Euro Membership as a Real Option Trigger: An Empirical Study of EU15 Manufacturing Firms

This article summarizes the authors' study of manufacturing firms in the 15 countries that made up the EU prior to its 2004 expansion. The study's main finding is that the introduction of the Euro has made companies based in one of the 12 countries that opted to adopt the Euro more inclined than firms based in one of the three non‐adopters (the U.K., Sweden, and Denmark) to exercise various forms of real options such as establishing alliances or partnerships, entering new markets, switching suppliers, or otherwise expanding within the Euro‐area. The study also shows that smaller, more profitable but financially constrained companies are particularly likely to exercise such real options triggered by the introduction of the Euro.     

Cashing In On Quality? Pay Incentives and the Quality Culture

In this article, the authors explore the relationship between total quality management (TQM) and financial incentives in British manufacturing industry. In particular, they examine the view of some of the most influential quality management ‘gurus’ that there is an incompatibility between incentive pay and TQM. Drawing on survey and case study evidence, they show that TQM is being implemented in the presence of financial incentives. Furthermore, those organisations which had such incentives did not appear to have less success in implementing TQM. On the basis of the evidence presented, the authors conclude that it is not possible to rule out a role for financial incentives in implementing TQM, although incentives are only likely to form one element in a broader implementation strategy.     

THE TERM STRUCTURE OF INTEREST RATES IN DENMARK 1982–89: TESTING THE RATIONAL EXPECTATIONS/CONSTANT LIQUIDITY PREMIUM THEORY

In this paper we examine whether the rational expectations/constant liquidity premium-theory can explain the Danish term structure of interest rates during the 1980s. Three types of tests will be conducted: a single-equation regression test, a volatility-test, and tests based on a cointegrated VAR-model. All these tests remain valid even if interest rates individually follow non-stationary stochastic processes. In contrast to most other empirical studies of the term structure, the evidence generally supports the rational expectations/constant liquidity premium-theory.     

Industrial Restructuring and the State: the Case of MG Rover

MG Rover was the final name by which the British Leyland Motor Corporation (BLMC) became known. BLMC had been formed in 1968 upon a government initiative to strengthen the UK's automotive industry so that it could compete effectively with the American and other European multinationals in international markets. Within six years BLMC teetered on bankruptcy and was all but nationalised. This paper traces the ongoing secular decline of BLMC through its various stages down to the eventual closure of the Longbridge plant in 2005. In particular it will look at key themes such as investment, output, product development and market failure. In particular, there will be examination of the role of the various owners of Rover such as British Aerospace, BMW and the Phoenix Consortium as well as the part played by the UK government in the company's eventual downfall.     

Do ADRs enhance portfolio performance for a domestic portfolio? Evidence from the 1990s

American depository receipts (ADRs) represent an increasingly popular and convenient mechanism for international investing. We analyze ADRs traded throughout the 1990s and find that these securities offer a diversification and portfolio performance benefit when combined with a domestic portfolio (proxied by the S&P 500). While we find that emerging market ADRs are effective instruments for reducing portfolio risk, they do not improve portfolio performance as measured by the Sharpe ratio. Developed market ADRs do improve portfolio performance as measured by the Sharpe ratio. The asset allocation which maximizes the Sharpe ratio is 84 percent domestic stocks, 16 percent developed ADRs, and 0 percent emerging ADRs. Further, due to problems in defining an appropriate market index for ADRs, the Sharpe ratio is viewed to be the preferred performance measure. Other measures such as Jensen’s alpha and the Treynor measure are susceptible to being “gamed” to distort portfolio performance.     

Too old or too young? The impact of perceived age discrimination

This article examines the impact on employee attitudes of perceived age discrimination, drawing on a study of a local authority. Survey respondents report that discrimination on the grounds of being ‘too young’ is at least as common as discrimination on the grounds of being ‘too old’. Findings suggest that perceived age discrimination, whether for being too old or too young, has negative consequences for affective commitment to the organisation. Those who feel that they have been discriminated against because they are considered too old have higher levels of continuance commitment. There is partial support for the hypothesis that older workers who feel that they have been discriminated against have a stronger intention to retire early.     

Multi-dimensional risk and the cost of business cycles

This paper analyzes the welfare costs of business cycles when workers face uninsurable idiosyncratic labor income risk. In accordance with the previous literature, this paper decomposes labor income risk into an aggregate and an idiosyncratic component, but in contrast to the previous literature, this paper allows for multiple sources of idiosyncratic labor income risk. Using the multi-dimensional approach to idiosyncratic risk, this paper provides a general characterization of the welfare cost of business cycles when preferences and the (marginal) process of individual labor income in the economy with business cycles are given. The general analysis shows that the introduction of multiple sources of idiosyncratic risk never decreases the cost of business cycles, and strictly increases it if there are cyclical fluctuations across the different sources of risk. This paper also provides a quantitative analysis based on a version of the model that is calibrated to match US labor market data. The quantitative analysis suggests that realistic variations across two particular dimensions of idiosyncratic labor income risk increase the welfare cost of business cycles by a substantial amount.     

Living on the border: knowledge, risk and transdisciplinarity

Transdisciplinarity has been hailed as a potentially effective means of addressing increasingly complex societal problems, the nature of which cut across the boundaries between orthodox disciplinary knowledges. In this paper we are concerned with an approach to achieving a form of transdisciplinarity which entails making linkages between scholarship and practice, as well as across disciplinary boundaries. Such ‘border-work’, we suggest, provides important options for engaging with a range of practical economic and quality of life related problems. Moreover, it offers new and challenging possibilities for scholarly work and understanding. We discuss some practical and conceptual difficulties associated with discipline-based investigations, and illustrate these difficulties by focusing on risk-related phenomena. Here we argue that much of what is interesting and important about the character of risk tends to be lost by the generalising, decontextualising and reductionist tendencies of discipline-based research. Finally we consider two existing approaches to establishing a practice for border-work. These have both attempted to combine an appreciation of the active character of practical reasoning by human agents with the constraining and affording nature of social and material contexts.