Partial ownership and cross-border mergers

Partial ownership can be used as a screening device by a foreign firm which wants to merge with a local firm whose productivity is private information. As partial ownership is confined to sharing future merger profits, it cannot achieve complete separation in all cases but improves expected merger gains also in an equilibrium which is not fully separating. Without partial ownership, the foreign firm potentially discriminates against high productivities. In a pooling equilibrium with partial ownership, however, it will potentially discriminate against intermediate productivities.     

Forecasting Inflation Using Constant Gain Least Squares

This paper assesses the usefulness of constant gain least squares when forecasting inflation. An out‐of‐sample forecast exercise is conducted, in which univariate autoregressive models for inflation in Australia, Sweden, the United Kingdom and the United States are used. The results suggest that it is possible to improve the forecast accuracy by employing constant gain least squares instead of ordinary least squares. In particular, when using a gain of 0.05, constant gain least squares generally outperforms the corresponding autoregressive model estimated with ordinary least squares. In fact, at longer forecast horizons, the root mean square forecast error is reliably lowered for all four countries and for all lag lengths considered in the study.     

Environmental Innovations and Firm Profitability: Unmasking the Porter Hypothesis

We examine impacts of different types of environmental innovations on firm profits. Following Porter’s (Sci Am 264(4):168, 1991) hypothesis that environmental regulation can improve firms’ competitiveness, we distinguish between regulation-induced and voluntary environmental innovations. We find that innovations which do not improve firms’ resource efficiency do not provide positive returns to profitability. However, innovations that increase a firm’s resource efficiency in terms of material or energy consumption per unit of output have a positive impact on profitability. This positive result holds for both regulation-induced and voluntary innovations, although the effect is greater for regulation-driven innovation. We conclude that the Porter hypothesis does not hold in general for its “strong” version, but depends on the type of environmental innovation. Our findings rest on firm-level data from the German part of the Community Innovation Survey 2008 (CIS 2008).     

Fracking in Deutschland — eine Option für die Zukunft!

Extraction of shale gas in Germany (fracking) is better left as an option for the future. Today, owners of deposits in many other countries have uncertain property rights and extract too quickly. German deposits may appreciate in value if left in the ground. They also better contribute to national energy security there than if extracted and depleted. Waiting also allows Germany to learn from the mistakes of others and to take this new information and the improvements in extraction technology into account when deciding about extraction in the future. Such decisions should not be left to the resource extraction industries. Their objectives are likely to differ from the objective of maximising the rent from the nation’s shale gas.     

Neuordnung der Besteuerungskompetenzen bei der Einkommensteuer

The controversies over the reform of the German intergovernmental fiscal equalisation system generally concern the equalisation formula at the last step of the tax-sharing system. In order to achieve a financial architecture that truly corresponds with the tasks of the federal government, the states and the municipalities, the tax-sharing schedules also need to be reconsidered. To share the personal income tax according to proportional tax rates for the states and municipalities and to leave the progressive tax rates to the federal level would not only deliver horizontally more equal tax revenues for the sub-federal tiers of government but also increase the vertical flexibility of tax distribution if the federal and state governments then had the right to change “their” tax rates without the approval of the Bundesrat or Bundestag.     

Understanding Society: minimising selection biases in data collection using mobile apps

Understanding Society, the UK Household Longitudinal Study has a programme of research and development that underpins innovations in data collection methods. One of our current focuses is on using mobile applications to collect additional data that supplement data collected in annual interviews. To date, we have used mobile apps to collect data on consumer expenditure, well-being, anthropometrics and cognition. In this paper, we review the potential barriers to data collection using mobile apps and experimental evidence collected with the Understanding Society Innovation Panel, on what can be done to reduce these barriers.     

Internal rent seeking,works councils,and optimal establishment size

Using a microeconomic model and data from the Establishment Panel of the German Institute for Employment Research, we analyze the optimal establishment size against the background of rent-seeking workers and the influence of works councils. The theoretical part shows that establishment size has not only a discouragement effect on the level of individual rent seeking but also a quantity effect as the number of rent seekers increases. The interplay of both effects – together with technological considerations – determines whether the employer chooses an inefficiently small or large establishment size. Introduction of a works council restores efficient establishment size although it is purely used as rent-seeking device. Whether the employer benefits from a works council or not depends on the degree of contract incompleteness and the degree of worker coordination via a works council. The empirical part indicates dominance of the discouragement effect over the quantity effect in establishments without works council. As theoretically predicted, works councils are beneficial by disentangling rent-seeking and production issues, thus eliminating the influence of the two rent-seeking effects.     

A framework of successful organizational practices in Western multinational companies operating in Russia

Russian organizations have undergone significant changes since the 1990s. A new generation of Russian managers has come to the fore in Russia, who are eager to learn and open to Western knowledge. In turn, Western multinationals have also learned the fundamentals of doing business in Russia. How these developments are reflected in today's operations of Western multinationals in Russia remains – albeit with a few exceptions – largely unexplored in the academic literature. To address this gap, this paper explores what are the organizational practices and how do Western multinationals utilize them when striving to succeed in today's Russia. Based on two explorative case studies and 64 personal interviews with top and line managers it identifies four organizational practices, such as management training, corporate culture management, intercultural and linguistic training, and HRM practices, and two internalization mechanisms, such as boundary spanning, and reliance on local competence. The analysis elucidates important changes that have occurred in Western-Russian business relations and underscores important practical implications.