INSTITUTIONS,ECONOMICS AND THE DEVELOPMENT QUEST

Institutions crucial for the analysis of how agents deal with uncertainty have been gaining increasing relevance on the economic research agenda. In this paper, we analyze the institutional literature aiming to explain why this perspective obtains better results than others in development economics. In particular, we stress the relevance of New Institutional Economics as an adequate framework for a broad understanding of development issues.     

Financial dollarization: The role of foreign-owned banks and interest rates

Why in many economies households and firms borrow and make deposits in foreign currency? Expanding on the existing literature, our framework addresses this question allowing for interest rate differentials and access to foreign funds to play a role in explaining this process of asset substitution or financial dollarization. Using a newly compiled data set on transition economies and employing a standard panel as well as a panel-VAR methodology we find that increasing access to foreign funds leads to higher credit dollarization, while it decreases deposit dollarization. Interest rate differentials matter for the dollarization of both loans and deposits.     

A Genetic Algorithm Approach to Farm Investment

A farm portfolio model is specified with two risky enterprises and a risk-free asset which may be held short or long by the farmer. The model is solved numerically using a genetic algorithm. It is shown that the assumption of competitive adaptation leads to a violation of normative efficiency. Those who survive are not the most efficient in a normative sense.     

Countercyclical markups and news-driven business cycles

The standard one-sector real business cycle model is unable to generate expectations-driven fluctuations. The addition of countercyclical markups and modest investment adjustment costs offers an easy fix to this conundrum. The simulated model replicates the regular features of U.S. aggregate fluctuations.     

Internal Embeddedness,Headquarters Involvement,and Innovation Importance in Multinational Enterprises

In this paper we apply a business network perspective to investigate the effects of internal embeddedness and headquarters involvement on subsidiaries' innovation‐related competencies, and on the perceived importance of innovation in multinational enterprises. A model framed in the innovation context is developed and six hypotheses are tested on 85 innovation projects in 23 multinational enterprises using partial least squares based structural equation modelling. The results suggest that, contrary to predictions of the business network perspective, headquarters involvement in the innovation development process improves subsidiary competencies while internal embeddedness does not. Headquarters involvement, driven by subsidiary internal embeddedness, enhances the innovation impact on the subsidiary, which in turn influences innovation importance at corporate level. Thus, the business network perspective is challenged but at the same time expanded in terms of highlighting the role of, and interplay between, different internal corporate actors, particularly the role of headquarters, in developing competencies and creating competitive advantage.     

Headquarters involvement and efficiency of innovation development and transfer in multinationals: A matter of sheer ignorance?

We compare two theoretical perspectives on the knowledge situation of headquarters (HQ) in multinational corporations: the bounded rationality perspective and the sheer ignorance perspective. We claim that these perspectives lead to different expectations when it comes to HQ's role and the effects of HQ involvement in innovation processes at the subsidiary level. More specifically, we examine the impact of HQ involvement on the efficiency of 71 subsidiary innovation projects. The findings show that HQ involvement in innovation development and transfer has a negative rather than a positive impact on efficiency in both processes. We contribute by showing and suggesting that the sheer ignorance perspective might provide a more accurate portrayal of the HQ knowledge situation than the bounded rationality perspective does. This study furthers understanding of the role of HQ in the contemporary, knowledge-creating multinational.     

All That Glitters is Not Gold: Digging Beneath the Surface of Data Mining

This article develops a more comprehensive understanding of data mining by examining the application of this technology in the marketplace. In addition to exploring the technological issues that arise from the use of these applications, we address some of the social concerns that are too often ignored.As more firms shift more of their business activities to the Web, increasingly more information about consumers and potential customers is being captured in Web server logs. Sophisticated analytic and data mining software tools enable firms to use the data contained in these logs to develop and implement a complex relationship management strategy. Although this new trend in marketing strategy is based on the old idea of relating to customers as individuals, customer relationship management actually rests on segmenting consumers into groups based on profiles developed through a firm's data mining activities. Individuals whose profiles suggest that they are likely to provide a high lifetime value to the firm are served content that will vary from that which is served to consumers with less attractive profiles.Social costs may be imposed on society when objectively rational business decisions involving data mining and consumer profiles are made. The ensuing discussion examines the ways in which data mining and the use of consumer profiles may exclude classes of consumers from full participation in the marketplace, and may limit their access to information essential to their full participation as citizens in the public sphere. We suggest more ethically sensitive alternatives to the unfettered use of data mining.     

The evolution of exchange

Stochastic stability is applied to the problem of exchange. We analyze the stochastic stability of two dynamic trading processes in a simple housing market. In both models, traders meet in pairs at random and exchange their houses when trade is mutually beneficial, but occasionally they make mistakes. The models differ in the probability of mistakes. When all mistakes are equally likely, the set of stochastically stable allocations contains the set of efficient allocations. When more serious mistakes are less likely, the stochastically stable states are those allocations, always efficient, with the lowest envy level.     

Enhancing Competitiveness Through Guests’ Experiences: A Typology of Customer Experiences in Upscale Hotels

This study sought to develop a marketing model that can enhance the competitiveness of four- and five-star hotels in Kenya. The main factors generating guests’ expectations and delight were investigated after focusing on managers’ and customers’ opinions since these perspectives have generally been underexplored. The voices and viewpoints of these stakeholders were therefore incorporated and analyzed in determining an appropriate marketing model, which was based on the experiences of guests in hotels after examining what they considered important.     

The political economy of immigration quotas

It is argued, using a single-sector general equilibrium model, that the economic interests of citizens of a host country in relation to immigration depend on their factor ownership. Using the median voter model, it is argued that whether a country admits further immigration depends on the country's factor ownership distributions, the generosity of its transfer programs, as well as on the prejudices about immigrants that its citizens hold.on leave from Moorhead State University.