Executive Pay and Performance: The Empirical Importance of the Participation Constraint

The low elasticity of top executive pay to performance in recent empirical work presents a puzzle since it is clear from the data that in practice both pay and performance measures have moved closely in line in recent years. This paper demonstrates that cross-section and time-series estimates of the pay performance elasticity differ significantly unless the effect of average executive pay is included. It is argued that this can be seen as the effect of the participation constraint in a principal agent model, more commonly known as "the going rate". The going rate must be paid to executives to deter them from taking up their outside option, which is the opportunity to leave the current firm and sign an incentive contract with another firm. Thus the outside option will depend on performance by other firms. Since performance is correlated between firms, this generates a larger time-series pay performance elasticity as perceived by the executive. The paper also considers the possibility that the going

rate may induce incentive effects. The predictions of this argument are tested on a panel of data for large UK companies     

Scenario planning interventions in organizations: An analysis of the causes of success and failure

This paper presents a case analysis of a successful scenario intervention in an organization. This intervention is compared and contrasted with an unsuccessful one reported in Hodgkinson and Wright [Confronting strategic inertia in a top management team: learning from failure, Organization Studies 23 (2002)949-977]. We demonstrate that analysis of the answers given by workshop participants in a pre-intervention interview can be helpful in determining the receptiveness of an organization to a subsequent scenario intervention. We theorize that strategic inertia-characterized by coping patterns of bolstering failing strategy, procrastination (over a strategic dilemma) and buck-passing (the responsibility for the dilemma's resolution), can be caused by the psychological attenuation of the perceived level of environmental threat to the organization, culminating in unconflicted adherence to the currently followed strategy. We contend that the expression of such coping behaviour is antithetical to a subsequent successful scenario exercise since, if the exercise fails to identify an unconflicted strategic alternative, the sharp focus of the scenarios on futures unfavourable to business-as-usual strategy will re-activate the cognitive stress-reduction mechanisms. Strategic inertia will thus be reinforced. We conclude with a review of the implications of our diagnosis for reflective practitioners.Our paper is divided into four sections. In Section 1, we overview writings on inertia in strategic decision making. We pay especial attention to identifying potential causes of inertia. Next, we present Janis and Mann's [Decision Making, Free Press, New York, 1979] views of the psychological processes invoked by conflicted decisions and analyse the relevance of this laboratory-based theory to provide a psychological explanation of strategic inertia. Finally, we briefly describe the scenario intervention process and argue that it contains the potential to overcome strategic inertia. In Section 2, we review an already-published study of an unsuccessful scenario planning intervention, which illustrates the operation of components of Janis and Mann's model. Next, in Section 3, we focus on our own case investigation of a successful scenario planning intervention. The early part of this section documents the “success”, whilst the latter part analyses the causes of the success—again using the components of Janis and Mann's model. We conclude in Section 4, where we compare and contrast the application of Janis and Mann's model to both cases and we demonstrate that application of the model to pre-intervention interview data can aid the practitioner determine, at the outset, whether or not the organizational context will be receptive to the intervention.     

Influence of problem-based learning strategy on enhancing student’s industrial oriented competences learned: an action research on learning weblog analysis

In order to respond to the ever-changing global economic environment, the technological and vocational education system in Taiwan needs to be dramatically reformed to the changing needs of the domestic industrial structure. Integrating practical talents with practical industrial experiences and competences can help avoid discrepancy and close the gap between vocational education and the practical demands of industries. Thus, to achieve the goals of technological and vocational education, it is necessary to incorporate instruction that meets the demands of the industrial-oriented manpower in Taiwan. In this study, the well-known problem-based learning (PBL) approach, utilized commonly in the educational area of medicine and business management, was integrated with the qualitative method of action research to explore how such a learning strategy could influence college students’ learning outcomes regarding industrial-oriented competences. The research results were induced from the empirical data collected via participatory classroom observations, and analyses of teachers’ instructional journals and semi-structural interviews. A survey with quasi-experimental design of the control group pretest and posttest was conducted by using an industrial-oriented competences scale to explore the influences of PBL on students’ learning outcomes of industrial-oriented competences. The findings are expected to shed light on the teaching and learning strategy of college students’ industrial-oriented competences and contribute to theoretical implications and future educational and industrial development of Taiwan.     

Modeling Time-Varying Correlations in Volatility Between BRICS and Commodity Markets

This article investigates the asymmetric and long memory volatility properties and dynamic conditional correlations (DCCs) between Brazilian, Russian, Indian, Chinese, and South African (BRICS) stock markets and commodity (gold and oil) futures markets, using the trivariate DCC-fractionally integrated asymmetric power autoregressive conditional heteroskedasticity (FIAPARCH) model. We identify significant asymmetric and long memory volatility properties and DCCs for pairs of BRICS stock and commodity markets, and variability in DCCs and Markov Switching regimes during economic and financial crises. Finally, we analyze optimal portfolio weights and time-varying hedge ratios, demonstrating the importance of overweighting optimal portfolios between BRICS stock and commodity assets.     

Technology Foresight for Wiring Up the National Innovation System: Experiences in Britain, Australia, and New Zealand

Since 1990, technology foresight has spread rapidly. We begin by analyzing the reasons for this before examining the specific political background to technology foresight in the United Kingdom, Australia, and New Zealand. The article analyzes and compares the approaches to foresight in these countries, identifying the strengths and weaknesses of each approach. We then propose a new rationale for technology foresight, which centers on its role in “wiring up” and thereby strengthening the national innovation system, before arriving at a number of conclusions.     

Phenomena and Epiphenomena in Economics

Evidence-based medicine (EBM) has meteorically emerged to dominate contemporary medical methods and practicess. Its proponents argue that it offers a “new paradigm ” for medicine through the prospects of generating “gold standards” of care and democratizing provision by generating more reliable evidence and information. As such, EBM has the theoretical and ontological potentials to act as a catalyst of institutional change. Institutional economics has been sluggish in investigating whether such claims are warranted. This paper, by presenting a theoretical and abstract conceptual analysis, contests that there are sufficient grounds for considering that EBM is capable of promoting the dominance of a particular epistemological orientation in the framing of medical procedures through its invocation of instrumentalism, de-contextualization and reductionism in evidential sources. Thus, far from being the value-neutral, objective scientific evidential “gold standard” and democratic pathways its advocates claim, EBM presents the promise of a more utilitarian foundation for health care.