On the ambiguous economic freedom–inequality relationship

Previous research on the relationship between economic freedom and income inequality has produced mixed results. We provide a short survey of this literature, identifying potential causes for this empirical heterogeneity. Next, we replicate the results from two significant studies using six alternative measures of income inequality for an updated dataset of up to 112 countries over the period 1970–2010. Notably, we use the latest release of the Standardized World Income Inequality Dataset, which allows us to account for the uncertainty of the estimated Gini coefficients. We find that the results of previous studies are sensitive to the choice of country sample, time period and/or inequality measure used. We conclude with suggestions for future research in the area.     

The Intellectual Structure of Product Innovation Research: A Bibliometric Study of the Journal of Product Innovation Management, 1984–2004

Product innovation research has matured substantially in the last two decades. A great deal of knowledge has been produced on various aspects of the discipline, so it is of interest to assess the state of the art the scientific community has reached in this discipline and the route it has taken. This perspective is investigated through a bibliometric study of the Journal of Product Innovation Management (JPIM), arguably the most important specialized journal on this topic. The work reviews all journal paper contributions in JPIM from 1984 to 2004 in determined time frames, assesses the citations contained in these papers, identifies how the citations are related to the various topics of production innovation research (topic‐related citation variety, topic‐related citation consistency, variation in topic‐related citation pattern), and offers a retrospective examination of the evolution of the field. The overall analysis of citations shows that most papers in JPIM cite at least one of the top 50 works identified by this study. This testifies to the strong impact of the most influential works on the intellectual structure of product innovation research. The observed citation pattern suggests that the top 50 papers gained influence in product innovation research either because they represent a relevant contribution on a fundamental topic that already has been authoritatively studied or because they investigate in a relevant manner a new topic. The paper suggests that JPIM might benefit in its aim to consolidate its position as one of the top academic business journals if published papers increasingly drew on the most influential works to inform their research design and explicitly stated the theoretical underpinnings they draw on in their research design. Overall, the analysis of the subperiods (1984–1988, 1989–1993, 1994–1998, and 1999–2004) provides evidence for the maturation of new product innovation research. Books covering a wide range of topics are replaced by journal papers addressing a specific topic; over time, specific topics emerge and become influential for the discipline's intellectual structure; papers published in JPIM augment their methodological rigor and increasingly address contingency factors. The paper also notes that obtaining relevance for JPIM authors constitutes a necessary condition for being considered by management researchers at large as an influential contribution to product innovation research.     

The risky business of hiring stars

With the battle for the best and brightest people heating up again, you're most likely out there looking for first-rate talent in the ranks of your competitors. Chances are, you're sold on the idea of recruiting from outside your organization, since developing people within the firm takes time and money. But the authors, who have tracked the careers of high-flying CEOs, researchers, software developers, and leading professionals, argue that top performers quickly fade after leaving one company for another. To study this phenomenon in greater detail, the authors analyzed the ups and downs of more than 1,000 star stock analysts, a well-defined group for which there are abundant data. The results were striking. After a star moves, not only does her performance plunge, but so does the effectiveness of the group she joins--and the market value of her new company. Moreover, transplanted stars don't stay with their new organizations for long, despite the astronomical salaries firms pay to lure them from rivals. Most companies that hire stars overlook the fact that an executive's performance is not entirely transferable because his personal competencies inevitably include company-specific skills. When the star leaves the old company for the new, he cannot take with him many of the resources that contributed to his achievements. As a result, he is unable to repeat his performance in another company--at least not until he learns to work the new system, which could take years. The authors conclude that companies cannot gain a competitive advantage or successfully grow by hiring stars from outside. Instead, they should focus on cultivating talent from within and do everything possible to retain the stars they create. Firms shouldn't fight the star wars, because winning could be the worst thing that happens to them.     

Market Orientation in the Transition Economies of Central Europe:: Tests of the Narver and Slater Market Orientation Scales

The Narver and Slater (Narver, J.C., and Slater, S.F.: The Effect of Marketing Orientation on Business Profitability. Journal of Marketing 54 (1990): 20–35.) market orientation scale is tested in the context of the transition economies of central Europe and found to be both valid and reliable. Relationships between market orientation and both marketing strategy and performance broadly follow predictions from the Western literature indicating that the adoption of a market orientation is equally applicable in transition as in Western economies. A number of different approaches, however, are evident in the transition economies suggesting that other business orientations may coexist with a market orientation creating a richer and more complex set or organizational drivers.     

House prices, money, credit, and the macroeconomy

This paper assesses the links between money, credit, house prices,and economic activity in industrialized countries over the lastthree decades. The analysis is based on a fixed-effects panelvector autoregression, estimated using quarterly data for 17industrialized countries spanning the period 1970–2006.The main results of the analysis are the following. (i) Thereis evidence of a significant multidirectional link between houseprices, monetary variables, and the macroeconomy. (ii) The linkbetween house prices and monetary variables is found to be strongerover a more recent sub-sample from 1985 to 2006. (iii) The effectsof shocks to money and credit are found to be stronger whenhouse prices are booming.     

Corporate hierarchy and vertical information flow inside the firm—a behavioral view

Little is known about how corporate hierarchies influence managers' propensity to pass information upward within the firm. Two streams of literature arrive at seemingly conflicting and untested predictions. Information economists maintain that middle managers pass more suggestions up the firm's line of command as the corporate hierarchy increases in order to avoid corporate omission errors. In contrast, scholars of organizational psychology suggest that hierarchies lead to evaluation apprehension and foster a perceived lack of control among mid‐level managers, leading to their reduced willingness to, and interest in, passing information up within the organization. Drawing on field data and model‐guided experimental studies, we provide original empirical evidence for the relevance of all the mechanisms above, and we delineate the conditions under which either mechanism prevails. Copyright © 2014 John Wiley & Sons, Ltd.     

Constrained Mean-Variance Portfolio Optimization with Alternative Return Estimation

This paper studies the problem of asset allocation in a mean-variance framework. The theoretical model of portfolio optimization is specified and then applied to a long panel data set from historic to most recent times, March 1990 – March 2013. The paper contributes in three ways. First, an alternative asset return model is proposed that combines the historical returns, capital asset pricing model (CAPM) and returns estimated based on firm fundamentals. These return estimates enter the optimization problem. The second contribution is the application of an improved covariance matrix estimator that has superior properties compared to the typical sample covariance estimator. Third, the paper proposes two investments strategies. The first proposition suggests always choosing the maximized Sharpe ratio portfolio and the second one, the portfolio with the highest information ratio. The nature of both strategies is designed for investors with different appetites for risk. The performance of these choices is analyzed in light of four types of constraints: upper/lower investment limits, group constraints and transaction costs. The one-period optimal investment portfolio is rebalanced at quarterly intervals. Both strategies are benchmarked against an alternative investment choice such as holding the S&P 500 index, or investing in a risk-free asset such as a bond. Portfolio analysis and backtesting reveal that the strategies are superior to simply holding an equally weighted portfolio, a risk-free asset or the S&P 500 index.     

Returns to alliance portfolio diversity: The relative effects of partner diversity on firm's innovative performance and productivity

This study considers the impact of diversification in types of technological alliances, resulting in alliance portfolio diversity, on various dimensions of a firm's performance, as they relate to exploration and exploitation. Using a large panel of innovative firms in the Netherlands, this study shows that partner type diversity in a firm's alliance portfolio has an inverted U-shaped relationship with productivity and radical innovative performance and a positive relationship with incremental innovative performance. Moreover, the results suggest that a lower level of diversity is needed to achieve an optimal level of productivity compared to radical innovative performance, whereas for incremental innovative performance a higher level of portfolio diversity appears to give the best performance.