Trade Openness and Labor Force Participation in Africa: The Role of Political Institutions*

Trade liberalization is usually expected to lead to greater economic activity including higher labor force participation rates. Using data from forty‐eight Sub‐Saharan African countries over the period 1985–2012, we explore the impact of trade openness on labor force participation rates (LFPR), and examine how political institutions such as democracy, political rights, and civil liberties can play a role in driving this relationship in the above group of low‐income countries. The estimated marginal impact of openness on LFPR shows that LFPR is increasing with the level of institutional quality. In particular, political institutions are critical in enhancing the benefit from openness. Our conclusions are similar for male and female participation rates although the magnitudes of the former are higher, thus confirming that improving institutions can generate greater labor market benefits from trade in poor countries.     

A componovation perspective of innovation in emerging markets: Evidence from Indian organizations

In todays market landscape firms can effectively compete without the benefit of resource advantages, proprietary technology, or market power but by being more aligned towards creative combination and responsive innovation. This study approaches the concept of componovation from the composition based view (CBV) developed by Luo and Child. The CBV emphasizes how firms with ordinary resource endowments can achieve outstanding results through the creative use of open resources and unique integrating capabilities that result in an enhanced speed and a value‐price ratio that are well suited to large numbers of mass market consumers. Thus componovation is a new approach aimed at innovation in emerging markets.     

CAN GREATER ATTENTION TO WOMEN'S RIGHTS HELP ADDRESS INCOME INEQUALITY?

We investigate the relationship between women's economic, social, and political rights with the level of income inequality. We use dynamic panel estimation to check our hypothesis that that strong rights for women translate into higher participation in economic productive activities, improve income and education and support for future generations, thus reducing the overall income inequality in the economy. We further look at how a country's overall economic performance and the status of women's education alter the relationship. The relationship is strengthened if countries are either in the higher‐income spectrum or have higher levels of female educational attainment. (JEL O1, I00, H00)     

Information disclosure,firm growth,and the cost of capital

We study how information disclosure affects the cost of equity capital and investor welfare in a dynamic setting. We show that a firm’s cost of capital decreases (increases) in the precision of public disclosure if the firm’s growth rate is below (above) a certain threshold. The threshold growth rate is higher when the firm’s cash flows are more persistent, or when other firms in the economy are growing at low rates. While current shareholders always prefer maximum public disclosure, future shareholders’ welfare decreases (increases) in the precision of public disclosure if the firm’s growth rate is below (above) the threshold.     

What's your personal social media strategy?

Social media are changing the way we do business and how leaders are perceived, from the shop floor to the CEO suite. But whereas the best businesses are creating comprehensive strategies in thi area, research suggests that few corporate Leaders have a social media presence--say, a Facebook or Linked in of page--and that those do don't use it strategically. Today's leaders must embrace social media for three reasons, First, they provide a low-cost, highly accessible platform on which to build your personal brand, communicating who you are both within and outside your company. Second, they allow you to engage rapidly and simultaneously with peers, employees, customers, and the broader public--in order to leverage relationships, show commitment to a cause, and demonstrate a capacity for reflection. Third, they give you an opportunity to learn from instant information and unvarnished feedback. To formulate your personal social media strategy, it helps to clarify your goals (personal, professional, or both), desired audience (private or public), and resources (can you justify using your company's?). You must also consider the risks of maintaining a large number of connections and of sharing content online. Active participation in social media can be a powerful tool--the difference between leading effectively and ineffectively, and between advancing and faltering in the pursuit of your goals.     

Alignment of performance measurement to sustainability objectives: A variance-based framework

Meaningful incorporation of environmental and social responsibility goals into organizational strategic plans requires a mechanism to measure and reward performance contributing to that objective. This paper formulates such a framework using management accounting concepts. We demonstrate that the benefits of pursuing sustainability objectives can be decomposed into three parts. The first consists of what might be considered a natural outcome of pursuing the traditional economic goal of efficiency through cost-minimization (a “waste” variance). The second part consists of sustainability gains that produce societal benefit but may be incongruent with short-term economic goals (a “sustainability” variance). The third part stems from a change in optimal output level when that is considered endogenous to the firm (a “volume” variance). While elimination of waste variances can be encouraged using a traditional performance evaluation and reward structure, elimination of sustainability and volume variances requires redesign of performance evaluation tools and reward structures. We demonstrate that failure to recognize and incorporate the difference between the three variances can lead to inefficient allocation of resources, over- or under-production, and only partial fulfillment of environmental goals. Further, availability of shadow price information is essential to implementing such a performance measurement system; thus it is a public policy imperative to develop markets that establish such prices.     

Nutrient consumption in India: Evidence from a village study

Adequate nutrition is generally regarded as a core dimension in any evaluation of well‐being. In the context of India, a country with a high prevalence of poor nutrition, there is a dearth of nutrition studies with adequate coverage and comparability. Using primary data on food consumption from a village in a poorer state of India, we study the consumption of five key nutrients, namely, calories, protein, carbohydrates, calcium and iron. Among the various determinants of nutrition, we find that expenditure has a significant impact on nutrition and the expenditure elasticity of nutrition is comparatively high for all the key nutrients. By correcting for potential endogeneity, we demonstrate a causal link from expenditure and food subsidy provided by the public distribution system to nutritional intake. There is some evidence that household characteristics such as household size and gender of the household head matter for nutrition; however, they are not robust under various specifications.     

Equilibrium earnings management and managerial compensation in a multiperiod agency setting

To investigate how the possibility of earnings manipulation affects managerial compensation contracts, we study a two-period agency setting in which a firm’s manager can engage in window-dressing activities to manipulate reported accounting earnings. Earnings manipulation boosts the reported earnings in one period at the expense of the reported earnings in the other period. We find that the optimal pay-performance sensitivity may increase and expected managerial compensation may decrease as the manager’s cost of earnings management decreases. When the manager is privately informed about the payoff of an investment project to the firm, we identify plausible conditions under which prohibiting earnings management can result in a less efficient investment decision for the firm and more rents for the manager.