Towards a model of dynamic capabilities in innovation-based competitive strategy: Insights from project-oriented service firms

With the growing significance of services in most developed economies, there is an increased interest in the role of service innovation in service firm competitive strategy. Despite growing literature on service innovation, it remains fragmented reflecting the need for a model that captures key antecedents driving the service innovation-based competitive advantage process. Building on extant literature and using thirteen in-depth interviews with CEOs of project-oriented service firms, this paper presents a model of innovation-based competitive advantage. The emergent model suggests that entrepreneurial service firms pursuing innovation carefully select and use dynamic capabilities that enable them to achieve greater innovation and sustained competitive advantage. Our findings indicate that firms purposefully use create, extend and modify processes to build and nurture key dynamic capabilities. The paper presents a set of theoretical propositions to guide future research. Implications for theory and practice are discussed. Finally, directions for future research are outlined.     

Common Ground Between Free‐Traders and Environmentalists

We use a North–South model with property right differences and resource dynamics to study the effects of trade on resource use and welfare. Autarky is likely to Pareto‐dominate free trade in the long run when the environment is quite fragile, and the result is reversed when the environment is quite resilient. Trade may cause an environmentally poor country to “drag down” its richer trading partner, when they degrade their stocks which would be preserved under autarky. It may enable the environmentally richer country to “pull up” its partner, when they preserve their stocks which would be degraded under autarky.     

The Emergence and Persistence of the Anglo-Saxon and German Financial Systems

We use a moral hazard model to compare monitored (nontraded)bank loans and traded (nonmonitored) bonds as sources of externalfunds for industry. We contrast the theoretical conditions thatfavor each system with the historical conditions prevailingwhen these financial systems evolved during the British andGerman industrial revolutions. To study persistence, we consideran entry model where financiers take the industrial structureas given when they lend and firms take the financial systemas given when they borrow. We show multiple equilibria can exist,compare equilibria in welfare terms, and discuss their robustnessto coordination between lenders and borrowers.     

The Washington State combined fund drive: a case study

The Washington combined fund drive is a large employee workplace giving programme in the state of Washington, USA. This programme provides individuals with a large choice of charities and payment options. Promotion for the programme is conducted entirely through a volunteer organisation. It has grown steadily, but contributions are now levelling off, so the director of the programme is trying to identify the most effective way to improve it. Copyright © 2002 Henry Stewart Publications     

What if the UK had Joined the Euro in 1999?

The issue of whether the UK should join the European single currency has been fiercely debated for the past two decades. However little research has been devoted to forecasting hypothetical projections for important UK economic variables, assuming that the UK had in fact joined the euro at its inception in 1999. This paper focuses on estimating counterfactual series for two key macroeconomic variables: unemployment and output. We do this by estimating Phillips curves for the UK, which we then use to compute counterfactual series for what unemployment and output may have looked like for the UK had they adopted the single currency in 1999. Based on the comparison of our forecasts with observed data, we find that the UK was correct in not joining the euro; had they adopted the European single currency in 1999, unemployment would have been higher and output would have been lower.     

Measuring the Accuracy of Federal Reserve Forecasts

Markets across the world pay enormous attention to every economic forecast made by Federal Reserve governors, particularly those from the chair. This article develops a new way that the academic literature can assess the accuracy of these Federal Reserve forecasts. In particular, our proposed method allows for both general and specific predictions to be assessed, while also accounting for the macroeconomic volatility that prevails at the time of the forecast. To develop this measure, we expand upon a methodology proposed by the Wall Street Journal to score the accuracy of forecasts made by the Fed. Our results show that Alan Greenspan was consistently the most accurate forecaster among Fed governors, while the most recent chair in our sample, Janet Yellen, has performed relatively poorly. More generally, we find that the chairs have become less accurate over time with their forecasts and have also tended to make fewer specific predictions.     

Loan Loss Provisions by Banks in Hong Kong, Malaysia and Singapore

This paper studies loan loss disclosures by banks in Hong Kong, Malaysia, and Singapore for the period 1993 through 2000. We find that unexpected loan loss provisions are positively related to bank stock returns and future cash flows. This indicates that Asian bank managers increase loan loss provisions to signal favorable cash flow prospects, and bank investors bid bank stock prices up when unexpected provisions are positive. These results are consistent with those obtained by Wahlen (1994) for US banks. We also examine the impact of the Asian financial crisis of 1997 on the loan loss variables. The results indicate that the association between the unexpected loan loss provisions and bank stock returns and future cash flows was significantly lower in the crisis years, relative to the non‐crisis period. Evidently, discretionary loan loss provisions had no signaling value during the crisis. This suggests that macroeconomic uncertainty influenced the strategic behavior of Asian bank managers and investors.     

The not-so-secret-agent: Professional monitors,hierarchies and implementation

Abstract. It is well-known that, when agents in an organization possess private information that is unverifiable by an outside party, games where agents simply announce their information can have multiple equilibria that may impede the successful implementation of the organization's objectives. We show that the introduction of a professional monitor (e.g. auditor, regulator, supervisor) can help to destroy the “bad' equilibria when agents have private information but have incomplete info rmation about others' information. Received: 21 May 1998 / Accepted: 26 May 2000     

Board Characteristics,Firm Profitability and Earnings Management: Evidence from India

The present paper explores the association between earnings management and specific board characteristics and the firm's profitability in the Indian context. In India, the corporate ownership model is the promoter dominated shareholders model. This is the first study based on a panel data framework that employs a fixed effect model to control for time‐invariant endogeneity. It also contributes to the literature by exploring the role of the firm's profitability in transmitting the impact of audit committee independence on earnings management. The study finds that profitability is an important variable, as it moderates the association between audit committee independence and earnings management. Managers of a profit‐making company would have little need to modify their earnings. This signifies that independent audit committees are more effective monitors of earnings management in profitable firms than in non‐profitable firms. Independent directors with multiple directorships are also found to be ineffective monitors. The findings are of material significance to policymakers in analysing board effectiveness and earnings management and improving policymaking for corporate governance by using profitability and related variables.     

Excess demand and price formation during a Walrasian auction

We conduct a detailed analysis of the relationship between excess demand and the convergence of price to equilibrium during a real-world Walrasian auction, paying special attention to the size and speed of the price adjustment. Using data from the Tokyo Grain Exchange (TGE), we first show that because auctions for the various futures contracts occur sequentially, information becomes more evenly dispersed across traders as an auction sequence progresses. Then we show that excess demand is positively correlated with both the eventual price change and the speed with which price adjusts. As information becomes more evenly dispersed, the strength of these relationships weakens. Finally, though excess demand explains a large proportion of the variability of the change in price, it explains only a small proportion of the variability of the speed of adjustment.