods to study the effectiveness and efficiency of debt forgiveness and debt buyback. We find that creditors tend to reduce more debt under Forgiveness than Buyback. Debtors under Forgiveness are not significantly more reciprocal than under Buyback. After controlling for the amount of debt relief, creditors are significantly worse off under Forgiveness whereas debtors are indifferent between the two schemes. From the viewpoint of promoting debt relief, debt forgiveness appears to be a more effective tool to achieve this goal. Nevertheless, if one is to maximize the overall efficiency, debt buyback is superior to debt forgiveness in making best of each relief dollar.     

Human Resource Management in the Building Industry： International Comparison

This paper summarizes the results of the international questionnaire survey which took place at the start of 2013 in order to examine, judge, and compare the implemented concept and procedures of human resource management in the questioned building companies operating in the Visegrad Four countries （the Czech Republic, Hungary, Poland, and the Slovak Republic） and the Federal Republic of Germany, and proposes an optimal approach to human resource management in the context of the current and expected economic development. The questionnaire survey was based on the assumption that effective human resource management is a condition of the successful function of each building company and that human resource management is that area of management which distinguishes the successful building companies from the unsuccessful ones. In total, 202 companies from the Czech Republic, 105 companies from Hungary, 100 companies from Poland, 102 companies from the Slovak Republic, and 99 companies from the Federal Republic of Germany took part in the questionnaire survey. The results of the questionnaire survey showed that among the building companies questioned in individual countries, there was no substantial difference in the overall concept and in the partial procedures of human resource management. The implemented concept and procedures in the questioned building companies show significant merits and surprising shortcomings, whereas it is difficult to prove an unequivocal connection between the efficiency of human resource management and the success of building companies. This relationship is determined by a series of other political, economic, legal, social, cultural, technical, demographic, and natural effects which are not related to the efficiency of human resource management or to the performance of the workforce of building companies.     

Corporate Reporting in Central and Eastern Europe: Issues,Challenges and Research Opportunities

The purpose of this paper, building upon the papers included in this special section of Accounting in Europe on Corporate reporting in CEE countries and on our knowledge of the region, is to broaden out and open up dialogue and debate about how local institutions are evolving and impact the corporate reporting practices in this under-researched region. We begin by discussing the institutional context for conducting research on corporate reporting by entities in Central and Eastern Europe (CEE), within the broader context of emerging, transitional economies. We also reflect on how research conducted on CEE countries can make a relevant contribution to the international literature, and exemplify by summarizing the research questions and findings of the papers included in the special section. A future research agenda emerges, given the gaps in the international literature and the future research implications suggested in the papers constituting the special section.     

Ruin probabilities under general investments and heavy-tailed claims

In this paper, the asymptotic decay of finite time ruin probabilities is studied. An insurance company is considered that faces heavy-tailed claims and makes investments in risky assets whose prices evolve according to quite general semimartingales. In this setting, the ruin problem corresponds to determining hitting probabilities for the solution to a randomly perturbed stochastic integral equation. A large deviation result for the hitting probabilities is derived that holds uniformly over a family of semimartingales. This result gives the asymptotic decay of finite time ruin probabilities under sufficiently conservative investment strategies, including ruin-minimizing strategies. In particular, as long as the insurance company invests sufficiently conservatively, the investment strategy has only a moderate impact on the asymptotics of the ruin probability.     

Optimal development budgets tied to the marketing mix

The purpose of this paper is to forge a link between optimal levels of the three principal marketing mix instruments—price, promotion and product quality—and the development expenditures devoted to the quality improvement of a firm's existing product. Using the latest operational marketing mix model which prescribes quantitatively what the optimal quality of a brand should be, a simple function relating this optimal quality to desirable development outlays is suggested and some of its implications are explored.     

Communication Flows in International Product Innovation Teams

Recently, we have witnessed a strong growth in the internationalization of many firms' product development activities. However, the lack of attention devoted by scientific research to the management of international innovation contrasts sharply with the importance attached to it as a cornerstone of international business success. Although several empirical studies and normative theories have specified the communication requirements in innovation teams, an empirically based insight is definitely needed on the communication requirements and requirements that prevail in the complex context of international innovation teams, in which the participants are located in different company units, countries, and cultures. This article addresses the following research question: viewing international innovation as an interfunctional activity, what are the communication requirements an international innovation team is facing, and what are the communication capabilities (interface mechanisms) that may be adopted to initiate, develop, and launch the new product effectively and efficiently? An extensive case study research project was designed to develop a comprehensive theoretical framework. Over a two year time period, the research team has investigated selected innovation projects in four European multinational corporations. The analysis of the case study data suggests five requirements that determine the effectiveness and efficiency of communication in international product development teams: network transparency, knowledge codification, knowledge credibility, communication cost, secrecy. To cope with these communication requirements, organizations may create firm level capabilities (parallel structures, cross‐functional and inter‐unit climate, communication infrastructure, goal congruence) and team level capabilities (core team, team leadership, formalization, procedural justice). The evidence from the in‐depth case study research indicates that these mechanisms provide a parsimonious and powerful approach to address the communication requirements in international product innovation teams. After the information processing framework proposed by Tushman and Nadler [124], the adoption of these mechanisms is expected to improve innovation effectiveness. This holds important consequences for the management of international product innovation projects. First, the innovating firm must balance centralization and decentralization, employ formal as well as informal strategies, and integrate ad‐hoc and permanent strategies. Second, it highlights the critical role of the project leader. Given the fact that companies often select the most available person, rather than the best person for the job, the allocation of light weight project leaders may create heavyweight problems in international teams. Third, following the argument in favor of procedural justice, the absence of involvement may severely hinder cross‐functional commitment to international innovation projects. Fourth, the innovating firm must also actively manage the communication flows with external parties. Failure to do so may result in flawed specifications, and a limited understanding about product design and market strategies.     

A Policy Perspective on European Unemployment

This paper focuses on three major themes in the policy debate on European unemployment. A first issue concerns the causes of unemployment. We point to the diversity of the unemployment performance in Europe and plead for a policy approach which takes into account the interdependence between employment, labour costs and social protection. As a second major theme, we evaluate existing EU policies. While a EU social dimension is gradually developing, the European level is far from providing a comprehensive policy framework at this stage. A third issue relates to the national policy dimension and is linked to Europe's quest for a third way. We compare the corporatist and competitive labour market approach.     

Is Belgium ready for EMU? A look at national, sectoral and regional developments

In EMU the question arises how countries will respond to adverse economic shocks. A statistical decomposition of output shocks in Belgium identifies the sectoral level as the main source of turbulence. This sectoral focus reduces the need for monetary, exchange rate and budgetary policies as macro-economic adjustment mechanisms but raises the issue of labour market flexibility. We show that wages fail to respond to sectoral and regional shocks. Similarly to the other EU countries, this absence of wage adjustments tends to amplify the regional divergence in production and employment performance, and can thus threaten political cohesion.     

In‐Group versus Out‐Group Trust: The Impact of Income Inequality

In this article, we adopt a variant of the trust game by Berg, Dickhaut, and McCabe (1995) and the dictator game by Cox (2004) to determine if income inequality can activate in‐group favoritism and, if so, whether such a bias is strong enough to survive the removal of income inequality. We find evidence of in‐group favoritism only on the part of rich first movers. Rich first movers trust their in‐group members significantly more in the presence of income inequality not only before but also after they gain enough experience. Poor first movers, in contrast, do not exhibit such in‐group bias. They do not discriminate between in‐group and out‐group at the very outset of the experiment, and once they become experienced, they behave with significantly more trust toward the rich than toward the poor. We also find that in‐group and out‐group favoritism established in the past can be alleviated, but not completely removed, by an equal income distribution.