Are Incentives the Bricks or the Building?

The efforts of economists to emphasize the importance of incentives as determinants of organizational performance, while successful to some degree, may have left the mistaken impression that "getting the incentives right" is the only task requiring the attention of senior executives when designing corporate organizations. The author identifies the incentive-intensive companies envisioned by economists as "mercenary organizations" (or MOs), or companies whose distinguishing feature is near-complete reliance on financial rewards and controls. Citing the difficulties of devising an effective incentive system that cannot be gamed (which he calls the organizational equivalent of "an anti-gravity machine"), the article questions whether such organizations are likely to yield superior performance.
As an alternative to paying more attention to incentive design, the author suggests devoting more corporate resources to seeking and attracting individuals with low "monitoring costs." After holding up examples of top executives who appear committed to that search, the author posits a "character-rich" organization (CRO) as an alternative to the MO of the economists.
Then, viewing all companies as occupying points on a continuum with the MO and CRO as its poles, the author argues that all companies combine elements of both kinds of organizations. And perhaps most important, the CEOs of many of the most successful large organizations, without minimizing the importance of incentives, pay even greater attention to the search for trustworthy individuals and the creation of a culture of teamwork and accountability.     

Digital Negotiation: Online Leisure in Coping with Gender Stereotypes

This study aimed at exploring whether cyberspace and the anonymity it provides can be useful in coping with leisure constraints that originate in gender stereotypes. The study was based on a survey that measured perceptions of parallel online and offline forms of masculine, feminine, and gender neutral leisure activities among 240 Internet users belonging to one of two age groups: adolescents and seniors. Findings indicated that offline feminine activities were perceived as more suitable for both genders in their online form. By contrast, the offline leisure activities labeled masculine were still perceived as such in their online form, with older participants even considering them more masculine in that mode. These findings suggest that online leisure plays a dual role, rendering activities more accessible to men of all ages but further discriminating against older women. It seems to broaden age and gender disparities and perpetuates power relations inherent in patriarchal societies.     

The interaction between public and private governments: An empirical analysis

Private governments, found in planned developments and condominiums, are increasingly common methods of delivering local services to residents. This paper provides the first empirical study of their impact on local public finance. A novel data set of homeowners' associations allows construction of a panel of private governments in California. Panel methods test whether public expenditures respond to private government prevalence. Estimates indicate that local governments lower spending moderately in response to private government activity, consistent with strategic substitution. The paper then examines various mechanisms to explain this downloading and shows that the substitutability between public and private providers is key to which services are downloaded. Evidence also suggests that the economies of scale in service production in small cities temper the offloading of public services to private governments.     

Corporate Strategy, Corporate Culture and Conversion; Adjustment in the Defence Industry

The recent decline in military demand has prompted calls for government aid to help the arms manufacturers convert to civil production. The authors examine the shock that UK defence firms faced, the constraints their defence culture imposed and how they responded. They conclude that while the market solution, closure of defence plants and redundancy, may appear wasteful, in the longer run it is likely to be more productive than trying to convert defence plants.     

Economic growth and the human capital intensity of government spending

The paper models an economy in which long-run growth is driven by human-capital-intensive, private sector research and development, and shows how government spending affects growth through its impact on relative wages. The more human-capital-intensive government spending is relative to private spending, the greater the derived demand for and relative wage of human capital and, hence, the more costly is research and development. The private sector thus devotes fewer resources to research and development and the rates of innovation and economic growth are lower. The paper argues that these effects are likely to be negative, and possibly substantial, in the U.S. The paper's results also offer a plausible explanation for the insignificance of government spending in cross-country growth regressions in recent empirical studies.     

On melodic contour and number preferences: The effects of musical melody on the processing of numerical information

In this paper, we utilize three exploratory studies to examine the effects of musical melody on accompanying numerical information used in an advertisement. We find that when melody (i.e., in the form of melodic “contour”) corresponds to—or is congruent with—the numerical information in an ad, consumers will have greater recall and more favorable predispositions toward that information. These favorable predispositions, in turn, may impact such downstream variables such as purchase intentions. We posit that “contour” effects occur because individuals process the scalar steps between musical notes in a manner similar to the way they process the differences between numbers in common numerical stimuli such as customer service numbers, prices, purchase amounts, and so forth. This expectation implies that there is cognitive consistency in terms of the spatial representation of number and the spatial depiction of pitch. Thus the latter may impact the former by facilitating ease of processing, thereby leading to a number familiarity effect.     

Diversification as a Public Good: Community Effects in Portfolio Choice

Within a rational general equilibrium model in which agents care only about personal consumption, we consider a setting in which, due to borrowing constraints, individuals endowed with local resources underparticipate in financial markets. As a result, investors compete for local resources through their portfolio choices. Even with complete financial markets and no aggregate risk, agents may herd into risky portfolios. This yields a Pareto‐dominated outcome as agents introduce “community” risk unrelated to fundamentals. Moreover, if some agents are behaviorally biased, or cannot completely diversify their holdings, rational agents may choose more extreme portfolios and amplify the effect.     

Can Ethical Organizational Character Be Stimulated and Enabled?: “Upbuilding” Dialog As Crisis Management Method

Crisis management can be simultaneously a content specific problem solving process and an opportunity for stimulating and enabling an organizations ethical tradition. Crisis can be an opportunity for ethical organizational development. Kierkegaardian upbuilding dialog method builds from within the internal ethical tradition of an organization to respond to crises while simultaneously adapting and protecting the organizations tradition. The crisis itself may not be a directly ethical crisis, but the method of responding to the crisis is built upon the ethical foundations of an organizations tradition. A limitation of this method is that it may be less applicable to organizations with questionably ethical traditions. The concept of upbuilding dialog is derived from Kierkegaard, but here is applied to organizational crisis management. The method is illustrated and discussed in the context of a wrongful death crisis of the Dana- Farber Cancer Institute, a nonprofit organization, and an economic survival crisis at Ben and Jerrys, a business organization.