P-star in times of crisis – Forecasting inflation for the euro area

In this paper we present three empirically testable versions of the common p-star model and evaluate their forecasting performance using conventional techniques. We try to answer the question if the p-star approach is preferable to achieve a reliable short-run inflation forecast and with regard to the latter we incur the need for a stable demand for money function. Our findings indicate the recurrence of the relevance of the monetary pillar of the ECB's two-pillar framework. In addition, we check for the effects of the current financial and economic crisis that started in 2007 on the forecasting performance, using two sub-sample periods, one excluding and one including the latter, and analyze the impact of the applied filter technique to compute the required equilibrium values.     

Bridging the Gap Between Strategy and Performance: Using Leadership Style to Enable Structural Elements

Successful leaders create structural elements in order to achieve the performance objectives set forth by organizational strategy. Supply chain oriented structural elements are reflected in an organization's relationships, both within the firm and with supply chain partners. In this research effort, we examine how such structural elements can be created as a means through which to enhance performance. Our hypothesized model is rooted in strategy‐structure‐performance theory and integrates elements of servant leadership theory and social exchange theory to explain how building organizational commitment via servant leadership behaviors can ultimately impact performance. We use a survey method to collect data from 158 motor carriers. The results of our structural equation model support our hypotheses and serve to extend the discussion of supply chain structural elements and the role of leadership style in achieving organizational performance.     

Banks and Microbanks

We combine two datasets to examine whether the presence of banks affects the profitability and outreach of microfinance institutions. We find evidence that competition matters. Greater bank penetration in the overall economy is associated with microbanks pushing toward poorer markets, as reflected in smaller average loans sizes and greater outreach to women. The evidence is particularly strong for microbanks relying on commercial-funding and using traditional bilateral lending contracts (rather than group lending methods favored by microfinance NGOs). We consider plausible alternative explanations for the correlations, including relationships that run through the nature of the regulatory environment and the structure of the banking environment, but we fail to find strong support for these alternative hypotheses.     

Fueling the buyout machine: fundraising in private equity

This paper analyzes the impact of performance, investment-firm-related, and macroeconomic variables on fundraising activities in private equity (PE). We use a novel, backward-looking approach to link current to preceding funds, which allows for including several parallel predecessor funds in our analysis. We employ logit and tobit models to a global sample of 1463 fundraising events observed between 2000 and 2010 in order to estimate the probability of raising and the volume of follow-on funds. Our results show that the average buyout duration of past transactions has a negative impact, whereas exits via an initial public offering (IPO) and deals without industry-style drift positively affect fundraising activities. Larger, industry-diversified, and independent PE firms exhibit a higher likelihood of fundraising and collect larger amounts.     

Erratic strategic decisions: when and why managers are inconsistent in strategic decision making

While decision makers in organizations frequently make good decisions rooted in stable and consistent preferences, such consistency in outcomes is not always the case. In this study, we adopt a psychological perspective of judgment to investigate managers' erratic strategic decisions, which we define as a manager's inconsistent judgments that can shape the direction of the firm. In a study of 2,048 decisions made by 64 CEOs of technology firms, we examine how both metacognitive experience and perceptions of the external environment (hostility and dynamism) could affect the extent to which managers make erratic strategic decisions. The results indicate that managers with greater metacognitive experience make less erratic strategic decisions. The results also indicate that in hostile environments managers make more erratic strategic decisions. But contrary to our expectations, in dynamic environments managers make less erratic strategic decisions. Similarly, hostility and dynamism interact in their effect on erratic strategic decisions in that the positive relationship between environmental hostility and erratic strategic decisions will be less positive for managers experiencing high environmental dynamism than those experiencing low environmental dynamism. These results have important implications for strategic decision‐making research. Copyright © 2010 John Wiley & Sons, Ltd.     

Differentiating Major and Incremental New Product Development: The Effects of Functional and Numerical Workforce Flexibility*

This study seeks to explain the differential effects of workforce flexibility on incremental and major new product development (NPD). Drawing on the resource‐based theory of the firm, human resource management research, and innovation management literature, the authors distinguish two types of workforce flexibility, functional and numerical, and hypothesize differential effects on NPD outcomes. A large‐scale sample of 284 Dutch firms across various manufacturing goods and business services industries serves to test these hypotheses. The results suggest that functional flexibility positively influences incremental NPD only, internal numerical flexibility negatively influences incremental NPD only, and external numerical flexibility positively influences major NPD only. Thus, differences between major and incremental NPD are grounded in the human resource flexibility of the firm. This complements research that found that such differences lie in critical development activities, learning processes, and capabilities. It also complements product innovation research on flexibility in NPD processes and on flexibility in organizational structures and routines. It extends the resource‐based theory of the firm suggesting that human resource flexibility is part of the dynamic capabilities that allow firms to reconfigure existing competencies. The conclusions imply that managers of manufacturing and service firms may use training and education and create a functional flexible workforce that can progressively enhance incremental NPD outcomes. They may want to avoid paying overtime, because such internal numerical flexibility hampers incremental NPD, but use fixed‐term contracts to expand external numerical flexibility to enhance major NPD.     

International free riding on institutions

Economic institutions are linked to economic growth because they create conditions favourable for production and exchange. Institutions can give a country comparative advantage in producing some goods. If its trading partners lack such institutions, it can still enjoy their benefits by importing these goods. Some institutions, such as intellectual property rights, have non‐excludable benefits because the resulting production is intangible, non‐rival, and often publicly disclosed. The profits, or surplus, that result, however, is rival. Foreign countries can ‘free ride’ on this benefit by misappropriating rival surplus through infringement. This article develops a theory of institutional free riding in which firms in one country free ride on the benefit of foreign institutions to the detriment of their competitor firms and their countries' institutions. It evaluates the incentives of firms and governments for this free riding, its effects, and potential responses to mitigate these effects.