Productivity and environmental regulation: the effect of the nitrates directive in the French pig sector

This paper measures the ensuing changes in productivity in the French pig sector following the introduction of the European regulation addressing water pollution by nitrates from agriculture. Productivity is measured using the Malmquist–Luenberger index. The sources of changes in productivity observed are examined by breaking down this index into its technical progress and efficiency components. The results show that in the early stages, increases in productivity were stimulated by increased efficiency, before being driven by technical progress. The estimations regarding the sources of efficiency gains for the farms in the sample (technical efficiency, efficiency of scale and environmental efficiency) are then used to estimate the indirect costs and benefits (or negative costs) linked to the introduction of the environmental regulation controlling the disposal of organic manure and the management of nitrogen surplus from pig farms. The existence of a “win-win” effect as regards the Porter hypothesis relation between efficiency and environmental regulation is highlighted for the French pig sector.      

Exchange-rate pass-through at the product level

Abstract.  We use a detailed database to investigate exchange-rate pass-through at the product level for a large number of countries. The empirical analysis suggests that pricing behaviours are dichotomous, with complete pass-through in around 25% of sectors and significant pricing-to-market in the remaining ones. Average long-run pass-through coefficient is close to 80%; this result hides a strong heterogeneity of pass-through behaviours across sectors. Even when composition effects are controlled for, average pass-through varies across importing countries. The econometric analysis shows that pass-through tends to be higher in volatile environments; in less developed countries; in weakly integrated markets.     

International trade and income distribution: reconsidering the evidence

This article reassesses the link between international trade and income distribution. We argue that one way to assess the influence of international trade upon income distribution is to take account of each country’s specific trade patterns by measuring the changes in the factor content of trade. The econometric specification is based on changes in Gini indices (over non-overlapping 4-year intervals), computed exclusively from series drawn from the same source. Our results show that a change in the factor content of trade has a significant impact on income distribution. The sign and magnitude of this impact is conditional on the national income level. We find that an increase in the labor content of trade raises income inequality in poor countries, but reduces it in rich countries (the reverse is true for the capital content of trade). In particular, we show that in the 1980s and 1990s, international trade may have contributed significantly to widening income inequalities in developing countries.     

Market Discipline and the Use of Stock Market Data to Predict Bank Financial Distress

We assess the extent to which stock market information can be used to estimate leading indicators of bank financial distress. We specify a logit early warning model, designed for European banks, which tests if market based indicators add predictive value to models relying on accounting data. We also study the robustness of the link between market information and financial downgrading in the light of the safety net and asymmetric information hypotheses. Some of our results support the use of market-related indicators. Other results show that the accuracy of the predictive power depends on the extent to which bank liabilities are market traded.      

European management: Steering the future towards the present

This article examines European management methods. While acknowledging that particular countries' cultural bedrock should be taken into account in attempting to change management style, the transformation of the economic, social and cultural contexts represented by the single European market may enable the future to be a guiding support in contributing to modifying firms' and public authorities' systems of relations and organization.     

Are family firms really superior performers?

Although international evidence suggests that families may be unhelpful to firm performance, recent analyses of U.S. public companies indicate that family firms outperform. This study probes these contrasting findings by investigating more fine-grained measures of family business in the U.S. Specifically, it makes a fundamental but neglected distinction between lone founder businesses in which no relatives of a founder are involved, and true family businesses that do include multiple family members as major owners or managers. The research also seeks to overcome issues of endogeneity and selection bias by examining both Fortune 1000 firms and a random sample of 100 much smaller public companies. The results show that findings are indeed highly sensitive both to the way in which family businesses are defined and to the nature of the sample. Fortune 1000 firms that include relatives as owners or managers never outperform in market valuation, even during the first generation. Only businesses with a lone founder outperform. Moreover neither lone founder nor family firms exhibited superior valuations within a randomly drawn sample of companies. Our results confirm the difficulty of attributing superior performance to a particular governance variable.     

Why bad projects are so hard to kill

Even at the prototype stage, experts were saying the technology was obsolete. Yet, in the face of tepid consumer response, the company stubbornly kept increasing production capacity and developing new models. By the time it was finally killed, the initiative had cost the company an astounding $580 million and had tied up resources for 14 years. The product was RCA's SelectaVision videodisc recorder, and its story is hardly unique. Companies make similar mistakes--if on a somewhat smaller scale--all the time. But why? No one comes to work saying, "I'm going to pursue a project that will waste my company millions of dollars." Quite the opposite. They come to work full of excitement about a project they believe in. And that, surprisingly, can be the root of all the trouble--a fervent belief in the inevitability of a project's ultimate success. Starting, naturally enough, with a project's champion, this faith can spread throughout the organization, leading everyone to believe collectively in the product's viability and to view any signs of impending doom merely as temporary setbacks. This phenomenon is documented here in two chillingly detailed case studied, one involving Essilor, the world's largest maker of corrective lenses for eyeglasses, and the other involving Lafarge, the largest producer of building materials. By counterexample, they point the way toward avoiding such morasses: assembling project teams not entirely composed of like-minded people and putting in place--and sticking to--well-defined review processes. Both cases also show that if it takes a project champion to get a project up and running, it may take a new kind of organizational player--an "exit champion"--to push an irrationally exuberant organization to admit when enough is enough.     

Productive efficiency of French grain producers: A latent variable model

In this article we propose to implement a covariance structure analysis to deal with the estimation of a stochastic frontier production function on panel data and the measurement of a time-varying technical efficiency. First, this method solves the potential problem of correlations between input quantities and individual effects. Second, individual effects and efficiency measures can be recovered as a byproduct of the analysis through the so-called factor scores. We implement this approach by fitting to a balanced panel of French grain producers, a parsimonious version of the Cornwell, Schmidt, and Sickles [1990]'s model where technical efficiencies are individual-specific linear functions of time. A specification search shows that this model is preferred to the traditional production function. Results shed light on the temporal pattern of efficiency in the French grain production sector.The authors thank Jacques Mairesse, Quang Vuong, two referees, the editor, and session participants at the Econometric Society European Meeting, Cambridge, September 1991, at the Second European Workshop on Efficiency and Productivity Analysis, Louvain-la-Neuve, October 1991, at the Conference on Current Issues in Productivity, Newark, December 1991, and at the ENSAE-EHESS seminar, Paris, March 1992, for helpful comments and suggestions.