A REVISED GEOMETRY OF MEAN-VARIANCE EFFICIENT PORTFOLIOS

A revised definition of efficiency compares portfolios with different net worths. One axiom rules out instantaneous riskless gains, the other asserts that it costs money to buy good portfolios. Unlimited short sales are allowed. Portfolios which cannot be improved at any price are called absolutely efficient. The geometry of the mean-standard deviation frontiers is governed by three “efficient set constants”. A few results regarding efficient portfolios must be modified, and a new version of the security line equation is proposed. Explicit formulas are given: no need to use different formulas for singular or non-singular covariance matrix.     

Experience with a simulator for training ammonia plant operators

A computer-based simulator was used for training operators prior to the start-up of a new fertilizer complex which includes a 1,350-MTPD ammonia plant, two 1,100-MTPD urea plants, and a steam and power generation plant with two 18-MW gas turbines. The simulator offered many benefits, which can be used for continued education of operators and engineering studies.     

Entry may increase network providers’ profit

In this paper the incentives for platform sponsors to open up their networks for independent rivals is analyzed. It is shown that open access may increase the platform sponsors’ profit levels and enhance quality improving investments. In addition, it is shown that a commitment to allow entry reduces the difference between ex ante and ex post compatibility incentives.     

Managing Risks in Complex Projects

Dealing effectively with risks in complex projects is difficult and requires management interventions that go beyond simple analytical approaches. This is one finding of a major field study into risk management practices and business processes of 35 major product developments in 17 high‐technology companies. Almost one‐half of the contingencies that occur are not being detected before they impact project performance. Yet, the risk‐impact model presented in this article shows that risk does not affect all projects equally but depends on the effectiveness of collective managerial actions dealing with specific contingencies. The results of this study discuss why some organizations are more successful in detecting risks early in the project life cycle, and in decoupling risk factors from work processes before they impact project performance. The field data suggest that effective project risk management involves an intricately linked set of variables, related to work process, organizational environment, and people. Some of the best success scenarios point to the critical importance of recognizing and dealing with risks early in their development. This requires broad involvement and collaboration across all segments of the project team and its environment, and sophisticated methods for assessing feasibilities and usability early and frequently during the project life cycle. Specific managerial actions, organizational conditions, and work processes are suggested for fostering a project environment most conducive to effective cross‐functional communication and collaboration among all stakeholders, a condition important to early risk detection and effective risk management in complex project situations.     

When natural resources run out,market knowledge steps in: Lessons on natural resource deployment from a longitudinal study in a resource-scarce region of Ethiopia

With the increasing scarcity of natural resources, the ability to maintain quality standards during resource-scarce times becomes more critical for business performance. Theories on managing resource scarcity cannot be easily tested in contexts where resources are still abundant. This study therefore turns to an emerging market context in which natural resource availability naturally varies strongly between seasons, namely, that of Ethiopian pastoralists who for many generations learned to adapt to natural resource scarcity. Central to our theory is the natural resource deployment capability, which is the ability of a business to make efficient and effective use of available resources to maintain business performance during resource-scarce times. Using three-wave longitudinal data from 120 pastoral family-based livestock businesses, the study shows that when resources are scarce or extremely scarce, market knowledge helps to better deploy the scarce natural resources, leading to higher product quality. The findings imply that businesses with a better understanding of markets have stronger natural resource deployment capability. The lesson for businesses that are confronted with approaching resource scarcity is therefore to strengthen their ability to deploy resources efficiently and effectively by strengthening their market knowledge in which such capability is rooted.     

Differentiated interchange fees

Payment networks typically differentiate interchange fees across different merchant sectors. This paper shows that it is generally efficient for a regulator to leave the decision on the structure of interchange fees to payment networks.     

Can student effort be manipulated? Does it matter?

This article provides evidence that college students’ effort can be manipulated substantially by making changes in the college testing regime and moreover that student effort is a meaningful input in education production. The evidence comes from a quasi-experiment where a mid-semester test with a pass requirement is introduced to a mandatory one-semester Business School course in Macroeconomics. Four cohorts of students – one before and three after the introduction of the pass requirement – have reported their study effort twice during the semester, and the relationship between achievement and study effort is investigated by using a within-subject within-student across-study periods approach.