Trade liberalization and rising wage inequality in Latin America: Reconciliation with HOS theory

The paper puts forward the hypothesis that the transitory effects of trade liberalization on wage inequality can differ from the long-run outcome. In cases where the HOS theory predicts a decline in wage inequality in the long run, a temporary rise can, nevertheless, occur due to (i) the asymmetries in the speed of contraction in the import sector and expansion in other sectors, and (ii) the capital-skill complementarity in production. The asymmetric contraction and expansion causes a transitory capital accumulation that boosts the relative and the real wage of skilled labor due to capital-skill complementarity. Although the long-run HOS fundamentals are, therefore, dominated in the short run by the transient effects arising due to capital-skill complementarity, the observed rise in wage inequality is nonetheless consistent with the HOS theory appropriately extended to a dynamic setting.     

Customer contact and the evaluation of service experiences: Propositions and implications for the design of services

A contingency framework is developed as a means of understanding the relationship between the level of customer contact and service satisfaction. Level of contact is defined as the extent of interpersonal interaction between the service customer and the service provider's boundary personnel. Consistent with Oliver (1997), perceived service satisfaction reflects the customer's judgment that the service delivered a plausible level of consumption-related fulfillment. The article offers a series of research propositions derived from prior research and writings from the marketing, psychology, and operations literatures. Implications for the design of service strategies in efforts to improve customer satisfaction are also discussed. © 1998 John Wiley & Sons, Inc.     

Planning with uncertain materials availability: The value of workday flexibility

In this paper, we consider the problem of a manufacturer that faces uncertainty in the availability of its raw materials. This can occur, for example, in a remanufacturing setting where replacements for damaged components are not always available as needed. We examine the potential for flexible workday policies to mitigate the impact of uncertain materials availability, and present a simulation optimization approach to determine staffing levels under various levels of workday flexibility. An example implementation of the aggregate planning model we develop is provided using data from a cell phone reassembly facility in Hong Kong. Our model provides insights for managers regarding the benefits of increasing levels of workday flexibility when raw material availability is uncertain.     

Are internal manufacturing and external supply chain flexibilities complementary capabilities?

Manufacturing flexibility is often viewed as a strategic capability that enables firms to more effectively meet heterogeneous market demands arising, in part, from increased product proliferation. However, recent studies suggest that the operational challenges associated with meeting this objective may be heavily dependent not only upon a firm's internal modification, mix, and new product flexibilities, but also upon the flexibility of its inbound and outbound supply chain partners. Drawing upon the theory of Complementarity, we examine if simultaneous utilization of both internal and external flexibilities does in fact create synergies that can improve a firm's delivery performance. Based on a sample of 158 U.S. manufacturing plants, we find that the extent to which performance enhancing synergies are generated is primarily dependent upon the type of internal flexibility that is paired with supply chain flexibilities. Additionally, we find that when synergies do exist, external supplier and logistics flexibilities generally tend to enhance the scope of flexible response, while internal flexibilities generally tend to enhance the achievability of a flexible response. Taken together, our findings suggest that the ability of firms to actually reap the synergistic benefits of an integrated system of supply chain flexibility is much more complex and nuanced than previously believed or expected.     

Sustainability in The Banking Industry: A Strategic Multi‐Criterion Analysis

The current paper aims to develop an effective and integrated MCDM model for the evaluation of the sustainability practices in the banking services, employing a multi‐stage, fuzzy MCDM model that integrates the Balanced Scorecard, fuzzy AHP and fuzzy TOPSIS. The approach aims to evaluate sustainability from the following four perspectives: financial stability, customer relationship management, internal business process and environment‐friendly management system. A real implementation dealing with the six largest commercial banks in India is discussed. The results highlights the critical aspects of the evaluation criteria and the issues in improving sustainable banking performances. Regarding the sustainability issues, it is shown that the environment‐friendly management system takes a back seat compared with the other criteria. Furthermore, the results show that there is a misunderstanding of the role that corporate social responsibility plays with respect to environmental issues. The developed evaluation model offers a valuable management tool for banks' administrators by assisting them in strategic choices in order to achieve their objective of sustainability and sustainable banking. Moreover, it offers a measuring tool with unique features that complements the emerging trend of integrated reporting considering uncertainty. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Deans' perceptions of published rankings of business programs

Using a survey of college of business deans, the authors investigate perceptions of published rankings of academic programs. Published rankings have become quite prominent, and anecdotal evidence suggests great efforts are being undertaken to be included in rankings or enhance rankings. The authors conducted a survey of business school deans to gain a better understanding of their perceptions of published rankings, and found that the majority of deans included in the survey did not perceive rankings to be reflective of underlying program quality. However, the majority chose to pursue rankings because of the perceived benefits to the university, students, and alumni. The authors also found statistically significant differences in deans' perceptions across universities with different accreditation statuses, sizes, and funding sources.     

An Analysis of the Demand for Earthquake Insurance

This research examines the decision to purchase earthquake insurance by analyzing data on earthquake insurance price and penetration in the New Madrid fault zone in Missouri. Earthquake risk is of concern to consumers, the insurance industry, industry regulators, and government agencies because of the potentially catastrophic nature of losses resulting from a major earthquake. Despite the significance of the earthquake peril, the recent literature does not contain estimates of the price and income elasticity of the demand for earthquake insurance. Our analysis indicates that homeowners acquire earthquake insurance because of risk considerations, at higher levels of risk the demand for earthquake insurance is higher, and the price of earthquake coverage does not provide incremental information in explaining the demand for earthquake coverage.     

The Pricing of Sequential Bank Loans

The theory of financial intermediation assigns banks a unique role in the resolution of information asymmetry. Banks, in general, obtain private information about the borrower and the project during the screening of loan applicants and during the monitoring of loan recipients. Incumbent banks, in particular, utilize information obtained while monitoring previous loan extensions to resolve information asymmetry when granting subsequent loans. We examine the rate on a sequence of loans to a borrower and find that the incumbent bank information advantage has finite magnitude and is quickly reflected in the pricing of the second loan. We also find that the lending relationship does not deteriorate to the detriment of the borrower. This study also provides further evidence supporting the hypothesis that an incumbent bank resolves information asymmetry during the monitoring of loan extensions.     

Political instability and capital flight: An application of event study methodology

The relationship between capital flight and political instability is investigated by using the event study methodology, which is widely used in the finance literature. The advantage of using this method is that by isolating specific instances of political instability (defined as events), one can examine the relationship more closely. An index of political instability is calculated using data on intranation political developments from the Conflict and Peace Data Bank (COPDAB). For our sample, we get mixed results, probably because the “event” could not be defined very precisely due to the volatile nature of the political index.     

Nonpoint-Source Pollution Reduction for an Iowa Watershed: An Application of Evolutionary Algorithms

We apply an integrated simulation-optimization framework to search for cost-efficient mix and location of agricultural conservation practices in a typical agricultural watershed for two types of nitrogen reduction targets: control of mean annual nitrogen loadings, and a “safety-first” type constraint, insisting that nitrogen targets be met in every weather realization (weather-resilient solutions). Evolutionary algorithms are developed for each of the appropriate water quality targets. Our approach allows for the derivation of a watershed-level total and marginal nitrogen abatement cost curve. Controlling for the probability of meeting water quality targets (looking for weather-resilient solutions) is found to be significantly more costly than controlling the average nitrogen loadings. Both types of solutions are assessed for robustness with respect to weather uncertainty: solutions selected to reduce average loadings do well under weather uncertainty, while the robustness of solutions selected to be resilient decreases with the stringency of the water quality goal. Nous avons appliqué un modèle intégré de simulation-optimisation pour trouver des combinaisons de pratiques agricoles de conservation efficaces en terme de coûts et les endroits où elles devraient être adoptées dans un bassin versant agricole typique pour deux types de cibles de réduction des charges d’azote : la surveillance des charges moyennes annuelles d’azote et une contrainte du type « sécurité d’abord », selon laquelle les cibles d’azote doivent être respectées peu importe les conditions météorologiques (solutions robustes aux changements météorologiques). Nous avons élaboré des algorithmes évolutifs pour chaque cible relative à la qualité de l’eau. Notre approche a permis de dériver la courbe de coût liéà la réduction marginale et totale de l’azote dans un bassin versant. L’ajustement de la probabilité que les cibles relatives à la qualité de l’eau soient respectées (solutions robustes aux changements météorologiques) s’est révélé significativement plus coûteux que de contrôler les charges moyennes d’azote. Nous avons évalué les deux types de solutions afin de vérifier leur performance dans des conditions météorologiques incertaines : les solutions retenues pour réduire les charges moyennes fonctionnent bien dans des conditions météorologiques incertaines, tandis que la performance des solutions robustes aux conditions météorologiques diminue avec le niveau visé de qualité de l’eau.