The Heavenly Calculus and Socially Responsible Business Conduct: An Explorative Study among Executives

Summary In this paper we present a theoretical economic model, describing the influence of eschatological beliefs of executives on their socially responsible business conduct. The core hypothesis is that the belief that one’s eternal destination depends on how one behaves in business will provide an incentive to socially responsible business conduct. We confront the model with explorative empirical data, collected by in-depth interviews with and questionnaires among twenty Dutch executives. The data provide weak indications that eschatological beliefs influence the executives’ socially responsible business conduct. The authors would like to thank the Dutch Ministry of Economic Affairs and the employers’ association VNO-NCW for their financial support. Thanks also to Boaz van Luijk and Aziza Yahia for their assistance in the collection of data used in this paper. We also thank the editor, professor M.M.G. Fase, and two anonymous referees for their valuable suggestions.     

Unemployment and Catching Up: Europe Vis-à-vis the USA

This paper develops a two-region two-sector endogenous growth model with a dual labour market based on efficiency wages. Growth is driven by research done in the (high-tech) tradeables sector. The follower region tends to catch up in terms of labour productivity with the leader region. Differences in unemployment compensation systems can lead to relative convergence, i.e., a steady state with the backward region lagging behind the leader region. The reason for this is that high social welfare compensations generate high unemployment and reduce the amount of labour employed for R&D purposes.     

Regulating the Anticommons: Insights from Public‐Expenditure Theory

This article offers a new interpretation of the traditional Cournot complements problem, or anticommons, by using the theory of public goods to gain a perspective on the problem. Specifically, I examine the pricing strategies and regulation of multiple monopolies that produce products which consumers view as perfect complements. I show that collusion by the firms increases total social welfare and that the collusion problem can be reinterpreted as a problem of provision of public goods from the point of view of the firms. I take this insight further and derive the familiar concepts of the Samuelson marginal condition and the ratio equilibrium for the firms. I compare these outcomes to the first best solution and then apply incentive‐compatible mechanisms to strategically implement the Pareto superior ratio‐equilibrium outcome and the optimal marginal‐cost pricing outcome. Finally, I show how this methodology can be applied to the more familiar Cournot model of oligopoly.     

Quote Stuffing

In this study we examine intense episodic spikes in quoting activity (frequently referred to as quote stuffing) on market conditions. We find that quote stuffing is pervasive and that over 74% of US exchange‐listed securities experienced at least one episode during 2010. We also find that stocks experience decreased liquidity, higher trading costs, and increased short‐term volatility during periods of intense quoting activity. We find that most quote‐stuffing events occur on the NYSE, ARCA, NASDAQ, and BATS and that during these quote‐stuffing events, the number of new orders and canceled orders increases substantially while the order size and order duration decrease.     

Hypercongestion in production correspondences: an empirical exploration

This empirical contribution reviews the rather limited existing literature measuring congestion in production. It first compares current ways to measure congestion using nonparametric specifications of technologies. In particular, it focuses on the magnitude and incidence of the congestion detected in empirical studies using traditional radial efficiency measures. Thereafter, it shows the limitations of this radial measurement and how alternative measurement schemes may reveal higher amounts of congestion. Then, the new, more general methodology of measuring S-congestion is presented. In particular, we first present a numerical example to illustrate the way the S-disposable technologies allow to capture more extreme forms of congestion by setting empirically determined upper bounds to the wasting of inputs. Then, an empirical illustration is presented based on an existing sample of data. A final section concludes.     

Single Stock Futures as a Substitute for Short Sales: Evidence from Microstructure Data

Abstract:  We examine how the introduction of single-stock futures impacts short sale costs and short interest levels in the underlying spot market. We find that short selling in the underling securities declines, after futures are introduced, the cost of borrowing stock for short sales declines and the available unborrowed supply of lendable shares increases. These results are consistent with futures exchanges providing a low-cost substitute market for establishing short positions. Microstructure evidence also suggests that the lower cost and greater ease of short selling via futures markets draws informed traders from the spot market.     

Managing Supplier Involvement in New Product Development: A Multiple‐Case Study*

Existing studies of supplier involvement in new product development have mainly focused on project‐related short‐term processes and success factors. This study validates and extends an existing exploratory framework, which comprises both long‐term strategic processes and short‐term operational processes that are related to supplier involvement. The empirical validation is based on a multiple‐case study of supplier collaborations at a manufacturer in the copier and printer industry. The analysis of eight cases of supplier involvement reveals that the results of supplier–manufacturer collaborations and the associated issues and problems can best be explained by the patterns in the extent to which the manufacturer manages supplier involvement in the short term and the long term. The results of this study reveal that the initial framework is helpful in understanding why certain collaborations are not effectively managed yet conclude that the existing analytical distinction among four different management areas does not sufficiently reflect empirical reality. This leads to the reconceptualization and further detailing of the framework. Instead of four managerial areas, this study proposes to distinguish between the strategic management arena and the operational management arena. The strategic management arena contains processes that together provide long‐term, strategic direction and operational support for project teams adopting supplier involvement. These processes also contribute to building up a supplier base that can meet current and future technology and capability needs. The operational management arena contains processes that are aimed at planning, managing, and evaluating the actual collaborations in a specific development project. The results of this study suggest that success of involving suppliers in product development is reflected by the firm's ability to capture both short‐ and long‐term benefits. If companies spend most of their time on operational management in development projects, they will fail to use the leverage effect of planning and preparing such involvement through strategic management activities. Also, they will not be sufficiently able to capture possible long‐term technology and learning benefits that may spin off from individual projects. Long‐term collaboration benefits can only be captured if a company can build long‐term relationships with key suppliers, with which it builds learning routines and ensures that the capability sets of both parties are aligned and remain useful for future joint projects.     

The Effects of Performance Measurement and Compensation on Motivation: An Empirical Study

Summary This paper analyzes empirically the relationship between pay and performance. Economic and psychological theories predict that the design and implementation of a performance measurement and compensation system affect the motivation of employees. Our survey results demonstrate a positive relationship between the perceived characteristics of the complete compensation system and extrinsic motivation. Intrinsic motivation is not affected by the design of monetary compensation, but by promotion opportunities. The compensation system also significantly affects work satisfaction and turnover intent. Our results have both managerial as well as policy implications. We would like to thank the organization and the participants of the 2002 conference of the Performance Measurement Association in Boston for helpful discussions and also seminar participants of the Dutch Labor Market Conference. We are grateful for the comments provided by Bruno S. Frey. The paper has also significantly benefited from the suggestions and comments of two anonymous referees.