Competition, entry and the social returns to infrastructure in transition economies

This paper presents a simple model for analysing the contribution of investments in physical and institutional infrastructure to the transition process. In addition to the direct cost savings, infrastructure investment generates important indirect effects, or transition impacts . The model shows that, by reducing transaction costs, infrastructure intensifies product market competition. This leads to more effective weeding out of the existing high-cost firms in the market. In this model, infrastructure also increases the incentives for low-cost firms to restructure which generates additional efficiency gains, but exacerbates the existing cost asymmetry in the economy. Finally, infrastructure investment enhances the incentives for relatively low-cost firms to enter the market, and thus improves the efficiency of the entry process. The importance of these transition impacts of infrastructure is dependent upon features of the economy, such as the degree of cost asymmetry among firms, the proportion of high-cost firms, the cost of restructuring and entry costs for new firms.
JEL classification: L1, O1, P2.     

The Relevance of XBRL Voluntary Disclosure for Stock Market Valuation: The Role of Corporate Governance

The aim of this paper is to investigate the relevance for stock market pricing of accounting earnings of voluntary disclosures in XBRL files considering the quality of corporate governance. Results are the following. It appears that XBRL extensions attract financial analysts. Good governance is positively associated with voluntary XBRL extensions. We observe that XBRL extensions enhance the positive relationship between accounting earnings and stock price. However, this positive association is reduced for firms with good governance, suggesting a substitution effect between XBRL extensions and corporate governance. Finally, it appears that XBRL extensions would strategically be related to earnings quality. This research highlights the importance to consider governance when assessing the value relevance of XBRL disclosures for stock market pricing.     

Modeling advertising impact at campaign level: Empirical generalizations relative to long-term advertising profit contribution and its antecedents

Research on advertising effectiveness is focused on sales and provides few empirical generalizations on profitability and its antecedents. To fill this gap, we develop an econometric model to capture the impact of advertising at campaign level, using retail panel data coupled with TV audience tracking data. Our study involves 31 brands from six packaged goods categories observed weekly and nationally over 4 years and representing 264 TV campaigns. Although we confirm empirical generalizations on the capacity of advertising to increase sales, we establish a different picture for profitability. Only 11 % of campaigns make a positive contribution to profit. Advertising is more profitable for challengers and medium brands, whereas leaders and small brands (recent or established) have a lower profitability. Advertising intensity in the category and campaign carry-over emerge as the strongest (respectively) negative and positive drivers of profitability. The antecedents of carry-over are also analyzed and discussed.     

Organizational Sensemaking of Non-ethical Consumer Behavior: Case Study of a French Mutual Insurance Company

Researchers and managers alike are becoming increasingly interested in the topic of unethical consumer behavior. Where most studies view unethical behavior as something that is identifiable per se, the authors of the present article believe that it only exists because it has been constructed by people operating within a specific context. Hence the efforts made by this paper to explore, at the level of one specific organization, how interactions between employees and consumers might lead to the construct of unethical consumers. Based on a case study of France’s AMDM—a mutual insurance company set up to serve a client base comprising motorcyclists—the paper addresses how one group of consumers ends up being categorized as unethical by revealing the existence of a sensemaking process within the target organization. This process develops in three main phases: the nurturing of a shared ethos; the protection of employees’ recognized status; and the demonization of any group of consumers threatening this status. Managers incorporating this sensemaking process can avoid or mitigate the negative effects befalling organizations when these kinds of unethical consumer behavior are constructed.     

Marketing in medium-sized manufacturing firms: The state-of-the-art in France and in Quebec

An examination of the relationship between marketing and SMEs raises two kinds of questions: the first relates to the categories of SMEs studied, and it goes without saying that their responses will depend on their size (very small, small, and medium); the second depends on the elements likely or not to bring out a marketing approach. In fact, we can infer a large part of this approach from the answers having to do with segmentation practices, positioning, and information research. These three practices constitute the foundation of this approach. For all that, to ask questions directly (especially with regard to segmentation) would lead to biased responses. Taking these premises into account and with understanding of marketing behaviour in the medium-sized firms as an objective, we conducted two surveys in two locations, France and Québec (Canada), in which only enterprises with 50 to 250 employees were retained. The results show that if the marketing approach of the medium-sized firms is always focused on client distinction (more than on the market as such), competition leading to positioning is very much a part of their preoccupations; finally, these enterprises commonly practice commercial intelligence. This implies structuring commercial activity in general and marketing in particular, the two not always well delimited. These last two traits differentiate them from the other categories of SMEs, the very small enterprises (VSEs) and the small enterprises (SEs).

GENERAL PROPERTIES OF ISOELASTIC UTILITY ECONOMIES

This paper studies the class of single‐good Arrow–Debreu economies in which all agents have isoelastic utility functions and homogeneous beliefs, but have possibly different cautiousness parameters and endowments. For each economy in this class, the equilibrium stochastic discount factor is an exponential function of the inverse mapping of a completely monotone function, evaluated at the aggregate consumption. This fact allows for general properties of the class to be studied analytically in terms of known properties of completely monotone functions. For example, conditions are presented under which the agents’ cautiousness parameters and a distribution of initial wealth can be recovered from an equilibrium stochastic discount factor, even if nothing is known about the agents’ endowments. This is a multiagent inverse problem since information about economic primitives is extracted from equilibrium prices. Several example economies are used to illustrate the results.     

Boorstin's consumption community concept: A tale of two countries

The concept of consumption community, first proposed by historian Daniel Boorstin, claims that in the modern era of high mobility, people look not only to neighborhood as a basis for feelings of community but also to communality of consumption behavior (e.g., drinking the same brand of beer). The idea was tested cross-nationally by administering a newly devised psychological sense of community (PSC) scale to more than 100 adult respondents in Belgium and a like number in the U.S. The findings support Boorstin in that for both national samples, PSC values for consumption items were generally positive and consistent with social science theoretical expectations. Implications of the study findings are discussed for theory and social policy.

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Zusammenfassung Das Konzept der Konsumgemeinschaft von Boorstin: Eine Geschichte von zwei Ländern. Das Konzept der Konsumgemeinschaft, erstmals durch den Historiker Daniel Boorstin vorgestellt, behauptet, da\ im heutigen Zeitalter hoher Mobilität der Einzelne sein Gemeinschaftsgefühl nicht nur durch seine Beziehung aus der direkten Nachbarschaft bezieht, sondern auch aus der Gemeinsamkeit bestimmter Konsumverhaltensweisen (z. B. das Trinken derselben Biermarke). Diese Idee wurde empirisch geprüft durch eine ländervergleichende Untersuchung, in der eine neu entwickelte psychologische Skala für den Gemeinschaftssinn bei jeweils einer Stichprobe von mehr als 100 erwachsenen Personen in Belgien und in den USA angewendet wurde. Die Ergebnisse stützen Boorstin insofern, als beide Länderstichproben zu Skalenwerten führen, die mit den theoretischen sozialwirtschaftlichen Erwartungen übereinstimmen.

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Koen De Vos is a Research Assistant at the same institution.     

The ABC-LCA method for the integration of activity-based costing and life cycle assessment

This article presents an approach to integrating life cycle assessment (LCA) into an activity-based costing (ABC) model to develop a steering system that takes into account both financial costs and associated environmental impacts. By combining the formalism of LCA and ABC matrix calculations, we show how impact assessment results can be affiliated with costs to jointly and simultaneously compute the costs and environmental impacts of products and activities. The conditions of integration are developed following the four-step structure of LCA. The proposal is applied to a simplified case study of the ‘Classic Pen Company.’ The developed ABC-LCA approach paves the way for further test applications, which are considered useful in the context of environmental indicators for strategic steering, communication with customers and forecasting or simulation.     

Dual Distribution and the Penrose Effect

This paper develops an approach to analyzing an equilibrium in markets where firms can choose dual distribution to sell their products. Dual distribution involves a firm selling its product both through company-owned stores and through independently owned franchises. For a monopoly firm, the use of company-owned stores is assumed to play a number of roles. When the total number of markets is variable, an increase in company-owned stores can signal the quality of the product to potential franchisees, increasing the total number of markets served by the monopolist. Additional company-owned stores may also increase the royalty rate received by the franchisor, as well as increase demand in the local markets. There are limits, however, to the benefits of company ownership, called the “Penrose Effect.” For an equilibrium to exist, the monopoly firm must have no incentive to alter the the number of company-owned stores vis-à-vis franchised stores. The approach taken here yields a number of testable implications, which can form the basis of empirical tests of dual distribution.