The New Economy: Ethical Issues

The new economy is a technological revolution involving the information and communication technologies and which affects almost all aspects of the economy, business, and our personal lives. The problems it raises for businesses are not radically new, and even less so from an ethical viewpoint. However, they deserve particular attention, especially now, in the first years of the 21st century, when we are feeling the full impact of the changes brought about by this technological revolution. In this article, I will try to draw a "map" of the main, positive and negative ethical challenges raised by the new economy, concentrating on its three basic features: (1) a knowledge- and information-based technological change, (2) which is taking place in real time on a planetary scale (globalization), and (3) which entails a new, flexible, network-based business organization.     

Involving mind, body, and friends: Management that engenders creativity

Based on the careful observation and interviews of employees at three companies, and supplemented by cases from the popular business press, a discovery approach is used to derive four management principles that engender creativity and innovation in organizations: (1) manage organizations so that their knowledge base is more diverse than what would occur naturally; (2) encourage employees to embrace a collaborative and non-complacent attitude towards work and the organization; (3) make it possible for organization members to engage in the quick testing of ideas and solutions as they emerge; (4) reward employee and supervisor behaviors that support these principles and punish resistance to their implementation. The principles work in companies even if creativity and innovation are not stated organizational objectives, and do not require large investments or disruptions to work processes to yield valuable results.     

Enriching strategic variety in new ventures through external knowledge

To build profitable market positions, new ventures have to address multiple challenges on several fronts. These ventures can compete by being simple (focused) or applying varied ways to compete. The likelihood of these ventures remaining competitive depends on their ability to build novelty into their products and operations, an activity that requires infusing knowledge into their operations. Most ventures, however, have limited knowledge bases and the reach (scope) of their external connections is limited, a factor that prompts them to tap into different external sources in their local areas. This article reports an empirical study of 140 new ventures located in seven regional clusters in Spain. The results show that new ventures can enrich the variety of their strategic repertoire by accessing diverse sources of external knowledge and being exposed to external novel knowledge, while absorptive capacity moderates this relationship. The degree of social development of these clusters also has a positive impact on the strategic variety of new ventures, exhibiting an inverted U-shape curve.     

An Extended Set of Risk Neutral Valuation Relationships for the Pricing of Contingent Claims

This article establishes an extended set of risk neutral valuation relationships (RNVR's), assuming a representative agent who has an extended power utility function, of the HARA class of utility functions. The utility function of the representative agent displays either increasing, constant or decreasing proportional risk aversion. Aggregate consumption and the random payoff of the underlying asset are bivariate three-parameter lognormal distributed. As an application of the RNVR's, closed-form solutions for the price of a call written on a stock are derived. These include an extra parameter, the threshold parameter, not contained in the Black-Scholes formula.