GOVERNMENT SPENDING IN DEVELOPING COUNTRIES: Trends, Causes, and Consequences

Throughout the twentieth century governments have been spendingever larger proportions of national income. Three issues arisein discussions about the growth of such spending as it pertainsto developing countries: How does it compare with expenditurein industrial nations? What explains the growth in spendingby developing country governments? And what are the effectson economic growth? Government expenditure as a share of GDPin low- and middle-income countries, on average, is lower thancomparable shares in industrial market economies and, with fewexceptions, is growing. Many factors, including ideology, demographics,a positive income elasticity for public goods, the rising costof public goods relative to private goods, and perhaps developmenttheory and practice, explain this growth. As for the relationshipbetween government expenditure and economic growth, the empiricalevidence does not reveal any strong correlation. The size ofgovernment may engender strong ideological debate, but the positionthat the aggregate level of government expenditure is a significantdeterminant of growth rates receives little support.      

Building deals on bedrock

The headlines are filled with the sorry tales of companies like Vivendi and AOL Time Warner that tried to use mergers and acquisitions to grow big fast or transform fundamentally weak business models. But, drawing on extensive data and experience, the authors conclude that major deals make sense in only two circumstances: when they reinforce a company's existing basis of competition or when they help a company make the shift, as the industry's competitive base changes. In most stable industries, the authors contend, only one basis--superior cost position, brand power, consumer loyalty, real-asset advantage, or government protection--leads to industry leadership, and companies should do only those deals that bolster a strategy to capitalize on that competitive base. That's what Kellogg did when it acquired Keebler. Rather than bow to price pressures from lesser players, Kellogg sought to strengthen its existing basis of competition--its brand--through Keebler's innovative distribution system. A company coping with a changing industry should embark on a series of acquisitions (most likely coupled with divestitures) aimed at moving the firm to the new competitive basis. That's what Comcast did when changes in government regulations fundamentally altered the broadcast industry. In such cases, speed is essential, the investments required are huge, and half-measures can be worse than nothing at all. Still, the research shows, successful acquirers are not those that try to swallow a single, large, supposedly transformative deal but those that go to the M&A table often and take small bites. Deals can fuel growth--as long as they're anchored in the fundamental way money is made in your industry. Fail to understand that and no amount of integration planning will keep you and your shareholders from bearing the high cost of your mistakes.     

Can absence make a team grow stronger?

Some projects have such diverse requirements that they need a variety of specialists to work on them. But often the best-qualified specialists are scattered around the globe, perhaps at several companies. Remarkably, an extensive benchmarking study reveals, it isn't necessary to bring team members together to get their best work. In fact, they can be even more productive if they stay separated and do all their collaborating virtually. The scores of successful virtual teams the authors examined didn't have many of the psychological and practical obstacles that plagued their more traditional, face-to-face counterparts. Team members felt freer to contribute--especially outside their established areas of expertise. The fact that such groups could not assemble easily actually made their projects go faster, as people did not wait for meetings to make decisions, and individuals, in the comfort of their own offices, had full access to their files and the complementary knowledge of their local colleagues. Reaping those advantages, though, demanded shrewd management of a virtual team's work processes and social dynamics. Rather than depend on videoconferencing or e-mail, which could be unwieldy or exclusionary, successful virtual teams made extensive use of sophisticated online team rooms, where everyone could easily see the state of the work in progress, talk about the work in ongoing threaded discussions, and be reminded of decisions, rationales, and commitments. Differences were most effectively hashed out in tele-conferences, which team leaders also used to foster group identity and solidarity. When carefully managed in this way, the clash of perspectives led not to acrimony but, rather, to fundamental solutions, turning distance and diversity into competitive advantage.     

Behavioral health benefits: key to a healthy workforce

Mental disorders exact a heavier toll on workplace productivity than do physical illnesses, but a complete behavioral health program is often looked upon as just one more driver of rate increases. Properly understood, promoted and utilized, however, behavioral health benefits can contribute to decreased absenteeism and increased productivity, and even help offset the treatment costs of medical disorders.     

Attribute differences between U.S. GAAP and IFRS earnings: An exploratory study

In this study we explore attribute differences between U.S. GAAP and IFRS earnings. Our study is motivated by the ongoing harmonization process in accounting standard setting as well as by recent convergence projects by the FASB and the IASB. We test two market-based earnings attributes, i.e., value relevance and timeliness, as well as two accounting-based earnings attributes, i.e., predictability and accrual quality. These attributes are tested for German New Market firms as they are allowed to choose between IFRS and U.S. GAAP for financial reporting purposes. Overall, we find that U.S. GAAP and IFRS only differ with regard to predictive ability. The fact that U.S. GAAP accounting information outperforms IFRS also holds after controlling for differences in firm characteristics, such as size, leverage and the audit firm. However, our results also seem to suggest that these differences are not fully valued by investors, as we do not observe significant and consistent differences for the value-relevance attribute.     

The role of organisational concern for workplace fairness in the choice of a performance measurement system

Prior studies linking performance management systems (PMS) and organisational justice have examined how PMS influence procedural fairness. Our investigation differs from these studies. First, it examines fairness as an antecedent (instead of as a consequence) of the choice of PMS. Second, instead of conceptualising organisational fairness as procedural fairness, it relies on the impression management interpretation of organisational fairness. Hence, the study investigates how the need of senior managers to cultivate an impression of being fair is related to the choice of PMS systems and employee outcomes. Based on a sample of 276 employees, the results indicate that the need of senior management to cultivate an impression of being fair is associated with employee performance. They also indicate that a substantial component of these effects is indirect through the choice of comprehensive performance measures (CPM) and employee job satisfaction. These findings highlight the importance of organisational concern for workplace fairness as an antecedent of choice of CPM. From a theoretical perspective, the adoption of the impression management interpretation of organisational fairness contributes by providing new insights into the relationship between fairness and choice of PMS from a perspective that is different from those used in prior management accounting research.     

Becoming A Leader In A Complex Organization

For a new leader, the process of entering and establishing a position of leadership in a complex organization presents a major challenge. This challenge seems particularly acute when authority, goals and technology are ambiguous, as in many professional service organizations. In this paper, we integrate ideas from the literature on socialization and role theory as well as that on executive succession processes to view new leader integration as a mutual adjustment process between two trajectories – that of the organization and that of the new leader. It is argued that this may lead to four possible types of integration outcomes: assimilation, transformation, accommodation and parallelism. Drawing on a case study of a large hospital, the paper identifies several mechanisms that can be mobilized by the new leader to enhance his or her room for manœuvre as the integration process evolves. The mechanisms can be classified as collaborative or affirmative, with each type having different risks and advantages. The case analysis further reveals that leader integration processes may be differentiated between different activity domains, dynamic over time (as the use of one type of integration approach alters the potential for another later), and interactive across different activity domains (as events in one part of the organization have consequences for those occurring in another).