Independent boards and innovation

Much research has suggested that independent boards of directors are more effective in reducing agency costs and improving firm governance. How they influence innovation is less clear. Relying on regulatory changes, we show that firms that transition to independent boards focus on more crowded and familiar areas of technology. They patent and claim more and receive more total future citations to their patents. However, the citation increase comes mainly from incremental patents in the middle of the citation distribution; the numbers of uncited and highly cited patents—arguably associated with riskier innovation strategies—do not change significantly.     

Problems of consumer protection against unfair advertising under Italian law

The present paper gives a critical survey of the main trends in the correction of unfair advertising under Italian law. From the viewpoint of consumer interest, such trends appear unsatisfactory in so far as they refer to an average consumer standard, a concept that results in too limited legal intervention. Aside from this, consumer associations and groups are still barred from access to legal action under unfair competition law. Thus, the most adequate legal model to date, seems to be the one founded on the administrative authorization of advertising, which embodies a preventive control of advertisements. Discussed also are self-regulation norms and practices, whose recent improvement is nevertheless insufficient to overcome structural defects.

---

Probleme des Verbraucherschutzes gegenüber unlauterer Werbung im italienischen Recht

Zusammenfassung In Italien gibt es kein auf die Belange des Verbraucherschutzes zugeschnittenes Werberecht. Täuschende und irreführende Werbeangaben gegenüber Verbrauchern werden unter bestimmten Umständen als »unlauterer Wettbewerb« behandelt. Das italienische Recht regelt dabei nur solche Werbeaussagen, die ganz bestimmte Tatsachen enthalten, womit also Übertreibungen auch täuschenden Inhalts keiner Rechtskontrolle unterliegen. Umgekehrt fehlt ein Grundsatz, daß die Werbung ein Mindestmaß an Informationen enthalten muß; das Unterlassen von Angaben wird nicht als Täuschung angesehen. Die Irreführung wird nicht an den von einer Werbebotschaft betroffenen Verbrauchern gemessen, sondern an einem fiktiven Maßstab des »Durchschnittsverbrauchers«.Der Autor kritisiert diese Voraussetzungen des Irreführungsverbotes im italienischen Recht und weist auf Widersprüche in den Begründungszusammenhängen, aber auch auf neue Tendenzen hin. Das Werbestrafrecht kennt in einigen Bereichen strengere Maßstäbe.Die Rechtsdurchsetzung im italienischen Recht weist viele Lücken auf. So haben Verbraucherverbände kein Klagerecht. Eine präventive Werbekontrolle findet praktisch nicht statt. Es sollte deshalb überlegt werden, die verwaltungsrechtliche Kontrolle der Werbung zu erweitern.Die inzwischen auch in Italien ausgebaute Werbeselbstkontrolle befriedigt vom Verbraucherstandpunkt aus nicht. Die Selbstbeschränkungsabkommen sind rechtlich nicht verbindlich. Nur als Ergänzung, nicht aber als Ersatz einer staatlichen Werbekontrolle erscheinen sie sinnvoll.

---

---

Gustavo Ghidini is Professor of Law at the University of Modena, Italy. His address is: Via C. Battisti 8, I-20122 Milan, Italy. In 1973 he became a founder of the Comitato Difesa Consumatori, an association now member of Bureau Européen des Unions de Consommateurs (B. E. U. C.).     

Productivity,real exchange rate,and aggregate demand: An empirical exercise applied to Brazil from 1960 to 2011

This research analyzes, from a post Kaleckian perspective, the interactions among the aggregate demand, the real exchange rate, productivity, and real wages in the Brazilian economy from 1960 to 2011. It adopts the longstanding perspective that demand is the driver of capital accumulation and economic growth. The research comprises the following steps: (a) a critical assessment of the growth regime literature, with a particular emphasis on issues related to productivity and the real exchange rate; (b) understanding the relationship between the real exchange rate and the productivity and growth regimes; (c) proposing a theoretical model that relates the real exchange rate, productivity, and the growth regime; and (d) an empirical test of the interaction between the real exchange rate, productivity, and the growth regime. Theoretically the study develops a model showing the interactions between the aggregate demand, the real exchange rate, productivity, and real wages. Furthermore, this research attempts to address the lack of theoretical and empirical studies about the relationship between the aggregate demand, the real exchange rate, productivity and real wages.     

Environmental Motivations: The Pathway to Complete Environmental Management

The aim of this research is to ascertain whether a firm’s environmental motivations may help to predict how complete or incomplete its environmental management will be, understanding incomplete management to be that which neglects one or more of the three keys aspects of such management, namely, monitoring, action and results. We specifically posit that while motivations based on the search for legitimation lead to more incomplete styles of environmental management, competitive motivations entail a more complete management. The analyses conducted with a sample of 1,902 plants provide empirical evidence in favour of such reasoning. The contribution this research makes, therefore, is not restricted solely to showing the effect motivations have on the environmental performance of organisations, as it also introduces a new dimension of environmental management—the degree of completeness, which needs to be considered when understanding and evaluating this effect.     

Does Financial Development Promote Innovation in Developing Economies? An Empirical Analysis

Using firm‐level data from 2006 to 2013 for a set of developing countries, we examine the effects of financial development on innovation. Financial development boosts innovation by improving resource allocation and investment in strategic sectors as well as facilitating technology to promote growth. Using binary response models and instrumental variable techniques to correct for endogeneity, we find robust but puzzling results. Contrary to most of the existing literature, financial development has a negative effect on the probability of a firm to innovate in developing countries. This effect is conditional on firm size, and only larger firms benefit from financial development. These results are robust to different measures of financial development and econometric specifications. We argue that this is a result of the design of the financial system in regard to the lack of capital and institutional system. Consequently, developing countries should first generate appropriate institutional conditions if they want financial development to spur growth through innovation.     

Distortions,endogenous managerial skills and productivity differences

We develop a span-of-control model where managerial skills are endogenous and the outcome of investments over the life cycle of managers. We calibrate this model to U.S. plant-size data to quantify the effects of distortions that are correlated with the size of production units, and how these effects are amplified by managerial investments. We find a quantitatively important role for managerial investments. Distortions that consist of a tax rate of 20% on the top 50% managers reduce steady-state output by about 14.6% in our benchmark model. When skills are exogenous the reduction is about 9.2%.     

Toward farm-based policy analysis: concepts applied in Haiti

Many policies – on the delivery of inputs or on marketing systems, credit, or extension – influence the potential utilization of new technologies. Through 'farm-based policy analysis' it is possible to use data generated in on-farm research (OFR) to identify policy constraints to the use of new technologies, and to effectively communicate that information to policy makers. This paper describes a tentative framework for farm-based policy analysis and suggests a sequence of five steps for the analysis: (1) identify the policy-induced constraints; (2) determine the rationale behind the policy; (3) identify the decision makers to whom the results should be communicated; (4) identify solutions or policy options; and (5) communicate results to decision makers. A case of farm-based policy analysis from Haiti illustrates the concepts and methods described in the first part of the paper. On-farm experiments in Les Cayes, Haiti, confirmed a response to nitrogen in maize, but adoption of the recommended practice and consequent gains in productivity and income were constrained by the scarcity of urea in the local market. An analysis of local supply and potential local demand for urea and the potential benefits of urea application was conducted, and results communicated to two target groups of decision makers: representatives of the Ministry of Agriculture responsible for fertilizer distribution policy, and representatives of private fertilizer enterprises. These groups responded by making larger supplies of urea available to local farmers. Adoption of the fertilizer recommendation and urea sales increased. The case demonstrates the potential value of farm-based policy analysis building upon data from OFR.