Think again: Why good leaders make bad decisions

Sydney Finkelstein, Jo Whitehead , and Andrew Campbell studied decisions made around the world and researched those that were flawed at their inception. Their caveats for making decisions will help you to avoid some common errors.     

Developing a critical view on e‐learning trend reports: trend watching or trend setting?

Trend watching reports are an indispensable resource in the e‐learning domain. Many HRD departments consider these reports as essential cornerstones for the development of their e‐learning strategy. But what is the quality of the forecasts made in these reports? In this article, several methods of forecasting trends are discussed, resulting in a checklist to evaluate the quality of trend studies. Next, this checklist is applied to evaluate some significant trend studies. The evaluation results show that the reports do not meet basic quality criteria, such as ‘sound methodology’ and ‘objectivity’. The article concludes with some critical remarks on the role trend watching reports play in the domain of e‐learning.     

Ethical perception: are differences between ethnic groups situation dependent?

This study was conducted to determine how culture influences the ethical perception of managers. Most studies conducted so far have only stated similarities and differences in ethical perception between cultural or ethnic groups and little attention has been paid towards understanding how cultural values influence the ethnic groups' ethical perception. Moreover, most empirical research in this area has focused on moral judgement, moral decision making and action, with limited empirical work in the area of ethical perception. A total of 22 interviews were conducted and the questionnaire survey yielded 272 managerial responses. Three implications were obtained based on the findings of the study. The first implication is that differences in ethical perception can exist when one culture attributes moral significance to something that another culture does not. The results of the study also suggest that similarities in ethical perception can occur when a situation is viewed as an accepted and institutionalised part of doing business. Finally, the findings of the study also show that the influence of culture on ethical perception varied according to the different types of scenarios.     

Insurance Guaranty Schemes in a Contingent Claims Setting

The introduction of an insurance guaranty scheme can have significant influence on the pricing and capital structures in a competitive market. This contribution summarizes the major findings of a working paper written by Schmeiser and Wagner (Working Papers on Risk Management and Insurance (IVW-HSG), No. 80, 2010). The effect on competitive equity-premium combinations is studied while considering a framework with policyholders and equity holders where guaranty fund charges are volume-based, as levied in existing schemes. Several settings with regard to the origin of the fund contributions are assessed and the immediate effects on the incentives of the policyholders and equity holders are analyzed through a one-period contingent claim approach. One result is that introducing a guaranty scheme in a market with competitive conditions entails a shift of equity capital towards minimum solvency requirements. Hence adverse incentives may arise with regard to the overall security level of the industry.     

Improving Financial Performance with Hedging Via Forwards for Electric Power Generation Companies

In order to improve the financial performance of electric power generation companies, we show how additional on-peak forwards can be exploited to hedge against the risk exposure of nonpeak physical power, taking advantage of the competitive market outside the regulated service territory. Specifically, we model the evolution of the forward price as a geometric Brownian motion (GBM) process without drift and show how the optimal amount of additional on-peak forwards can be determined under the mean minus variance criterion via simulation. Furthermore, we show how the simulation approach and the analytical results may lead to a robust decision-making process.     

Dealing with Dirt and the Disorder of Development: Managing Rubbish in Urban Pakistan

This article unveils the different “thought worlds” that inform urban development policy and the reality of urban service delivery in Faisalabad, Pakistan's third largest city. Focusing on changing patterns of residential waste removal and based on ethnographic work among minority Christian street sweepers, the “little sub-worlds” involved in domestic rubbish collection are explored, showing how these articulate with larger “thought worlds” about dirt and disorder. The symbolic meanings of dirt across public and private spheres are examined alongside efforts by development practitioners and donors to impose generic policy solutions related to privatized delivery. Drawing on Mary Douglas's insights about how ritual pollution or danger-beliefs serve generally to maintain social categories and hierarchies, the article nevertheless points to the historically contingent specificities of caste-like relations in urban Pakistan and how these have been constructed. It shows how, under increasing competition for scarce jobs, entitlements associated with hereditary status-based occupations are once more appealed to and reconstructed by these vulnerable waste workers, shaping in the process urban service delivery and the relations that underpin it. The disjuncture born of diverse logics about dirt and disorder reveals an institutional multiplicity and messy social reality that sits uneasily with development as an ordering and unidirectional process.     

Insurance guaranty fund—what good is it?

In this paper, we analyze under which conditions a self-supporting insurance guaranty fund can be beneficial for the policyholders in an incomplete market. Within the analyzed setting, we find out that in general, if existent, the potential advantages from its introduction cannot be fairly divided among the participating insurers. Thereby, we have to expect systematic wealth transfers between the policyholders of different insurance companies. We introduce a framework for utility-based fund charges as a solution to this problem.     

CROSS‐COUNTRY RANKINGS IN INTERGENERATIONAL MOBILITY: A COMPARISON OF APPROACHES FROM ECONOMICS AND SOCIOLOGY

Abstract This paper summarizes research on the relative level of intergenerational mobility – whether classified by income, education or social class. The literatures on education and income mobility reveal a similar ranking with South America, other developing nations, southern European countries and France tending to have rather limited mobility although the Nordic countries exhibit strong mobility. Estimates of mobility based on social class point to rather different patterns, and we demonstrate that these differences are most likely generated by intergenerational earnings persistence within social classes. The second part of the paper looks for explanations for the differences in earnings and education persistence and finds that mobility is negatively correlated with inequality and the return to education but positively correlated with a nation's education spending.     

A framework for strategic decision making and performance among Chinese managers

This study develops an integrative model that explains the relationship between Chinese culture, managers' strategic decision making (SDM) processes, and organizational performance. For the study 1200 participants were randomly selected from a business club's company register, resulting in 204 valid respondents. The results highlighted two significant SDM paths used by managers: (1) the cognitive-speed path, which suggested that Overseas Chinese managers (the Chinese who live outside of Mainland China) focus on the big picture, draw analogies from past experiences, and use extensive networks to reduce the duration of the decision process; and (2) the social-political path which shows that Overseas Chinese managers focus on collective interests, strive to maintain harmony, and to save face while using a collaborative style to handle conflict; this approach reduces dysfunctional political behavior, while reinforcing the decision team's focus on common goals. From these results we concluded that a speedier decision making process (based on intuition, experience, and networks) accompanied by the appropriate use of political behavior (that created harmony, through a hierarchical structure, during conflict management) in the Overseas Chinese managers' strategic decision making process could positively influence organizational performance.     

Learning from Trade through Innovation

This paper explores the idea that firms learn from trade by introducing either new products or processes influenced by their trade links with foreign markets. By exploring microdata for Spain, including data on innovation and trade, we find a robust relationship between imports, exports and innovation. The results suggest that firms learn primarily from import links, which enable them to innovate and to ‘dress up’ for starting to export. This sequencing between trade and innovation, however, is shown to be more pronounced for small firms only and technologically advanced firms.