Book Reviews

This study applies data envelopment analysis to evaluate the financial efficiency of a sample of 63 top US pharmaceutical advertisers, based on their sales and media advertising expenditures in 11 key media outlets (i.e. network TV, cable TV, syndicated TV, spot TV, magazines, Sunday magazines, national newspapers, newspapers, network radio, national spot radio, and outdoor). The analyses reveal that, on average, 35% of a pharmaceutical advertising budget is wasted, the largest portion of which is on network TV. In addition, the results of tobit regression indicate that magazines and Sunday magazines significantly contribute to the advertising inefficiency.     

THE VALUE OF AGRICULTURAL LAND

Ricardo's discovery that the rents of agricultural lands arise essentially out of the differences between them can be restated by saying that the rent of land should depend on its marginal product. In come countries the Ricardian situation persists; where agricultural labour has “nowhere else to go” rents rise as a function of rural population density. The paper reviews the measures of marginal product which have been made using three methods of estimation: the production function (Cobb Douglas): estimates made by precise linear programming; and estimates of the “residual” income to land. The production function technique has been applied in countries at all stages of development ranging from African hand hoe agriculture to Australia and Belgium, and for a range of farm sizes. There are fewer examples of measures made by the other two methods; they are more suitable for use in advanced economics.     

CHOICE UNDER UNCERTAINTY

Books reviewed in this article:
Jacques Drèze (1987) Essays on Economic Decisions under Uncertainty.
W. Kip Viscusi and Wesley Magat et al (1987) Learning about Risk.
J. L. Ford (1987) Economic Choice under Uncertainty: a Perspective Theory Approach.
Isaac Levi (1986) Hard Choices: Decision Making under Unresolved Conflict.     

Accounting in its social context: Towards a history of value added in the United Kingdom

Although the relationship between accounting and society has been posited frequently, it has been subjected to little systematic analysis. This paper reviews some existing theories of the social nature of accounting practice and, by so doing, identifies a number of significant conceptual problems. Using the case of the rise of interest in value added accounting in the United Kingdom in the 1970s, the paper conducts a social analysis of this particular event and then seeks to draw out the theoretical issues and problems which emerge from this exercise. Finally, the implications of these for the social analysis of accounting are discussed.     

THE THEORY OF STATE-OWNED ENTERPRISES IN MARKET ECONOMIES

Abstract. Four topics are covered: the circumstances under which state-owned enterprises (SOEs) are more effective than private firms; the different approaches to modelling public and private firms; the performance of SOEs; and strategies including privatization to limit their more damaging effects. It is argued that ideological or development motives are important in their genesis, but that if efficiency and innovation are key considerations the normative case for their existence is more doubtful. Various types of SOE model are identified, deriving from the variety of circumstances in which they operate, and the theoretical perspective of the modeller. These include the property rights school, the public choice tradition, neoclassical, behavioural and budget maximizing approaches. All models assume the existence of monitoring problems, created by informational asymmetry. The consequences can include high non-pecuniary benefits for managers, a concentration on monitored activities, and lower innovation levels and efficiency than private firms. Curiously this is not necessarily reflected in higher prices or costs. Possible remedial strategies include a change of ownership, a change of objectives, the introduction of incentive-compatible payment schemes, improved performance indicators and privatization.     

Redirecting research in business policy and strategy

Because business policy research has primarily been a series of inductive generalizations of case studies; theories have been typically ambiguous and untested, and have not progressed swiftly. Deductive theorizing, by contrast, yields clear, often non-obvious conclusions that can be debated effectively and generalized slowly; so realism of current models can be sacrificed for progress towards realistic future models. Deductive theorizing, with more attention to a game-theoretic definition of equilibrium and to recent ideas from economics, should be one new direction for policy research. Of course, these deductive models will inevitably draw their inspiration from the richness of careful observation and exhaustive checklist-making that are the hallmarks of induction. Specific avenues for new research are described, and the importance of teaching non-obvious theories is defended.     

Book Reviews

Indonesia: The Transmigration Program in Perspective, Washington, D.C.: World Bank, 1988, pp. 227 + xlii. Paper: US$17.00.

William Segers, Changing Economy in Indonesia, Vol. 8, Manufacturing Industry 1870–1942, Amsterdam: Royal Tropical Institute, 1988, pp. 224. Dfl. 48.00.

Leslie Castle and Christopher Findlay (Eds), Pacific Trade in Services, Allen and Unwin, Sydney, 1988, pp. 294 + Xiv. Paper: 24.95; Cloth: $39.95.