Hidden costs of control: four repetitions and an extension

We report four repetitions of Falk and Kosfeld’s (Am. Econ. Rev. 96(5):1611–1630, 2006) low and medium control treatments with 476 subjects. Each repetition employs a sample drawn from a standard subject pool of students and demographics vary across samples. We largely confirm the existence of hidden costs of control but, contrary to the original study, hidden costs of control are usually not substantial enough to significantly undermine the effectiveness of economic incentives. Our subjects were asked, at the end of the experimental session, to complete a questionnaire in which they had to state their work motivation in hypothetical scenarios. Our questionnaires are identical to the ones administered in Falk and Kosfeld’s (Am. Econ. Rev. 96(5):1611–1630, 2006) questionnaire study. In contrast to the game play data, our questionnaire data are similar to those of the original questionnaire study. In an attempt to solve this puzzle, we report an extension with 228 subjects where performance-contingent earnings are absent i.e. both principals and agents are paid according to a flat participation fee. We observe that hidden costs significantly outweigh benefits of control under hypothetical incentives.     

Are entrepreneurs influenced by risk attitude,regulatory focus or both? An experiment on entrepreneurs' time allocation

“Hybrid entrepreneurs” — those who maintain a wage job while starting a new enterprise — outnumber pure entrepreneurs in many countries. Yet, how hybrid entrepreneurs allocate their working hours between these two activities is not well understood. To better understand the relationship between hybrid entrepreneurs' division of time between their wage jobs and new enterprises we develop a model that captures hybrid entrepreneurs' decisions on the tradeoffs between financial risk and return as it relates to time allocation. We test two hypotheses based on utility theory, and challenge them with two hypotheses based on regulatory focus theory in a controlled experiment with 25 early stage entrepreneurs and 29 undergraduate students. In the computer-based experiment, entrepreneurs' and students' time allocation decisions (tied to monetary incentives) are used to test what would motivate them to work more or less hours in their entrepreneurial startups. We find that the actual time allocation decisions of the student group are somewhat in tune with utility theory, but that the entrepreneurs' time allocation decisions are better explained by regulatory focus theory.     

Export Behavior and Firm Productivity in German Manufacturing: A Firm-Level Analysis

This paper examines the causal relationship between productivity and exporting in German manufacturing. We find a causal link from high productivity to presence in foreign markets, as postulated by a recent literature on international trade with heterogeneous firms. We apply a matching technique in order to analyze whether the presence in international markets enables firms to achieve further productivity improvements, without finding significant evidence for this. We conclude that high-productivity firms self-select themselves into export markets, while exporting itself does not play a significant role for the productivity of German firms. JEL no. F10, F13, F14, D21, L60     

The Stability of European Money Demand: An Investigation of M3H

The paper assesses the stability and predictive performance of a European money demand function as compared to national money demand functions. With respect to the explanatory accuracy, the national functions perform better than the aggregated function. Examination of the residuals of the national money demand equations indicates that currency substitution is not the major cause for the stability of the aggregated money demand function. The aggregate relation mainly seems to reflect German money demand. This conclusion is supported by the instability of aggregated money demand resulting from the exclusion of Germany from the aggregate.     

Window on Eastern Europe

Commercial cooperation between transBaltic neighbours Denmark and Poland is thriving, yet relationships between business people in the two countries are not always easy as a consequence of differing cultural histories and misunderstandings. The author is Associate Professor in the Department of Intercultural Communication and Management in Copenhagen Business School, Dalgas Have 15, DK-2000 Frederiksberg, Denmark.     

How does(n't) Urban Shrinkage get onto the Agenda? Experiences from Leipzig,Liverpool, Genoa and Bytom

This article discusses the question of how urban shrinkage gets onto the agenda of public‐policy agencies. It is based on a comparison of the agenda‐setting histories of four European cities, Liverpool (UK), Leipzig (Germany), Genoa (Italy) and Bytom (Poland), which have all experienced severe population losses but show very different histories with respect to how local governments reacted to them. We use the political‐science concepts of ‘systemic vs. institutional agendas’ and ‘policy windows’ as a conceptual frame to compare these experiences. The article demonstrates that shrinkage is hardly ever responded to in a comprehensive manner but rather that policies are only implemented in a piecemeal way in selected fields. Moreover, it is argued that variations in institutional contexts and political dynamics lead to considerable differences with regard to the chances of making shrinkage a matter of public intervention. Against this background, the article takes issue with the idea that urban shrinkage only needs to be ‘accepted’ by policymakers who would need to overcome their growth‐oriented cultural perceptions, as has been suggested in a number of recent writings, and calls for a more differentiated, context‐sensitive view.     

Consistency Matters in Formally Selecting Incremental and Radical New Product Ideas for Advancement

Several new product development (NPD) scholars have argued that formal processes should be used when selecting incremental new product ideas for advancement at the very beginning of the fuzzy front end (FFE), but that such formal processes may be less beneficial when selecting radical new product ideas. However, arguments also exist for using formal idea selection processes for both types of new product ideas. In practice, informal processes are used for selecting both idea types and more formal processes are used for selecting radical ideas. Unequivocal empirical evidence for either of the opposing views or practices is lacking. This study sheds light on this matter using data from 161 of the firms that participated in the Product Development and Management Association's latest (2012) Comparative Performance Assessment Study. The results reveal that the highest idea success rate (i.e., the proportion of selected ideas that are eventually launched as new products and are successful in the marketplace) is associated with firms’ use of formal processes to select the vast majority of both incremental and radical new product ideas for advancement. This finding supports earlier claims that even for (raw) idea selection processes that take place at the very beginning of the FFE, managers need to adopt a portfolio perspective and consistently use formal idea advancement selection processes to ensure attaining the right balance between radical and incremental projects in later stages of the NPD pipeline to enhance overall NPD success. Notably, this finding shows that common managerial practices of using inconsistent approaches for selecting radical and incremental ideas for advancement need to be reconsidered.     

Thinking out of the box—by thinking in other boxes: a systematic review of interventions in early entrepreneurship vs. STEM education research

Management Review Quarterly - Scholars increasingly converge on the view that entrepreneurship education (EE) should start early during the formative years of individuals’ educational...