The Asymptotic Optimality of Residual Income Maximization

Residual income subtracts from operating income an interest charge for invested capital. Residual income can be calculated each period from current accounting information, unlike discounted cash flow (DCF), which requires the knowledge of future cash flows. This paper provides a normative justification for residual-income maximization by showing that if investment decisions are made myopically each period to maximize residual income, the resulting path asymptotically maximizes discounted cash flow. Thus, under the assumptions of the model, residual-income maximization is a heuristic that leads to the long-run DCF-optimum.     

Putting ethics and economic rationality together: an Aristotelian and philosophical approach

The gap between economic rationality, as embedded in utility maximization, and ethical rationality, identified with a set of rules that prescribe the right course of action, has been a challenging issue for economists, philosophers, and business ethicists. Despite the difference and the noncompetition between a scientific economic approach of economics and business ethics, and a behavioral and philosophical one, we highlight the importance of the Aristotelian concept of prudence or phronesis applied to business activity. Phronesis allows for a conceptualization of rationality that can be simultaneously applied to economics and ethics. It also allows conceiving the intrinsically ethical nature of economic rationality. This relationship requires an appropriate education and the intervention of the state.     

International business mentoring for development: the importance of local context and culture

This research investigates the value of donor‐funded, cross‐cultural business mentoring in a development context. Following a review of the existing literature on cross‐cultural mentoring, it examines the effectiveness of the Pacific Business Mentoring Programme in Samoa through interviews with 23 entrepreneurs and a survey of the New Zealand mentors. Research findings show that mentoring can provide both business and socio‐cultural development outcomes. However, the majority of entrepreneurs believe that their mentor did not have a good understanding of the local cultural context. Some cultural practices appear to be detrimental to running a business, but they add to the resilience of local people and should therefore not be undermined. This research indicates that donor‐funded business mentoring can be an effective tool for development assistance if mentors are sensitive to the local cultural context.     

On the stability of value added indicators

This paper shows how relevant concepts in educational effectiveness can support public policy in order to improve the performance of educational systems. Specifically, value-added indicators and the property of their stability over time is addressed with reference to application to school/teacher improvement. Findings of a longitudinal study developed in Portugal concerning primary education in mathematics are presented. Variance component models are fitted in order to obtain those indicators yearly to class-school units. Results of this study reveal that value-added indicators can be a useful instrument for progressive improvement in education, particularly in countries with high rates of student retention and evasion. The novelty of this paper is to measure value added over a single year rather than all stage of schooling that refers to more than 1 year.     

Developing Sustainable New Products in the Textile and Upholstered Furniture Industries: Role of External Integrative Capabilities

Environmental sustainability has become one of the key issues for strategy, marketing, and innovation. In particular, significant attention is being paid by companies, customers, media, and regulators to development and consumption of green products. It is argued that through the efficient use of resources, low carbon impacts, and risks to the environment, green products can be essential to help society toward the environmental sustainability targets. The number of green product introductions is rapidly increasing, as demonstrated by the growing number of companies obtaining eco‐labels or third party certifications for their environmentally friendly products. Hundreds of companies representing most of the industries, such as Intel, SC Johnson, Clorox, Wal‐Mart, and Hewlett–Packard, have recently introduced new green products, underlining the need to develop products that create both economic and environmental values for the firm and customers. A review of the literature shows that academic research on green product development has grown in interest. However, to date, only a few empirical studies have addressed the challenge of integrating environmental issues into new product development (NPD). Previous empirical works have mainly focused on a set of activities for the green product development process at the project level. After years of paying no or marginal attention to environmental sustainability issues, most of the companies now generally realize that it would require knowledge and competencies to develop green products on a regular basis. These knowledge and competencies can be varied, such as R&D, environmental know‐how, clean technology/manufacturing process, building knowledge on measuring environmental performance of products, etc., that may be developed internally or can be integrated through external networks. Adopting a resource‐based view of the firm, this article aims at (1) investigating the role of capabilities useful for companies to integrate knowledge and competencies from outside of the firm on green product development in terms of both manufacturing process and product design and (2) understanding whether green product development opens new product, market, and technology opportunities, as well as leads to better financial performance of NPD programs. To this end, a survey was conducted in two Italian manufacturing industries in which environmental issues are becoming increasingly important, namely textiles and upholstered furniture. A questionnaire was sent to 700 firms, and 102 useable questionnaires were returned. Results show that (1) companies engage in developing external integrative capabilities through the creation of collaborative networks with actors along the supply chain, the acquisition of technical know‐how, and the creation of external knowledge links with actors outside the supply chain; (2) external knowledge links play a key role in the integration of environmental sustainability issues into the manufacturing process, whereas capabilities such as the acquisition of technical know‐how and the creation of collaborative networks prove to be more important for integrating environmental issues into product design; and (3) the integration of environmental sustainability issues into NPD programs in terms of product design leads to the creation of new opportunities for firms, such as opening new markets, technologies, and product arenas, though not necessarily leading to improved financial performance of the NPD programs.     

Creative Mediations of the City: Contemporary Public Art as Compass of Metro Manila's Urban Conditions

In this article, public art is proposed as creative agency mobilized to form urban imaginaries. These alternate visions are largely facilitated by artists and art collectives using urban communities as performative grounds. These projects promote a view of art as an effective channel for ‘recentering’ — the identification of a multitude of centers that endlessly fracture and shift, very much resembling the nature of cities themselves. An alternate vision of the city through cartography informed by contrast, temporality and ephemerality is proposed alongside dominant representations of the city. Works by artists Alma Quinto, Mark Salvatus and Wire Tuazon are representative examples of such strategies. Diverse in tactics and platforms, defined by site‐specific mediations, the projects facilitated by these artists reveal the uneven conditions that beset Metro Manila and its outlying areas. Quinto's altered Urban Plan/Duyan is the result of her engagement with women in an informal settler community in San Andres Bukid, Manila, while Salvatus's web‐based Neo‐Urban Planner is an astute observation of the obsessive yet futile ordering of people and space by the state. Tuazon's Amphibian installation is a commentary on the encroachment of multinational interests in local communities. These interventions are foils to state‐ and private‐led urban development schemes. Their strength lies in their direct engagement with the sphere of public dialogue and self‐determination. These artistic practices and strategies are shaped by community interaction, revealing that meanings residing in urban forms are relentlessly negotiated by the numerous actors that inhabit the city.     

Movements of People for Movements of Goods?

Whilst it is well established to think of international tourism as a type of exports, namely ‘home’ exports, the potential of tourism flows as an engine for fostering trade among countries is a poorly studied topic. In this paper, we show that this relationship can be studied at a very detailed level by exploiting the disaggregation of existing information on international trade and inbound tourism. We consider a sample of 25 countries belonging to the European Union, a region that has been interested by common shocks such as the establishment of the euro as the new currency for many countries and the liberalisation in the air transport market. We carry out a panel data analysis by means of which we assess whether international tourist arrivals by a given country activate additional exports towards the same country. We find not only that tourism can promote exports, but also that this effect displays important differences depending on whether or not consumption goods are considered. This finding is consistent with the idea that the experience of tourists in a given destination reduces the fixed costs of trade, thus facilitating access to the advantages of international trade for more peripheral economies.     

Exchange Rate Volatility and Output Volatility: A Theoretical Approach*

This paper makes an attempt to determine the factors influencing exchange rate and exchange rate uncertainty, as well as output and output variability. In the context of a small open economy under flexible exchange rates regime it is found that the level both of exchange rate and output is affected by monetary and inflationary shocks, as well as shocks in government spending, output, and trade balance. Further, the uncertainty of exchange rate and output is associated positively with the uncertainty of all shocks while the contemporaneous occurrence of selected shocks imposes either a positive or negative impact on exchange rate and output volatility. Finally, it is shown that the effect of the determinants either of exchange rate volatility or output volatility is very sensitive to the parameter values.