Colonial adventures in tropical agriculture: new estimates of returns to investment in the Netherlands Indies, 1919–1938

How profitable were foreign investments in plantation agriculture in the Netherlands Indies during the late colonial era? We use a new dataset of monthly quoted stock prices and dividends of international companies at the Brussels stock exchange to estimate the returns to investment in tropical agriculture (1919–1938). We adopt the Dimson–March–Staunton method to compute real geometric annual average rates of return and assess our estimates in an international comparative perspective. We find that returns to colonial FDI in the Netherlands Indies during 1919–1928 were impressive (14.3 %), being almost 3 percentage points higher than the world average. In the following decade 1929–1938 fortunes reversed, with a rate of return of ?2.8 % compared to a world average of 2.2 %. Over the entire period the returns to colonial FDI (5.4 % in 1919–1938) were about a factor 2.5 higher than returns to investment in the Dutch domestic economy (2.1 % in 1920–1939). We argue that these returns should be interpreted in a colonial context of systematic labour repression, but that they may also partly reflect a higher risk-premium of investments in colonial commodities.     

Management Innovation and Leadership: The Moderating Role of Organizational Size

Recent research on management innovation, i.e. new managerial processes, practices, or structures that change the nature of managerial work, suggests it can be an important source of competitive advantage. In this study, we focus on management innovation at the organization level and investigate the role of leadership behaviour as a key antecedent. Due to its prominent role within organizations, top management has the ability to greatly influence management innovation. In particular, we focus on leadership behaviour and examine transformational and transactional leadership. Additionally, as contextual variables like organizational size may influence the impact of leadership, we investigate its moderating role. Findings show that both leadership behaviours contribute to management innovation. Interestingly, our study indicates that smaller, less complex, organizations benefit more from transactional leadership in realizing management innovation. On the other hand, larger organizations need to draw on transformational leaders to compensate for their complexity and allow management innovation to flourish.     

Hedging long‐term commodity risk

This study focuses on the problem of hedging longer‐term commodity positions, which often arises when the maturity of actively traded futures contracts on this commodity is limited to a few months. In this case, using a rollover strategy results in a high residual risk, which is related to the uncertain futures basis. We use a one‐factor term structure model of futures convenience yields in order to construct a hedging strategy that minimizes both spot‐price risk and rollover risk by using futures of two different maturities. The model is tested using three commodity futures: crude oil, orange juice, and lumber. In the out‐of‐sample test, the residual variance of the 24‐month combined spot‐futures positions is reduced by, respectively, 77%, 47%, and 84% compared to the variance of a naïve hedging portfolio. Even after accounting for the higher trading volume necessary to maintain a two‐contract hedge portfolio, this risk reduction outweighs the extra trading costs for the investor with an average risk aversion. © 2003 Wiley Periodicals, Inc. Jrl Fut Mark 23:109–133, 2003     

An experimental examination of rational rent-seeking

The theoretical literature exploring various ramifications and applications of Tullock's (1980) rent-seeking model is extensive and rapidly growing. In contrast, there exist as yet only a few experimental evaluations of this model, with ambiguous results. Moreover, these studies focus on one particular case (proportional probabilities) and use a problematic experimental design. With an appropriate design we investigate the extreme cases of proportional probabilities and perfect discrimination, which offer the starkest contrast in theoretical predictions. We find substantial evidence for the predictive power of the rent-seeking model, particularly if one allows for the fact that people sometimes make mistakes or are confused about what to do.     

Feasibility of a Responsive Business Scorecard – a pilot study

Several authors have pointed at opportunities to develop the well-established Business Balanced Scorecard into a Scorecard that enables companies to integrate sustainability into their strategy. Recent case studies and research experiences show that social and environmental targets are more widely recognized as strategic drivers for management. However, experiments also show that the traditional Scorecard has its limits when it comes to e.g. stakeholder management and product chain management. The European Corporate Sustainability Framework(ECSF) program distinguishes several ambition levels for Corporate Sustainability/Corporate Responsibility. The traditional Balanced Scorecard is suitable for companies that aim for Compliance-driven CS/CRor for Profit-driven CS/CR, where the financial bottom line is the ultimate indicator for success. More ambitious companies want to balance economic, social and ecological targets in a Community-driven CS/SRor Synergy-driven CS/CR.For ambitious companies, we propose a format of a Responsive Business Scorecard (RBS). The Responsive Scorecard enables companies to score at Profit, People and Planet, at the same time to integrate stakeholder demands into internal programs to improve performance. The RBS includes five Perspectives: Customers&Suppliers, Financiers&Owners, Society&Planet, Internal Process and Employees&Learning.We assessed the practical feasibility of a Responsive Scorecardin food and tourist industries. In the food industry, we analyzed whether existing business priorities of Italian companies can adequately fill a Responsive scorecard.Our conclusion is that traditional topics like finance, customers and employees are readily filled, but that sustainability topics like chain management (suppliers) and environmental performance (planet) need further elaboration. The tourist sector is dominated by Small and Medium Sized Enterprises. We investigated whether existing eco-labels for camping-sites and marinas can be developed into Responsive Scorecards. Our conclusion is that such a sector specific development of a Responsive Scorecard is possible. Further research has to show what is the value added of the new scorecard for companies in the tourist sector.     

Exposure to PAHs of workers on contaminated sites: a modelling approach to assess the occupational contribution – the SOLEX study

The SOLEX study sought to assess the occupational contribution to PAHs exposure among employees working on former gasworks sites. Four categories of volunteers were selected according to their job profile: office, mixed, outdoor, and remediation (workers close to a soil desorber); during each of the two study periods (November 1997 and June 1998) a reference group was also recruited. Personal exposure was estimated by 1‐HOP measurements in urine samples taken before and after the shift each day of the study week. All participants completed a questionnaire describing their PAH exposure from sources other than job‐related. Each exposure job category is described by the median of the individual medians of 1‐HOP concentrations across all subjects in the group. Multiple linear regression models assessed the association between 1‐HOP urine concentrations and the occupational and general environmental exposure variables. The statistical models' fit were good (R ²?=?0.87 in November 1997 and 0.75 in June 1998). Belonging to the outdoor and desorber job categories and smoking were the key exposure predictors for both periods. Physical activity while at work, and commuting time (using an automobile) were also predictive variables in November 1997. Compared to the reference group, working outdoors and near the soil desorber represented 70–99% of the total PAHs exposure among non‐smokers, and 54–97.6% among smokers. A measurable excess of PAH exposure was observed only among employees directly involved in the soil remediation process; soil pollution was responsible for nearly all the exposure of these subjects, smoking representing a smaller fraction.     

Stock market development and economic growth in Belgium

This paper investigates the long-term relationship between financial market development and economic development in Belgium. We use a new data set of stock market development indicators to argue that financial market development substantially affected economic growth. We find strong evidence that stock market development caused economic growth in Belgium, especially in the period between 1873 and 1935. Institutional changes affecting the stock exchange explain the time-varying nature of the link between stock market development and economic growth.     

Location choice by households and polluting firms: An evolutionary approach

This paper examines several policy regimes to deal with the problem of households suffering from environmental damage by firms in the same region. We employ an evolutionary framework to analyze migration movements in the course of time, since firms and households will not relocate immediately in response to payoff differentials. We show that taxation gives firms and households an incentive to stay away from each other. Laissez faire (compensation) only gives households (firms) an incentive to stay away from firms (households). We find that taxation creates the right incentives to reach a local welfare maximum. However, when there are multiple local maxima, circumstances may arise under which compensation leads to a better outcome than taxation.     

Testing for Mean-Variance Spanning with Short Sales Constraints and Transaction Costs: The Case of Emerging Markets

We propose regression-based tests for mean-variance spanning in the case where investors face market frictions such as short sales constraints and transaction costs. We test whether U.S. investors can extend their efficient set by investing in emerging markets when accounting for such frictions. For the period after the major liberalizations in the emerging markets, we find strong evidence for diversification benefits when market frictions are excluded, but this evidence disappears when investors face short sales constraints or small transaction costs. Although simulations suggest that there is a possible small-sample bias, this bias appears to be too small to affect our conclusions.     

Rational habit formation

This paper discusses consumer demand under rational habit formation. If consumer tastes change endogenously through habit stocks depending on past consumption, the rational consumer will make allowance of the future habit forming effects of current consumption. A model with rational habit formation is made formally equivalent to an intertemporal consumer model without habit formation by redefining the cost of consumption and wealth. The cost of consumption is obtained by adding the cost of future induced consumption to the rental price of the commodity. The extended wealth concept is obtained by subtracting the cost of the initial stocks of habits and the cost of future physically necessary consumption from wealth. The paper also investigates the implication of rational habit formation for constructing one period cost of living indices.