The Ability and Willingness Paradox in Family Firm Innovation

We present a framework of how family involvement influences innovation management based on ability (discretion to act) and willingness (disposition to act), two drivers that distinguish family firms from nonfamily firms and lead to heterogeneity among family firms. Paradoxically, family firms have superior ability yet lower willingness to engage in technological innovation. Resolving this paradox should yield new insights about innovation management in general. We summarize and position the papers in this special issue according to these drivers and set out an agenda for further research that will contribute to a better understanding of family firms' heterogeneous and paradoxical behaviors.     

Employment transitions and computer use of older workers

Our empirical analysis studies the impact of computer use on out of employment transitions of older workers, disentangling the effect of using a Personal Computer (PC) at work from that of being PC literate. Data are drawn from the 2000, 2002 and 2004 waves of the Bank of Italy Survey on Household Income and Wealth. We provide empirical evidence that, even controlling for a wide set of covariates, older employees who use a PC at work have a higher probability of remaining employed in the future. However, our results also indicate that, once PC literacy is controlled for, the use of a PC at work decreases only marginally the risk of becoming not employed (i.e. the effect is smaller than the one registered when we do not control for PC literacy).     

Counting combinatorial choice rules

I count the number of combinatorial choice rules that satisfy certain properties: Kelso–Crawford substitutability, and independence of irrelevant alternatives. The results are important for two-sided matching theory, where agents are modeled by combinatorial choice rules with these properties. The rules are a small, and asymptotically vanishing, fraction of all choice rules. But they are still exponentially more than the preference relations over individual agents—which has positive implications for the Gale–Shapley algorithm of matching theory.     

Explaining the early years of the euro exchange rate: An episode of learning about a new central bank

Many observers were surprised by the depreciation of the euro after its launch in 1999. Handicapped by a short sample, explanations tended to appeal to anecdotes and lessons learned from the experiences of other currencies. Now sample sizes are just becoming large enough to permit reasonable empirical analyses. The model of this paper provides empirical support for the euro exchange rate to be affected by learning. By focusing on euro-area inflation as the key fundamental, the model is structured toward the dynamics of learning about ECB policy with regard to inflation. While a stated target inflation rate of 2 percent existed, it may be that market participants had to be convinced that the ECB would, indeed, generate low and stable inflation. With a prior distribution drawn from the pre-euro EMS experience and updating based upon the realized experience each month following the introduction of the euro, the evidence suggests that it was not until December of 1999 that the market assessed a greater than 50 percent probability that the inflation process had changed to a new regime. From this point on, trend depreciation of the euro ends and further increases in the probability of the new inflation process are associated with euro appreciation versus the US dollar, the British pound and the Japanese yen.     

Outward FDI and Local Employment Growth in Italy

Using several data sources, we assess the impact of Italy’s outward foreign direct investment (FDI) on local employment growth between 1996 and 2001 for 12 manufacturing industries and 103 administrative provinces. Our main result is that, controlling for the local industrial structure and area fixed effects, FDI is associated with faster local employment growth, relatively to the national industry average. We also find that employment in small plants is not negatively influenced by higher levels of FDI. Our findings do not support therefore the idea that FDI is detrimental to local employment growth in the home country. JEL no.  C21, F21, F23     

Can PIGLOG preferences identify equivalence scales?

This paper clarifies the conditions under which PIGLOG and extended PIGLOG preferences can identify household equivalence scales. The results are of interest to practitioners who have to elect preferences suitable for welfare analysis. It also shows that independent of the base utility equivalence scales are the same whether the budget shares of the demand systems are linear or quadratic in log income. (JEL: D11, D13) The author is grateful to an anonymous referee for several helpful suggestions.