An interview with Stuart Altman and Uwe E. Reinhardt

In this second of a two-part interview (conducted in January), Dr. Stuart Altman and Professor Uwe Reinhardt continue to share their candid opinions on long-term care, the President's FY91 budget, and the influential commissions (the Prospective Payment Assessment Commission [ProPAC] and the Physician Payment Review Commission [PPRC]) upon which they serve.     

Investigating a neglected part of Schumpeter’s creative army: what drives new-to-the-market innovation in micro-enterprises?

This paper tests a theoretical model to evaluate e-business capability and value in the fast growth small-to-medium enterprise (SME) context. We propose that e-business value depends on how fast growth SMEs deploy IT resources, strategic planning, culture, and business partnerships to develop e-business capability and business process competence which help these companies to achieve outstanding business performance. Structural equation modelling is employed to test our theoretical conceptualization on a cohort of 310 Australian fast growth SMEs across different industrial sectors. The results show that IT resources, strategic IT alignment, market orientation, and business partnerships do contribute significantly and indirectly to SME performance through the development of e-business capability and business process competence. Our study provides an initial empirical evidence to understand the relationship between IT and entrepreneurial SME performance. These findings have important implications for research and business practices.     

The interaction between macroprudential policy and monetary policy: Overview

This paper presents the main findings of an International Banking Research Network initiative examining the interaction between monetary policy and macroprudential policy in determining international bank lending. We give an overview on the data, empirical specifications and results of the seven papers from the initiative. The papers are from a range of core and smaller advanced economies, and emerging markets . The main findings are as follows. First, there is evidence that macroprudential policy in recipient countries can partly offset the spillover effects of monetary policy conducted in core countries. Meanwhile, domestic macroprudential policy in core countries can also affect the cross‐border transmission of domestic monetary policy via lending abroad, by limiting the increase in lending by less strongly capitalized banks. Second, the findings highlight that studying heterogeneities across banks provides complementary insights to studies using more aggregate data and focusing on average effects. In particular, we find that individual bank characteristics such as bank size or GSIB status play a first‐order role in the transmission of these policies. Finally, the impacts differ considerably across prudential policy instruments, which also suggests the importance of more granular analysis.     

Households' Willingness to Pay for "Green" Goods: Evidence from Patagonia's Introduction of Organic Cotton Sportswear

To shed light on individuals' willingness to pay for "green" goods (i.e., goods that are supposed to have lower adverse environmental impacts either in production or in use), we study data from the introduction by Patagonia, Inc., of organic cotton sportswear in the mid-1990s. Patagonia, a maker of high-end outdoor wear, substituted organic cotton for conventionally grown cotton in all of its sportswear (i.e., casual clothing for travel and leisure) in 1996. We find that customers were willing to pay significant premiums for organic cotton garments although the organic cotton provided no demonstrable private incremental benefits to the customer.     

Giving and Receiving Foreign Aid: Does Conflict Count?

Of what relative importance are strategic motivators for bilateral aid donors, and how important is a recipient’s geographic proximity to conflict relative to previously examined economic and political motivators? We find that donors have historically responded to balanced incentives to reduce recipient poverty and further donor political and economic goals. Every bilateral donor conditions aid on conflict. The United States allocates large amounts of development aid to countries bordering a conflict, both pre- and post-Cold War. However, controlling for development levels and donor economic and political interest, most donors reduce aid to a recipient with an in-house or nearby intense conflict.     

The Dilemma of Growth: Understanding Venture Size Choices of Women Entrepreneurs

In recent years the number of women-owned firms with employees has expanded at three times the rate of all employer firms. Yet women remain underrepresented in their proportion of high-growth firms. A number of plausible explanations exist. To develop richer insights, a two-stage research project was undertaken. A mail survey was sent to a sample of female entrepreneurs to assess motives, obstacles, goals and aspirations, needs, and business identity. Based on the survey results, follow-up, in-depth interviews were conducted with entrepreneurs, selecting equally from modest-growth and high-growth ventures. In terms of quantitative findings, growth orientation was associated with whether a woman was "pushed" or "pulled" into entrepreneurship, was motivated by wealth or achievement factors, had a strong women's identity in the venture, had equity partners, and believed women faced unique selling obstacles. The qualitative research made clear that modest- and high-growth entrepreneurs differ in how they view themselves, their families, their ventures, and the larger environment. The results of both stages suggest that growth is a deliberate choice and that women have a clear sense of the costs and benefits of growth and make careful trade-off decisions.