NHS ancillary services and competitive tendering

Competitive tendering for NHS ancillary services has significantly increased the role of market factors in influencing locally-determined employment conditions. It has also provided an opportunity for increased managerial control. The employment and industrial relations consequences of these changes are considered in the context of two case studies.     

Reviews

'LONDON INDUSTRIAL STRATEGY'

Greater London Council, London Industrial Strategy. London: GLC, 1985. £5.00 paper. (Now available from Economic Policy Group, Middlesex House, 20 Vauxhall Bridge Road, London, SW1.)

'FUTURE WORK'

James Robertson: Future Work Aldershot, Hants; Gower Publishing Co Ltd, 1985. £15.00 hardback, £6.95 paperback.

'SMALL FIRMS IN REGIONAL ECONOMIC DEVELOPMENT'

STOREY, D. J. (ed): Small Firms in Regional Economic Development-Britain, Ireland and the United States. Cambridge University Press, 1985. Cloth, £22.50.

'POLITICS AND METHOD'

Massey, D. and Meegan, R. (eds): Politics and Method: Contrasting Studies in Industrial Geography. London. Methuen, 1985. £6.95 paperback.     

Chaos and Economics

Is the economy chaotic? Dr Mike Ball of the University of Liverpool, applies the new mathematics of chaos to the economy. He concludes that the connection between cause and effect in the economy is far from certain.     

Protective governance choices and the value of acquisition activity

Protective governance structure is often viewed as costly to minority shareholders who bear the costs of opportunism by entrenched managers. A less common view is that protective governance encourages value-enhancing initiative, allowing risk-averse managers to pursue projects they would otherwise forgo. To assess these views we examine the acquisition decisions of S&P 500 firms between 1994 and 2005 and document two entrenching dimensions of governance: founding family presence and larger boards with more inside directors. We find that family firms destroy value when they acquire, consistent with an agency cost explanation for acquisitions. In contrast, firms with large boards and more insiders are more likely to acquire and to create value when they do acquire. These results are consistent with benefits to managerial initiative when managers are insulated from discipline. Finally, we find no systematic evidence that shareholder right limiting provisions either facilitate managerial entrenchment or lead to wealth losses through acquisition activity.     

The ethical challenge of management buy-outs as a form of privatisation in Central and Eastern Europe

There has been a growing debate about the ethics of management buy-outs (MBOs). One possible criticism of the MBO is that it serves the interests of incumbent management at the expense of shareholders. In this paper we develop the general arguments concerning the ethical aspects of the MBO to include other forms of buy-out beyond “going privates” and apply the analysis to MBOs as a mode of privatisation in Central and Eastern Europe (CEE). MBOs are justified in this context postperestroika as a means of incentivising economic activity by giving managers an ownership stake in former state enterprises. The actual mode of privatisation, though, raises issues of social justice and the criticism that MBOs are at the expense of the broader social good. The ethical problem for the CEE is to balance the economic gains of a move to markets with the ethical risks to the agents of these markets.     

The Cost of Equity Capital at the Corporate and Investor Levels Allowing a Rational Expectations Model with Personal Taxations

This paper argues that the conventional definition of the cost of equity at the corporate level is likely to be fundamentally flawed under conditions of personal taxation. A 'dimensionally consistent' definition is developed utilising the pioneering contributions of Auerbach and Elton and Gruber. Consequent benefits are straight-forward expressions for the cost of equity capital at the corporate level (for both retained earnings and new equity) as well as at the investor level (post personal tax) in terms of both the dividend discount and CAPM-type models, which are applicable to classical and imputation tax systems. A fundamental framework is thereby provided which succeeds in illuminating investor pesonal tax liabilities as they might be expected to impact on a firm's investment and related dividend policies.     

Product and process innovation in biopharmaceuticals: a new perspective on development

Developing new products and processes is increasingly a focal point of competition and often requires the development and successful implementation of novel process technologies. The process development and production of a new biological entity are significantly more complex than those for small molecule drugs. Conventional new product development models in the literature on firm level innovation fail to explain the nature of development projects for biopharmaceuticals. This paper makes the case that a new perspective is required to understand the management of product and process development in biopharmaceuticals. An explanatory model is proposed for this purpose.     

Strikes and deindustrialization in the European Community: 1970–86

Strike activity within the European Community was markedly lower in the 1980s compared with the levels experienced in the 1970s. Over the same period, deindustrialization proceeded apace. The findings of this article suggest that up to 20% of the reduction in work stoppages may simply have been due to the shrinkage of the manufacturing sector. Moreover, a concurrent finding is that strike-proneness within the expanding service industries did not fall in line with that of other areas of activity. These results suggest the need for a careful reappraisal of the meaningfulness of conventional macroeconomic strike models.