Risky debt,jump processes,and safety covenants

The usual assumptions in the continuous-time contingent claims pricing of risky debt are (1) the firm is in default only when the value of its remaining assets falls short of the currently due promised payment and (2) the firm value follows continuous diffusion-process dynamics. It is the joint relaxation of these two simplifying assumptions that motivate this paper in its study of the valuation of risky debt and safety covenants when the firm value follows (possibly) discontinuous sample paths. Explicit solutions are derived and compared to the work of Black and Cox (1976).     

Customer Experience in Online Shopping: A Structural Modeling Approach

Online retail's rapid growth in India has triggered both untapped growth opportunities and challenges to maintain consumer “stickiness” to retailer websites. In this context, online customer experience (OCE) has emerged as a strategic differentiator for sustainable competitive edge. However, there is a paucity of empirical research in this field. Therefore, drawing on extant literature and qualitative research of online shoppers, this study proposes an integrated model of OCE with antecedents, components, and outcome variables. Data for this study were collected from Indian online shoppers; the data are empirically tested along with the moderating effect of time availability on OCE. Results of the study largely support the model and contribute to knowledge creation on OCE in the Indian context and to strategy development for online retailers.     

Communicating CSR practices – Role of internationalization of emerging market firms

Emerging markets suffer from institutional voids, and in such resource deficient economies, corporate social responsibility is given scant attention. However, when firms from emerging markets globalize, international stakeholders become suspicious about firms’ products, services, and business practices. Grounded in the liability of emergingness and legitimacy theory and using a sample of 134 manufacturing firms from one emerging market, India, this study explores how firms’ international diversification intent and market-seeking motives influence emerging markets’ firms communication of socially responsible activities as an attempt to eliminate illegitimacy. Furthermore, the study reveals that business group affiliation enhances the influence of internationalization on firms’ communication of socially responsible activities.     

Two-period supply chain coordination strategies with ambidextrous sustainable innovations

This study considers a manufacturer with ambidextrous sustainable innovation capability selling products in environmentally conscious market through an independent retailer in a two-period game setting. We design a two-period game theoretic and dyadic supply chain (SC) model considering exploitative and exploratory nature of environmental innovations. We study five different contract types, namely, wholesale price contract, vertical Nash game structure, cost sharing contract, revenue sharing contract and two-part tariff contract. We demonstrate the impact of market sensitivity towards sustainable innovation and cost parameters on optimal level of decision parameters. The equilibrium results reveal that a suitably designed two-part tariff contract can be used to achieve coordination in a fragmented SC. The equilibrium results assist managers to optimise the SC based on the two-period contract model. The results obtained in this study can help the decision-makers to take decisions on investment in the ambidextrous sustainable innovation under different types of contract structures.     

Bank credit,public financial incentives,tax financial incentives and export performance during the global financial crisis

This paper investigates the extent to which access to credit, public financial incentives and tax financial incentives affect export performance using the EU-EFIGE/Bruegel-Unicredit data set, covering firms within Austria, France, Germany, Italy, Spain, Hungary and the UK during the 2008 global financial crisis. The results show that firms receiving credit or benefiting from public financial incentives display higher export intensity and export a greater number of product lines compared to those that did not, especially in countries with better access to credit and/or financial incentives during the crisis. Further, firms benefiting from tax financial incentives show a better export performance compared to those that did not, regardless of the degree of access to credit and/or financial incentives in the country in which they operate. In addition, the effect of access to credit and public finance incentives on export performance is found to be size-dependent, while the effect of tax financial incentives is not. We suggest that governments should promote publicly funded financial incentives along with conventional schemes, such as R&D subsidies, to promote exports, particularly during a period of financial crisis.     

Market dynamics and dichotomy: evidence from Taiwanese manufacturing

In Taiwan, a dichotomous market structure is closely related to the progress of economic development. The purpose of the present article is to examine the market dynamics and dichotomous nature of Taiwanese manufacturing. A model of dynamic adjustment of industry structure is considered when both the speed of adjustment and the long-run market concentration are allowed to vary across industries. We use 118 four-digit manufacturing industries for empirical analysis of our models spanning between 1981 and 1991. Empirical findings show that both the speed of adjustment and long-run industry concentration are predominantly determined by minimum efficient scale. The speed of adjustment is much faster in a small open economy like Taiwan compared to mature economies like the US and Australia. In addition, the dichotomous nature of the market is supported in our findings for both periods, viz, 1981–1986 and 1986–1991, albeit weaker for the later period.     

Postservice Recovery Customer Satisfaction in Indian Retail Banking: Scale Development and Validation

The construct of postservice customer satisfaction with respect to Indian retail banking has been studied. Furthermore, the development and validation of the postservice recovery customer satisfaction scale in Indian retail banking is detailed. The scale development process was carried out over three stages (item generation, scale purification, scale validation) and comprised of conducting depth interviews and focus groups for item generation and three separate phases of data collection, involving a total of 851 individual respondents. The data provide evidence for face, content, discriminant and convergent validity, dimensionality, reliability, and generalizability of the customer satisfaction scale in Indian retail banking.     

Status Incentives and Performance

Studies in economics and management suggest that people invest effort to achieve pure status, and this investment increases in status incentives. We design field experiments to investigate these two behavioral hypotheses. We define status as the subjects' relative rank in their group based on their performance in a task. We explore two real tasks. In both of the tasks, subjects' earnings are nominal and independent of their performance; so status‐seeking preference should be the sole reason for achieving higher ranks. Our results indicate that inducing higher status incentives may not necessarily improve individual performance and may depend upon the task. Copyright © 2012 John Wiley & Sons, Ltd.     

Inferring welfare maximizing treatment assignment under budget constraints

This paper concerns the problem of allocating a binary treatment among a target population based on observed covariates. The goal is to (i) maximize the mean social welfare arising from an eventual outcome distribution, when a budget constraint limits what fraction of the population can be treated and (ii) to infer the dual value, i.e. the minimum resources needed to attain a specific level of mean welfare via efficient treatment assignment. We consider a treatment allocation procedure based on sample data from randomized treatment assignment and derive asymptotic frequentist confidence interval for the welfare generated from it. We propose choosing the conditioning covariates through cross-validation. The methodology is applied to the efficient provision of anti-malaria bed net subsidies, using data from a randomized experiment conducted in Western Kenya. We find that subsidy allocation based on wealth, presence of children and possession of bank account can lead to a rise in subsidy use by about 9% points compared to allocation based on wealth only, and by 17% points compared to a purely random allocation.