Rule-of-thumb behaviour and monetary policy

We investigate the implications of rule-of-thumb behaviour by consumers or price setters for optimal monetary policy and simple interest rate rules. This behaviour leads to endogenous persistence in output and inflation and alters the policymaker's welfare objective. Our main finding is that highly inertial policy is optimal regardless of what fraction of agents occasionally follow a rule of thumb. We also find that a first-difference version of Taylor's (Carnegie-Rochester Conf. Ser. Public Policy 39 (1993) 195-214) rule generally has desirable properties. By contrast, the coefficients in other optimised simple rules tend to be extremely sensitive with respect to the fraction of rule-of-thumb behaviour.     

An economic assessment of options for operating within plantation forestry water entitlements and tightening cap and trade policy

The Green Triangle (GT) region of southern Australia is one of only two jurisdictions globally to licence plantation forestry's groundwater use. In response to declines in groundwater resources caused by historical plantation expansion, reductions in forest water allocations (~50%) are likely for some parts of the region, presenting novel challenges for forest managers in maintaining revenues and timber flows. This article presents a mathematical programming model evaluation of water trade opportunities for plantation forest owners to adapt to reduced water entitlements and explores how tightening groundwater policy could affect forestry returns and land use mix for the region. Results suggest that even absent opportunity to sell water, relatively limited 11% reduction in return could be expected for a large (−50%) water entitlement and (−48%) land-use change out of forestry. Results suggest that opportunities for forestry companies to sell water entitlements may allow them to maintain or even increase combined returns from forestry and water sales. Whilst the results highlight the adaptive capacity of the plantation forestry sector to operate within reduced water entitlement, a significant sectoral and regional economy adjustment would be likely. The discussion focusses on the potential to realise optimisation model-identified adaptation opportunities accounting for real-world thin markets, transaction costs and market friction.     

An Exploratory Study into the Factors Impeding Ethical Consumption

Although consumers are increasingly engaged with ethical factors when forming opinions about products and making purchase decisions, recent studies have highlighted significant differences between consumers’ intentions to consume ethically, and their actual purchase behaviour. This article contributes to an understanding of this ‘Ethical Purchasing Gap’ through a review of existing literature, and the inductive analysis of focus group discussions. A model is suggested which includes exogenous variables such as moral maturity and age which have been well covered in the literature, together with further impeding factors identified from the focus group discussions. For some consumers, inertia in purchasing behaviour was such that the decision-making process was devoid of ethical considerations. Several consumers manifested their ethical views through post-purchase dissonance and retrospective feelings of guilt. Others displayed a reluctance to consume ethically due to personal constraints, a perceived negative impact on image or quality, or an outright negation of responsibility. Those who expressed a desire to consume ethically often seemed deterred by cynicism, which caused them to question the impact they, as an individual, could achieve. These findings enhance the understanding of ethical consumption decisions and provide a platform for future research in this area.     

Conservation practice complementarity and timing of on-farm adoption

The adoption of conservation practices is a dynamic process. Factors that vary over time can affect farmers’ decision to adopt and adoption timing. We used a duration model to evaluate the farmer's adoption time for continuous no-till (CNT), cover crops (CCs), and the variable-rate application of inputs (VRA). We found that producers who had previously adopted soil conservation practices were more likely to adopt additional complementary practices. Farmers using crop rotation adopted CNT and CCs approximately 48% and 62% faster than farmers without a crop rotation, respectively. The CC adoption time was also reduced by 70% for farmers who had adopted CNT. Complementarities between conservation practices may enhance the benefits from adoption and allow farmers to adopt bundles of conservation practices more quickly over time. This can be taken advantage of in conservation programs by promoting or requiring practices first that enhance adoption of other practices. We also found important heterogeneity in the adoption speed associated with farm management characteristics, producers’ attitudes, weather patterns, and crop prices.     

Soil Carbon Sequestration Strategies with Alternative Tillage and Nitrogen Sources under Risk

This study examines the economic potential of using either no-tillage or conventional tillage with either commercial nitrogen or cattle manure to sequester soil in continuous corn production. This research uses stochastic efficiency with respect to a function to determine the preferred production systems under various risk preferences and utility-weighted certainty equivalent risk premiums to determine the carbon credit values needed to motivate adoption of systems, which sequester higher levels of carbon. The results indicate that no-tillage and cattle manure increase carbon sequestration. Carbon credits or government program incentives are not required to entice risk-averse managers to use no-tillage, but are required to encourage manure use as a means of sequestering additional carbon even at historically high nitrogen prices. New environmental rules for confined animal feeding operations may increase the demand for land to apply manure as a primary nutrient source and participation in the Environmental Quality Incentives Program, Conservation Security Program, and a carbon credit market to obtain payments to offset some or all of the costs of manure application.     

Accountants as layoff survivors: A research note

The beginning of the 21st century was witness to a wave of global forces and economic shocks that threatened the job security of accountants. Events such as the bursting of the stock market bubble, outsourcing, restructurings, and 9/11 created a dramatic rise in layoffs of white-collar workers. Drawing from theoretical and empirical research in the management and psychology literatures, the current study employed a field survey in testing a comprehensive model of the relationship among layoff survivors’ perceptions, psychological states, attitudes, and intentions. Our sample consisted of 125 accountants who had survived recent workforce reductions at a United States aircraft manufacturer in the wake of reduced demand following 9/11. The results of our structural equation analyses indicated that accounting survivors’ perceptions of procedural and interactional organizational justice affected their post-layoff stress and job insecurity, which in turn directly and indirectly influenced job satisfaction, affective commitment, and intent to turnover.     

A Temporal Model of Vertical Relationships

Purpose: The authors developed a model framework for buyer–supplier relationships and used it to extend theory in 4 areas: (a) maintenance of long-term relationships; (b) conversion of relationships from adversarial to cooperative; (c) changes in relationships over their lives; and (d) levels of commitment and trust between partners.

Methodology/approach: The authors analyzed existing research on buyer–seller relationships and theoretical concepts in various disciplines to develop a 3-stage temporal relationship model consisting of pre-deal (t–1), deal enactment (t), and deal continuation (t+1) stages. From the model and existing research, the authors drew propositions for relationships in the areas of buyer and seller power, several forms of commitment and trust, intellectual capital, and financial performance.

Findings: Briefly, the authors proposed that (a) at the pre-deal stage, increased buyer power may instigate supplier input commitment or vice versa; (b) at deal enactment, both parties may commit to a written contract and build contractual trust through a low degree of relational commitment; and (c) in the deal continuation stage, contractual trust, and attitudinal commitment of one of the parties is likely to foster attitudinal commitment in the other party. The authors found that buyer's and supplier's total commitment fosters goodwill trust and helps build intellectual capital and financial performance, and that the weaker party in the relationship likely gains more from the partnership than the stronger party.

Research implications: In addition to existing research, the authors used several actual situations to provide support for our propositions. However, more research should be done in all areas to additionally confirm our propositions and otherwise add to theory development.

Practical implications: By looking at buyer–seller relationships in three stages, the authors developed several implications for both parties. These included long-term results of short-term actions, importance of industry factors on buyer and seller commitment, and the role of commitment in determining whether long-term relationships are developed.

Originality/value/contribution: The authors extended and coordinated existing theory by consolidating the implications of previous research into a cohesive buyer–supplier relationship model. This model should enable both researchers and managers to better comprehend the dynamics of vertical relationships with a multi-dimensional, reciprocal approach. The results should also provide managers an additional tool to gauge and forecast the fate of a relationship by analyzing levels of trust and commitment as the relationship progresses.     

The promise and problems of price subsidization in social entrepreneurship

Social entrepreneurship research has often focused on the benefits and challenges of designing hybrid organizations that integrate competing institutional logics to tackle social problems using market-based methods, especially in developing economies. Drawing on case evidence from the Safe Water for Africa program, we show how and why pricing new products at other than market prices offers a seductive but dangerous mechanism for managers seeking to pursue dual objectives in hybrid organizations. We identify five strategic and operational challenges with ethical implications that manifest as pricing dilemmas and show how and why they are likely to elicit moral dilemmas among stakeholders of social entrepreneurship who are not equally committed to both social and economic objectives.     

Category membership,identity control,and the reevaluation of prosocial opportunities

We extend current knowledge on prosocial organizing by explaining how membership in organizational categories lead entrepreneurs to reevaluate their firms' activities and opportunities. Through a qualitative study of 46 firms that pursued B Corp certification, we developed an identity control model of prosocial opportunity. Our findings suggest that joining a prosocial category catalyzes identity-driven reflexivity, which can alter the firm's engagement in prosocial activity. This identity-driven process occurs in tandem with evaluations of opportunity viability and attractiveness, the potential for intra-organizational conflict, and the relative power and position that category legitimacy affords the firm. Our findings contribute to literature streams on prosocial organizing, identity, and categories.