Customer perception and competitive quality strategy

The objective of this paper is to determine the optimum level of quality a firm should choose in a product/service, given the customers‘ perceptions of quality and the reference standard in a competitive market. Our work on this quality selection problem differs from those of past researchers in that we model explicitly customer's perceptions and the reference standard. We develop a game-theoretic model to obtain insights into the firms’ quality selection problem. The model results suggest that the market differentially provides rewards or penalties to firms depending upon customers' perceptions as well as other market and product-specific parameters. We contrast our findings for an oligopolist with that for a monopolist and observe that although an oligopolist often provides a better quality product, he does not do so always; especially when perceptions are sufficiently weak and the reference standard is endogenous.     

The Significance of Working Time Arrangements Accompanying the Introduction of Teamworking: Evidence from Employees

A study is reported where the introduction of teamworking was accompanied by negotiated changes in working time patterns, involving some employees transferring to a 5‐shift, 8‐hour pattern, others to a 5‐shift, 12‐hour pattern. Employee attitude surveys before and after the changes show those moving to 12‐hour working much more satisfied with both working time and other changes, compared with those remaining on 8‐hour shifts. The creation of extra non‐work days was seen as the major advantage of the longer shifts, which compensated for the harder work regime identified under teamworking and the greater rigidity of the 5‐shift system. The findings underline the potential significance of working hours for employee support for broader changes in working practices. Possible explanations of why the longer shift pattern met with considerable support at one research site, but failed to gain support at a similar site elsewhere, are also explored.     

Editorial introduction: Is the World Bank lending effective in developing countries?

This special issue of Economic Systems includes five papers about the World Bank lending in developing countries. The motivation for the special issue stems from the relatively extensive literature on the sister institution, namely, the International Monetary Fund (IMF), but not on the World Bank itself. The papers’ focus is the influence of the World Bank lending on economic growth, education and health, poverty reduction, and regulation in the recipient countries. The papers’ findings contribute to our understanding of the effects of the World Bank lending in developing countries, which reflects both successes and shortcomings.     

Self-Interest, Self-Deception and the Ethics of Commerce

On taking the common distinction between the legal and the ethical as a point of departure, and in an effort to understand Marshall's approach to self-interest, and thereby to his conception of an ethics of commerce, I read three of his essays in the light of some non-technical writings of Frank Hahn and three other Cambridge intellectuals. My larger project connects self-interest and self-deception to a possible ethics of theorizing in economics, and thereby to the ethics of the relationship between the theorist and the theorized, the analyst and the analyzed.     

Determinants of fertility in developing countries

The contribution of agricultural modernization to changes in fertility in developing countries was examined. A model for the determinants of both fertility and infant mortality--hypothesized to be positively related--was specified and applied to cross-sectional data for 75 developing countries for the year 1971. The infant mortality rate, productivity per unit of labor and land, and density of population for agricultural land were highly correlated with the crude birth rate. The only other exogenous variables highly correlated with each other were productivity per unit of labor and infant mortality, and productivity per unit of land and population density for agricultural areas. The coefficient of population density of agricultural areas suggested a negative impact of density on fertility. The infant mortality rate, productivity per unit of land and labor, and density of population of agricultural areas explained 85% of the intercountry variation in fertility. The infant mortality rate, productivity of land, and productivity of labor were of descending order of importance in determining the crude birth rates in the countries analyzed. 68% of the intercountry variation in infant mortality was explained by fertility, adult literacy, per capita energy consumption, gini-coefficient of income distribution, population per hospital bed, and protein supply. Adult literacy, crude birth rates, population per hospital bed, per capita energy consumption, per capita protein supply, and gini-coefficient of income distribution were of descending order of importance in determining infant mortality rates. All of the variables that affected infant mortality directly affected fertility indirectly; conversely, all the variables that affected fertility directly affected infant mortality indirectly. Overall, these results confirm that agricultural modernization does exert an effect on fertility. The task in developing countries is to break the vicious cycle of infant mortality and fertility. This can be achieved both through family planning programs and the diffusion of health programs to lower infant mortality.     

Navigating towards sustainable development: A system dynamics approach

Traditional fragmented and mechanistic science is unable to cope with issues about sustainability, as these are often related to complex, self-organizing systems. In the paper, sustainable development is seen as an unending process defined neither by fixed goals nor by specific means of achieving them. It is argued that, in order to understand the sources of and the solutions to modern problems, linear and mechanistic thinking must give way to non-linear and organic thinking, more commonly referred to as systems thinking. System Dynamics, which operates in a whole-system fashion, is put forward as a powerful methodology to deal with issues of sustainability. Examples of successful applications are given.Any system in which humans are involved is characterized by the following essential system properties: Bounded rationality, limited certainty, limited predictability, indeterminate causality, and evolutionary change. We need to resort to an adaptive approach, where we go through a learning process and modify our decision rules and our mental models of the real world as we go along. This will enable us to improve system performance by setting dynamic improvement goals (moving targets) for it.Finally, it is demonstrated how causal loop diagrams can be used to find the leverage points of a system.     

Strategic planning and strategic management in Australian organisations

Many planning and organisational aspects of 48 Australian organisations were examined. The empirical information tends to suggest that the process of adopting the strategic management concept is well advanced in some Australian organisations. Irrespective of size and ownership status, some organisations have already adopted strategic planning, and the process of evolution is continuing towards the final stage of strategic management. The increasing environmental volatility and growing international exposure of organisations in Australia and elsewhere in the Asia Pacific region will increase the pressure to implement international management systems, including strategic management.     

Do U.S. macroeconomic surprises influence equity returns? An exploratory analysis of developed economies

Given the dominant role the U.S. economy plays in global trade, we explore how U.S. macroeconomic surprises affect stock markets in ten major developed economies as well as in China and India. We do not find strong enough evidence to conclude that U.S. macro shocks materially and consistently influence equity returns and volatilities in the economies studied. Consistent with previous research, it appears that only in few markets are return levels materially influenced by macro surprises generated in the U.S. Also, only a small number of macro shocks seem to be of any consistent significance. For returns levels, inflation, productivity, consumer confidence, and retail sales seem to matter. At the same time, conditional volatilities appear to be influenced by inflation, retail sales, durable goods, industrial production, consumer confidence, gross domestic product, and trade balance surprises. Finally, our exploratory analysis indicates that the degree of bilateral trade connectedness may partially explain the extent to which macroeconomic surprises are transmitted across countries.     

Does Illegitimate Corporate Behaviour Follow the Forms of Polity? The Turkish Experience

In this study, we argue that illegitimate corporate actions can not only be strategic responses to the conflicting technical and institutional demands at the field level but also manifestations of the contradictory higher‐order institutional logics at the polity level. By focusing on the statist polity, somewhat neglected by the new institutional theory, we argue that the contradictory nationalist and capitalist institutional logics in the statist polity generate illegitimate corporate actions. We also propose that uncertainties and opportunities created by statist polity characteristics such as weak policy‐making capacity, neopatrimonialism, and clientelism lead to illegitimate corporate actions by triggering conflict between nationalism and capitalism. To demonstrate this, we examine the Turkish case, by focusing particularly on a recent example of illegitimate corporate action, namely the pursuit of non‐operating revenues. The case supports our arguments. It implies that illegitimate corporate behaviours may be ‘institutionalized’ as continuously reproduced by the actors embedded in a polity. It also implies that the impression management techniques to legitimate illegitimate behaviours may vary according to the forms of polity. Finally, it suggests that organizations may adopt hybrid missions as a survival strategy in a contradictory and uncertain business environment, paradoxically ultimately restricting their competitive capacities.     

Modeling integrated supply chain logistics in real-time large-scale disaster relief operations

The goal of this research is to develop a comprehensive model that describes the integrated logistics operations in response to natural disasters. We propose a mathematical model that controls the flow of several relief commodities from the sources through the supply chain and until they are delivered to the hands of recipients. The structure of the network is in compliance with FEMA's complex logistics structure. The proposed model not only considers details such as vehicle routing and pick up or delivery schedules; but also considers finding the optimal locations for several layers of temporary facilities as well as considering several capacity constraints for each facility and the transportation system. Such an integrated model provides the opportunity for a centralized operation plan that can eliminate delays and assign the limited resources to the best possible use.A set of numerical experiments is designed to test the proposed formulation and evaluate the properties of the optimization problem. The numerical analysis shows the capabilities of the model to handle the large-scale relief operations with adequate details. However, the problem size and difficulty grows rapidly by extending the length of the operations or when the equity among recipients is considered. In these cases, it is suggested to find fast solution algorithms and heuristic methods in future research.