Technological convergence, R&D, trade and productivity growth

This paper analyses productivity growth in a panel of 14 United Kingdom manufacturing industries since 1970. Innovation and technology transfer provide two potential sources of productivity growth for a country behind the technological frontier. We examine the roles played by research and development (R&D), international trade, and human capital in stimulating each source of productivity growth. Technology transfer is statistically significant and quantitatively important. While R&D raises rates of innovation, international trade enhances the speed of technology transfer. Human capital primarily affects output through private rates of return (captured in our index of labour quality) rather than measured TFP.     

Choosing Among Regulatory Options in the United States Telecommunications Industry

We examine the determinants of the choice between rate-of-return regulation and incentive regulation in the United States telecommunications industry. We find that a state is more likely to select incentive regulation in any year: (1) when it has employed incentive regulation in the past; (2) when the Republican party controls both the executive and the legislative branches of the state government, but the Democratic party has controlled these branches historically; and (3) as the firms earnings under rate-of-return regulation increase toward the industry average. We also find that appointed regulators are more likely than their elected counterparts to revert to rate-of-return regulation.     

Trucking deregulation and highway safety: The effect of the 1980 Motor Carrier Act

The relationship between deregulation in the trucking industry and highway safety is an important economic and social issue. Analyses thus far have concentrated on the relationship between the downward pressure imposed on freight rates by deregulation and total safety investment by firms. Two issues which have been ignored are the effects that deregulation had on route carriage restrictions and total firm mileage. We show that the inclusion of these factors yields a model in which the relationship between motor carrier deregulation and highway safety is dependent upon the relative effects of all three factors. Estimation of the model using accident data implies that trucking deregulation did not deteriorate highway safety and may have actually improved it.     

Discriminatory Price Auctions in Electricity Markets: Low Volatility at the Expense of High Price Levels

A pay-as-offered or discriminatory price auction (DPA) has been proposed to solve the problem of inflated and volatile wholesale electricity prices. Using the experimental method we compare the DPA with a uniform price auction (UPA), strictly controlling for unilateral market power. We find that a DPA indeed substantially reduces price volatility. However, in a no market power design, prices in a DPA converge to the high prices of a uniform price auction with structural market power. That is, the DPA in a no market power environment is as anti-competitive as a UPA with structurally introduced market power.     

Embodied and Disembodied Technical Change in Fisheries: An Analysis of the Sète Trawl Fishery, 1985–1999

Overfishing and excess capacity in mostfisheries around the world have generated considerableand increasing concern about their biological and economic performance ramifications. Theseproblems, in part, stem from substantialinvestment in technical improvements to boats andequipment in fishing fleets, which exacerbatesexcess fishing capacity and low returns tofishing effort and investment, given regulatoryand biological constraints. However, little attempt hasbeen made to quantify the extent or effects oftechnical change in fisheries. In this paper, we usedetailed data on innovation patterns for 19vessels in the Sète trawl fleet of southernFrance to evaluate the contributions oftechnical change to catch rates. We find thatembodied technical change enhanced productivity by approximately one percent per year between 1985 and 1999, but that external (disembodied) events counteractedthis trend, causing a net output decline ofabout three percent per year.     

Promise and peril in implementing pay‐for‐performance

Why would managers abandon pay‐for‐performance plans they initiated with great hopes? Why would employees celebrate this decision? This article explores why managers made their decisions in 12 of 13 pay‐for‐performance “experiments” at Hewlett‐Packard in the mid‐1990s. We find that managers thought the costs of these programs to be higher than the benefits. Alternative managerial practices such as effective leadership, clear objectives, coaching, or training were thought a better investment. Despite the undisputed instrumentality of pay‐for‐performance to motivate, little attention has been given to whether the benefits outweigh the costs or the “fit” of these programs with high‐commitment cultures like Hewlett‐Packard was at the time. © 2004 Wiley Periodicals, Inc.     

The business cycle with nominal contracts

Summary In this paper we study the quantitative implications of nominal wage contracts for business cycle fluctuations. We address this issue using a model economy based on the neoclassical growth model supplemented by the assumption that cash is needed to purchase goods. We consider a variation of the standard recursive competitive equilibrium concept that is intended to capture the important features of wage contracting. We use this equilibrium construct to address three issues. First, we consider whether monetary shocks, propagated by nominal contracts, constitute a viable alternative to technology shocks as a source of aggregate fluctuations. Our results suggest that, while monetary shocks and nominal rigidities succeed in causing output volatility of the required magnitude, the resulting data have properties that are inconsistent with several key features of U.S. data. Second, we consider how the behavior of the economy varies with contract length. We find that the volatility induced by both monetary and technology shocks increases sharply with contract length. Finally we consider how much rigidity would be necessary to match the volatility of U.S. output. We find that only a very small amount of rigidity would be necessary to cause output volatility of the magnitude observed.We have received helpful comments from David Chapman, Paul Gomme, Jeremy Greenwood, Gary Hansen, Michael Keane, Tim Kehoe, Lee Ohanian, Edward Prescott, and Warren Weber. The usual disclaimer applies. This research is supported in part by NSF Grant SES-8921346 and the John M. Olin Foundation.     

Announced layoffs: Their effect on corporate financial performance

Conventional wisdom holds that when a firm gets into trouble due to lagging sales and rising costs, cutting the size of the organization to reduce fat and waste is a normal and effective response. In this study, evidence was found to suggest that just the opposite might be true. The financial performance of Fortune 100 companies was tracked over a five-year period—two years prior to the announced layoff, the year of the layoff announcement, and two years following it. Contrary to expectations, the results indicate that financial performance worsened, rather than improved, following announced layoffs. Strategic and human resource implications for the management of corporate downsizing are provided.     

The Antecedents of Middle Managers' Strategic Contribution: The Case of a Professional Bureaucracy

abstract    Our study contributes towards a burgeoning literature that argues organizational performance is heavily influenced by what happens in the middle of the organization, rather than at the top. Examining the UK National Health Service, our study develops the work of Floyd and Wooldridge (1992 , 1994 , 1997 , 2000 ). It utilizes role theory to conceptualize changing experiences of middle managers in organizations as a role transition. Associated with this are problems of role conflict and role ambiguity ( Biddle, 1979 , 1986 ; Biddle and Thomas, 1966 ; Kahn et al., 1964 , 1966 ). Our study illustrates that there are limiting factors to a more strategic role for middle managers associated with the professional bureaucracy context. However, role conflict and ambiguity can be mediated by a socialization process, which values incoming identity and personal characteristics ( Van Maanen and Schein, 1979 ).