Emotion As Well As Reason: Getting Students Beyond "Interpersonal Accountability"

The paper notes the recent spread of business ethics courses in American higher education, observing that teachers trained in economics have not readily incorporated ethical notions or theory into regular courses, such as finance, management, accounting, and marketing. The presumed ethically neutral, value-free approach of economists, who dominate business courses, is increasingly inadequate to meet the needs of business managers – or of business students. Technological and political changes, creating an interdependent environment within which managers operate, have eroded older ethics based on tradition and common backgrounds. They have also raised ethical issues of new orders of complexity. With corporate business managers finding ethical concerns more pressing matters than do many teachers, the paper offers some tentative answers to three questions about how to interest business students in ethical issues: What Approach to Business Ethics Gets student's Attention? What Is the Value of Simulations and Games? What Can Be Said About the Business System And Its Values? The answer to the first question is simulations and games. Case method analysis is serviceable, engaging students' intellect, but all too often without emotional involvement or self-revelation. Experiential learning through class-room games accomplish both engagement and involvement in ways that are exceedingly helpful to business students, who have had "less occasion for critical reflection on self and world than have others of their age." The answer to the second question is: They engage the whole student, stimulating the player to examine the source of her ethical strengths and the reasons for ethical lapses. Generating emotional involvement the games leverage and enhance reasoning, allowing students to learn more about their own values and question their own behavior. The answer to the third question is: A socially justifiable (community-legitimated) competitive market system requires of its managerial participants an emotionally informed response – as well as a rational analysis and use of business techniques. Business operates with enhanced effectiveness efficiency at appropriate levels of such virtues as loyalty, trustworthiness and cooperativeness; they ensure externality benefits as well as promote justice for its own ultimate social justification.     

Dynamic hedging of paper with T bill futures

Despite the growing importance of the commercial paper market there is no empirical work investigating the hedging performance of dynamic hedging strategies versus traditional static hedging strategies. This article proposes a dynamic hedging model for commercial paper that takes advantage of time dependencies present in the joint density of commercial paper and T-bill futures. The hedging effectiveness of the dynamic model is compared to that of the static regression model. There is clear evidence that dynamic hedging is superior to static hedging in terms of both total variance reduction and expected utility maximization. These results hold even when transactions costs are explicitly taken into account. © 1998 John Wiley & Sons, Inc. Jrl Fut Mark 18:925–938, 1998     

The development of critical capabilities in foreign subsidiaries: disentangling the role of the subsidiary’s business network

Within business literature in general, capabilities have advanced to the prime determinant of the corporation’s economic rents. Within international business literature, it is further assumed that multinational corporations can enhance their pool of capabilities through foreign subsidiaries. Foreign subsidiaries are seen as means to assimilate new capabilities from their local, external network and integrate these capabilities into the multinational corporation. Data from more than 2000 foreign subsidiaries shows that some foreign units actually are endowed with superior capabilities which are useful for other corporate entities. It is argued that the development of critical capabilities within these subsidiaries is driven not only by internal corporate actors, but also by external actors. The analysis provides evidence that the role of different internal and external network partners for capability development varies according to the functional activity under consideration. Thus, subsidiaries benefit from various internal and external network actors in very different ways. The contribution ends with some conclusions and some avenues for future research.     

The social value of income information in a model with market power and endogenous variety

The present paper analyzes the value of public information in a general equilibrium economy with imperfect competition. The welfare effects of an improved information system for perfectly competitive economies have been extensively investigated in the published literature. Schlee (2001) shows that the value of information is always negative in exchange economies if an efficient risk sharing mechanism exists. In contrast, in economies with production, better information reduces welfare provided consumers are sufficiently risk-averse ( Eckwert and Zilcha 2000, 2003 ). In the present paper it will be shown that this result is robust if the production sector exhibits monopolistic competition in the Chamberlinian sense. Even so, the inefficiency of equilibria adds further potential for positive welfare effects of improved information. A model is presented where the degree of market imperfection is positively linked to the value of information. If the markup on competitive prices is sufficiently high, the value of information is positive; that is, better information increases economic welfare.     

Product variety, competition and economic growth

In this paper, we study the relationship between competition and economic growth using a model of economic development through the creation of new sectors. In our model, competition has both an intra- and an inter-sector component. We find that the best conditions for economic development are achieved when a suitable ratio of inter- to intra-sector competition is achieved. This ratio constitutes a compromise between providing a temporary monopoly to the first entrepreneur (low inter-sector competition) and creating enough imitation to expand the sector (intra-sector competition).     

A Theory of Menu Federalism: Decentralization by Political Agreement

This paper analyzes agreements between governments that determine the division of policy-making power between central and regional governments. Our analysis demonstrates that initial circumstances and political risks affect the degree of centralization that will be adopted, and that asymmetric forms of federalism are often consequences of ongoing negotiations between regional and central governments over the assignment of policy-making authority. We analyze three settings where gains from constitutional exchange may exist: (i) the under-centralized state, (ii) the over-centralized state, and (iii) the constitutional convention. In each case, an asymmetric form of federalism is the predicted outcome, although the degree of asymmetry differs according to starting point. Modern and historical examples are used to illustrate the relevance of our analysis.     

The use of ex-ante modelling tools in European Impact Assessment: What role does land use play?

Impact Assessment was introduced by the European Commission in 2002 in order to make policy development more transparent and improve the ‘quality’ of European policies. Cross-sectoral consultation, broad participation and the quantitative assessment of the impacts of policies are significant elements of this process. This article specifically addresses the role of tools modelling the impact of policies on land use in Impact Assessment. The choice of a specific modelling tool is conceptualised as an action situation interlinked with other action arenas. The article aims to uncover the institutions structuring the action situation. The outcome of the empirical work suggests that two types of Impact Assessments can be distinguished. Impact Assessments either substantively contribute to the specific policy that the Commission proposes or they legitimise policy choices ex post that have already been adopted. The legislative procedure that applies to a specific policy sector, the policy making culture in the DG and the stakes that are at issue seem to influence whether Impact Assessments contribute to policy development, or legitimise it. Furthermore, the article describes the situation in which desk officers choose a modelling tool throughout Impact Assessment. To advance their careers desk officers aim to produce policy proposals which respond to the issues raised by the actors involved in Impact Assessment and specifically in policy development and, later on, adoption. Therefore, desk officers’ preferences are shaped by the community that is involved in policy development and Impact Assessment. The article describes what role modelling tools play in European Impact Assessment procedures and it names the heuristic of criteria which desk officers use to choose a modelling tool. Besides several technical and data problems of modelling land use impact, it seems to be unlikely that land use will become a significant dimension of Impact Assessment and modelling as it is confronted with an unfavourable institutional environment at the European level.     

Smart Meter-Angebote: Eine empirische Untersuchung von Kundenpräferenzen

The implementation of smart meters in German households by 2032 is a major step in the transition towards an intelligent and connected energy system. Despite of federal legislation providing a structured plan for the nationwide smart meter rollout including basic product requirements, actors within the energy market have the opportunity to take an active part in shaping the market through appealing product offers and hence to create competitive advantage. This study identifies relevant features of smart meters from literature und business practice, and measures customer’s preferences for these features. Results indicate predominantly positive customer evaluations of smart meter features, amongst which the availability of consumption data, the installation price and rental charges as well as time variable tariffs contribute most to overall utility of smart meters. Finally, findings suggest targeting customers by defining strategies to address privacy concerns, to educate about saving potentials as well as to create differentiated pricing schemes.     

Climate Change and Asset Prices: Are Corporate Carbon Disclosure and Performance Priced Appropriately?

This paper empirically assesses the relevance of information on corporate climate change disclosure and performance to asset prices, and discusses whether this information is priced appropriately. Findings indicate that corporate disclosures of quantitative greenhouse gas (GHG) emissions and, to a lesser extent, carbon performance are value relevant. We use hand‐collected information on quantitative GHG emissions for 433 European companies and build portfolios based on GHG disclosure and performance. We regress portfolios on a standard four factor model extended for industry effects over the years 2005 to 2009. Results show that investors achieved abnormal risk‐adjusted returns of up to 13.05% annually by exploiting inefficiently priced positive effects of (complete) GHG emissions disclosure and good corporate climate change performance in terms of GHG efficiency. Results imply that, firstly, information costs involved in carbon disclosure and management do not present a burden on corporate financial resources. Secondly, investors should not neglect carbon disclosure and performance when making investment decisions. Thirdly, during the period analysed, financial markets were inefficient in pricing publicly available information on carbon disclosure and performance. Mandatory and standardised information on carbon performance would consequently not only increase market efficiency but result in better allocation of capital within the real economy.