Ethical reflection and service internships

To achieve the goals of ethics education, students must have oportunities to develop both moral capacities (imagination, responsibility, and perseverance) and intellectual capacities (critical thinking). This article contends that service-based learning represents an important opportunity for integrative ethics education. It describes a program of leadership internships at North Central College in Naperville, Illinois, in which faculty members conduct a for-credit reflection seminar with students involved in service internships. The seminar is based upon student-written cases about ethical issues they face in their work settings.David C. Smith is Executive Vice President of the Council for Ethics in Economics, an association of leaders in busienss and the professions dedicated to strengthening the ethical fabric of business and economic life. Prior to joining the Council in August, 1994, he was Director of the campus-wide Leadership, Ethics, and Values Program at North Central College in Naperville, Illinois.     

Can Oxford heal itself?

The fast-growing HMO was hammered on Wall Street after revealing its massive computer problems. Those foul-ups are being fixed, but now comes the hard part--reclaiming the trust of stunned shareholders and outraged doctors.     

Demographic change and income inequality in the United States, 1976-1989

"The U.S. economy experienced significant increases in the degree of income inequality over the past two decades.... In this paper we consider the effects of race, age, female headship, and college education on the distribution of family income by developing a multivariate methodology that allows us to gauge the influence of one factor while holding other determinants of family incomes constant. Over the period studied we find that race had only a minor effect on the overall size distribution of income. Age had a somewhat greater effect than race. In contrast, the impact of female heads and college education were quite substantial. The multivariate estimates reveal that the effects of female heads and college education both increase the Gini to a much greater extent than the progressivity of federal income taxes decreases it. The effects of college education and female headed families on inequality have grown larger across time, while the influence of age has declined. We find that the effects of race on inequality have changed little over the 1976 to 1989 period."     

Strategic Internet application trends in supply chain management

The Internet is evolving as a powerful force in the new marketplace where the nexus of competition has changed from individual firms to efficient supply chain networks both between firms and within industries. This study explores Internet adoption patterns and operational applications in US supply chain networks. The data reveal that the integration of the Internet into supply chain management applications has increased and has moved away from indiscriminate application of novel Internet technologies towards becoming a focused endeavor with precise expectations and measurable goals. Specifically, the study finds that Internet usage within supply chains is maturing as evidenced by enhanced and increased productivity, reduced costs and increased profit for participating firms.     

In search of a residual dividend policy

We survey 309 sample firms exhibiting behavior consistent with a residual dividend policy and their matched counterparts to learn how they set their dividend policies. The findings reveal that the sample firms are more likely than their counterparts to maintain a long-term dividend payout ratio, use long-run earnings forecasts in setting the dividend, and be unconcerned about the cost of raising external funds. Yet, firms behaving as though they follow a residual dividend policy generally do not profess to follow the policy. At best, the sample firms follow a “modified” residual policy in which they carefully manage their payout ratio and dividend trend. Although it may not be an explicit goal of such a dividend policy, consistently low free cash flow typically results.     

Feedback loops, fair value accounting and correlated investments

This paper presents and tests a model of the price dynamics that arise when investors fail to recognize the redundancy of unrealized gains and losses (“UGLs”) that are correlated with the firm’s past returns. Consistent with the predictions of our model, our experiment shows that a firm’s prices and earnings become highly volatile when correlated investment is large and correlated UGLs are made salient by comprehensive income reporting. The results suggest that including correlated UGLs in performance numbers could induce violations of weak-form efficiency that exacerbate volatility in share prices and earnings.     

The outsourcing of R&D through acquisitions in the pharmaceutical industry

We examine the performance of 160 pharmaceutical acquisitions from 1994 to 2001 and find evidence that on average acquirers realize significant positive returns. These returns are positively correlated with prior acquirer access to information about the research and development activities at target firms and a superior negotiating position. A unique Desperation Index is employed to determine the current status of a firm's internal productivity. We find that firms experiencing declines in internal productivity or which are more desperate are more likely to engage in an outsourcing-type acquisition in an effort to replenish their research pipelines.     

Anxiety of dependency in international joint ventures? An empirical study of drivers and consequences of relationship insecurity

This research introduces and delineates the concept of insecurity in IJV relationships. We define relationship insecurity as a parent firm's concerns about the continuance of the alliance arrangement and its partner's future provision of need satisfaction. According to interdependence theory, exchange partners that experience high dependence inevitably experience this ‘anxiety of dependency’, and the emergence of insecurity can destabilize the working relationship from within. We develop a conceptual model of the drivers and consequences of relationship insecurity in IJVs. Our survey results from 125 IJVs indicate that focal firm dependence and partner firm dependence both negatively affect insecurity, though the former is the dominant predictor. This surprising finding implies IJV partners experience ‘anxiety of low dependency’. The results suggest insecurity not only reduces directly IJV performance, but also lowers the quality of interpartner communication, which in turn dampens performance. Implications of these results are discussed.     

Interest rate rules and price determinacy: The role of transactions services of bonds

Interest rate rules have been associated with price indeterminacy when they do not respond aggressively enough to inflation. Price indeterminacy is typically associated with indeterminacy of real bond balances, suggesting that the missing element is a meaningful role for government bonds. We assume that government bonds provide arbitrarily small transactions services and show that this can dramatically change the local and global determinacy conditions. In particular, the specification of fiscal policy affects the aggressiveness with which monetary policy must respond to inflation to deliver local determinacy—a range of passive monetary policies, even an interest rate peg, may yield determinacy.