The Cost of Diversity: The Diversification Discount and Inefficient Investment

We model the distortions that internal power struggles can generate in the allocation of resources between divisions of a diversified firm. The model predicts that if divisions are similar in the level of their resources and opportunities, funds will be transferred from divisions with poor opportunities to divisions with good opportunities. When diversity in resources and opportunities increases, however, resources can flow toward the most inefficient division, leading to more inefficient investment and less valuable firms. We test these predictions on a panel of diversified U.S. firms during the period from 1980 to 1993 and find evidence consistent with them.     

THE MOBILIZATION OF HUMAN RESOURCES AS AN EFFECT OF THE DEPLETION OF ENVIRONMENTAL AND SOCIAL ASSETS

In this paper, the growth process is not fed by the accumulation of productive assets (physical and/or human capital, knowledge etc.), but by the depletion of environmental or social resources, which induces individuals to increase their labor supply in order to consume more of the market goods that substitute for the depleted resources. Hence, production is expanded, thus eroding the resources’ ability to regenerate, which decreases with aggregate production. Within this context, the ‘green’ net national product is derived and it is shown how a regulatory authority should manage the resources for achieving Pareto‐optimality.     

Unique solutions for stochastic recursive utilities

We study unique and globally attracting solutions of a general nonlinear stochastic equation, widely used in Finance and Macroeconomics and closely related to stochastic Koopmans equations. The equation is specified by a temporal aggregator W and a certainty equivalent operator M. The main contribution of the paper is the introduction of the new class of Thompson aggregators. Other contributions of the paper are: (i) a detailed analysis of quasi-arithmetic operators M that generalize those of Kreps and Porteus (1978) [18]; (ii) a clarification of the nature and properties of the stochastic recursive preferences that underlie Koopmans equations.     

Global Rebalancing and the Future of the Sino-US Codependency

The crisis of 2008 has shown the unsustainability of the global imbalances centered on the US-China symbiotic relationship that characterized the previous decade. This has revived the so-called growth-rebalancing debate. In particular, the new emerging consensus calls for a re-orientation of the US economy away from consumption and toward exports, and for policy shifts that can help China to reduce its dependence on external demandand inefficiently high rates of capital accumulation. We discuss the economic and political feasibility of the proposed patterns of re-adjustment by focusing on the short-term and long-term trade-offs faced by the policy-makers. We argue that the rebalancing will be gradual and partial because of the costs associated with a radical shift in the growth models adopted by both countries. We believe that this scenario will be consistent with a world economy expanding at lower rates than over the past decade.     

A Note on the Three–Portfolios Matching Problem

A typical problem arising in financial planning for private investors consists in the fact that the initial investor's portfolio, the one determined by the consulting process of the financial institution and the universe of instruments made available to the investor have to be matched/optimised when determining the relevant portfolio choice. We call this problem the three–portfolios matching problem. Clearly, the resulting portfolio selection should be as close as possible to the optimal asset allocation determined by the consulting process of the financial institution. However, the transition from the investor's initial portfolio to the final one is complicated by the presence of transaction costs and some further more specific constraints. Indeed, usually the portfolios under consideration are structured at different aggregation levels, making portfolios comparison and matching more difficult. Further, several investment restrictions have to be satisfied by the final portfolio choice. Finally, the arising portfolio selection process should be sufficiently transparent in order to incorporate the subjective investor's trade–off between the objectives 'optimal portfolio matching' and 'minimal portfolio transition costs'. In this paper, we solve the three–portfolios matching problem analytically for a simplified setting that illustrates the main features of the arising solutions and numerically for the more general situation.     

Differentiating the workforce: The performance effects of using contingent labor in a context of high-performance work systems

In this study we focus on the impact of contingent labor on the outcomes of high-performance work systems (HPWS). Building on the emerging research on the social mechanisms linking HRM to organizational effectiveness, we argue that a higher incidence of contingent labor diminishes the productivity payoff associated with the use of HPWS for managing standard employees. We test these arguments using a sample of 229 British firms of different industries. The results support our arguments and help develop a more holistic and critical viewpoint in the analysis of workforce differentiation.     

Technological and geographical proximity effects on knowledge spillovers: evidence from the US patent citations

The purpose of this paper is to investigate the pattern of knowledge flows as indicated by the patent citations in three areas: USA, Japan and Europe. In each economic area, we use information from United States Patent and Trademarks Office data to assess empirically the impact of the technological and geographical proximities for 530 international firms. In particular, the contribution to the existing literature is twofold: first, we use an international sample in such a way that we may compare the empirical results among different economic markets; second, we extend the analysis of the determinants of knowledge spillovers, taking into account the time dimension of the effects of the proximities. In order to compute the technological proximity, we follow the methodology developed by A.B. Jaffe (1986 Jaffe, A. B. 1986. Technological opportunity and spillovers of R&D: Evidence from firms’ patents, profits and market value. American Economic Review, 76(5): 984–1001. [Web of Science ®] , [Google Scholar]. Technological opportunity and spillovers of R&D: Evidence from firms’ patents, profits and market value. American Economic Review 76, no. 5: 984–1001), where a technological vector is based on the distribution of patents of each firm across technology classes. As far as the geographic proximity is concerned, we use the latitude and the longitude coordinates of the city in which each firm is situated to obtain the distance, in miles, between the firms. The empirical results, in line with results from previous studies, indicate that there is a statistically significant relationship between the knowledge flows, proxied by the patent citations, and the proximities, but the effects are rather differentiated according to the proximity type.