Preservation or Conversion? Valuation and Evaluation of a Mangrove forest in the Philippines

Mangrove ecosystems are rapidly declining in many parts of the world. This has resulted in the loss of important environmental and economic products and services including forest products, flood mitigation and nursery grounds for fish. The aquaculture industry was the single biggest threat to mangroves in the Philippines until 1981 when conversion of the remaining mangrove stands was prohibited by law. However, the decreasing yield from capture fisheries is putting pressure for the re-examination of this policy. To understand the importance of mangroves, insight is needed into the value of products and services provided is needed. This article compares the costs and benefits of mangrove preservation with those generated by alternative uses such as aquaculture and forestry. Equity and sustainability objectives are taken into account, in addition to economic efficiency and analyzed according to the perspectives of the different types of decision makers involved.     

Perception of What the Ethical Climate is and What it Should be: The Role of Gender, Academic Status, and Ethical Education

This study examined ethical attitudes and perceptions of 691 undergraduate seniors and freshmen in a college of business. Gender was found to be correlated to perceptions of "what the ethical climate should be" with female subjects showing significantly more favorable attitude towards ethical behaviors than males. Further, Seniors had a more cynical view of the current ethical climate than freshmen. Freshmen were significantly more likely than seniors to believe that good business ethics is positively related to successful business outcomes. Ethical education was significantly correlated to both perceptions of "current ethical climate" as well as "what the ethical climate should be". Students who had been exposed to ethical issues in a course were more likely to believe both, that ethical behavior is, and should be, positively associated with successful business outcomes.     

(Noisy) communication

Communication is central to many settings in marketing and economics. A focal attribute of communication is miscommunication. We model this key characteristic as a noise in the messages communicated, so that the sender of a message is uncertain about its perception by the receiver, and then identify the strategic consequences of miscommunication. We study a model where competing senders (of different types) can invest in improving the precision of the informative but noisy message they send to a receiver, and find that there exists a separating equilibrium where senders’ types are completely revealed. Thus, although communication is noisy it delivers perfect results in equilibrium. This result stems from the fact that a sender’s willingness to invest in improving the precision of their messages can itself serve as a signal. Interestingly, the content of the messages is ignored by the receiver in such a signaling equilibrium, but plays a central role by shaping her beliefs off the equilibrium path (and thus, enables separation between the types). This result also illustrates the uniqueness of the signaling model presented here. Unlike other signaling models, the suggested model does not require that the costs and benefits of the senders will be correlated with their types to achieve separation. The model’s results have implications for various marketing communication tools such as advertising and sales forces.

Match your innovation strategy to your innovation ecosystem

High-definition televisions should, by now, be a huge success. Philips, Sony, and Thompson invested billions of dollars to develop TV sets with astonishing picture quality. From a technology perspective, they've succeeded: Console manufacturers have been ready for the mass market since the early 1990s. Yet the category has been an unmitigated failure, not because of deficiencies, but because critical complements such as studio production equipment were not developed or adopted in time. Under-performing complements have left console producers in the position of offering a Ferrari in a world without gasoline or highways--an admirable engineering feat, but not one that creates value for customers. The HDTV story exemplifies the promise and peril of innovation ecosystems--the collaborative arrangements through which firms combine their individual offers into a coherent, customer-facing solution. When they work, innovation ecosystems allow companies to create value that no one firm could have created alone. The benefits of these systems are real. But for many organizations the attempt at ecosystem innovation has been a costly failure. This is because, along with new opportunities, innovation ecosystems also present a new set of risks that can brutally derail a firm's best efforts. Innovation ecosystems are characterized by three fundamental types of risk: initiative risks--the familiar uncertainties of managing a project; interdependence risks--the uncertainties of coordinating with complementary innovators; and integration risks--the uncertainties presented by the adoption process across the value chain. Firms that assess ecosystem risks holistically and systematically will be able to establish more realistic expectations, develop a more refined set of environmental contingencies, and arrive at a more robust innovation strategy. Collectively, these actions will lead to more effective implementation and more profitable innovation.     

Unintended Consequence of Centralized Public School Funding in Michigan Education

As part of the movement to create greater spending equity among school districts, states have centralized funding for public education and instituted funding formulas where high-spending districts are often constrained in their operational expenditures. However, these school districts often maintain local discretion over capital expenditures financed by the sale of bonds. In this study, we find that Michigan's high-spending school districts have a greater probability of issuing bonds after centralizing public school funding, indicating that debt financing of capital expenditures may have become a mechanism to allow these school districts to circumvent the policy's intent for greater spending equity.     

How do investors react under uncertainty?

It has long been accepted that risk plays an important role in determining valuation where risk reflects that investors are unsure of future returns but are able to express their prior expectations by a probability distribution of these returns. Knight (1921) introduced the concept of uncertainty where investors possess incomplete knowledge about this distribution and so are unable to formulate priors over all possible outcomes. One common approach for making uncertainty tractable is to assume that investors faced with uncertainty will base their decisions on the worst case scenario (i.e. follow maxmin expected utility). As a consequence it is postulated that investors will become more pessimistic as uncertainty increases, upgrading bad news and downgrading good news. Using Australian data, we find evidence that investors react to bad news at times of high market uncertainty but largely ignore good news which is consistent with them taking on a pessimistic bias. However, we also find evidence of the reverse when market uncertainty is low with investors taking on an optimistic stance by ignoring bad news but reacting to good news. We also find that the impact that market uncertainty has on the reaction of investors to new information is modified by the prevailing market sentiment at the time of the announcement. Besides throwing light on the question of how uncertainty impacts on investor behaviour, our findings seriously challenge the common assumption made that investors consistently deal with uncertainty by applying maxmin expected utility.     

Price Effects of Dutch Hospital Mergers: An Ex-post Assessment of Hip Surgery

This study analyses price effects of six mergers in the Dutch healthcare industry. We investigate whether the merging hospitals raised their prices for hip surgery after the merger and, if so, how patients react to this higher price. For seven of the twelve hospitals involved, we found a statistically significant price increase for hip surgery, for three hospitals we found a significant price decrease. There is no clear relationship between price changes of hip surgery and changes in travelling behaviour of patients post merger.     

Measuring the Economic Effects of Competition Law Enforcement

Summary  Together with a move from a rules-based legal approach to a more economic approach in competition cases, the economic effects of competition law enforcement have received increasing attention. Measuring these effects is important for external accountability of the Competition Authority, for quality control of its decisions and for evaluating the effectiveness of the competition law. This raises many issues in measurement, including the choice of counterfactual, the choice of effects to be measured, and the proper use of available data. The papers in this Special Issue of De Economist discuss these and related issues, based on a broad range of experience in competition law enforcement.      

Shareholder Wealth Effects of the Private Securities Litigation Reform Act of 1995

This paper investigates the reaction ofstock prices to enactment of the Private Securities LitigationReform Act of 1995 (PSLRA). Based on a sample of 489 high-technologyfirms, we find that the PSLRA was wealth-increasing, on average,and that the market reaction is more positive for firms at greatestrisk of being sued in a securities class action. However, wealso show that the PSLRA was less beneficial for firms likelyto be the subject of a meritorious lawsuit. Collectively, ourevidence implies that shareholders generally benefit from restrictionson private securities litigation, although these benefits aremitigated when other mechanisms for curbing fraudulent activityare inadequate.     

The origins and evolution of scenario techniques in long range business planning

Scenario Planning has been around for more than 30 years and during this period a multitude of techniques and methodologies have developed, resulting in what has been described as a ‘methodological chaos’ which is unlikely to disappear in the near future (A. Martelli, Scenario building and scenario planning: state of the art and prospects of evolution, Futures Research Quarterly Summer (2001)). This is reflected in the fact that literature reveals an abundance of different and at times contradictory definitions, characteristics, principles and methodological ideas about scenarios. It has been suggested that a pressing need for the future of scenarios is amongst other things, to resolve the confusion over ‘the definitions and methods of scenarios’. This paper makes a beginning at this need by tracing the origins and growth of scenarios and the subsequent evolution of the various methodologies; a classification of the methodologies into three main schools of techniques is given and the salient features of these schools are compared and contrasted.