Responsible Leadership for Multinational Enterprises in Bottom of Pyramid Countries: The Knowledge of Local Managers

The gulf between multinational enterprises’ focus on high income countries and the reality of 80% of the world living in developing, bottom of pyramid (Hahn, J Bus Ethics 84:313–324, 2009) economies could magnify the anti-globalisation movement and political backlashes in the twenty-first century. The global financial crisis of 2008 and 2009 has increased such social tensions throughout the world and creates greater challenges for, responsible leadership. In this conceptual article, the authors analyse the value and identity of local managers, and the liability of foreignness caused by over-reliance on expatriate managers and under-reliance on local managers in bottom of pyramid countries (Hahn, 2009). It is argued that multinational enterprises need to assess local managers’ knowledge and contributions as having not only operational and market value, but also institutional value, such as access to local knowledge and local social capital; such a holistic approach will ensure fairer, equal treatment of all managers in the multinational enterprise. Responsible leadership in the twenty-first century requires a greater appreciation of local managers’ institutional value and the overcoming of any psychological distance towards local managers of bottom of pyramid countries.     

Equilibrium prices in the presence of delegated portfolio management

This paper analyzes the asset pricing implications of commonly used portfolio management contracts linking the compensation of fund managers to the excess return of the managed portfolio over a benchmark portfolio. The contract parameters, the extent of delegation, and equilibrium prices are all determined endogenously within the model we consider. Symmetric (fulcrum) performance fees distort the allocation of managed portfolios in a way that induces a significant and unambiguous positive effect on the prices of the assets included in the benchmark and a negative effect on the Sharpe ratios. Asymmetric performance fees have more complex effects on equilibrium prices and Sharpe ratios, with the signs of these effects fluctuating stochastically over time in response to variations in the funds' excess performance.     

Did gold-standard adherence reduce sovereign capital costs?

A commonly cited benefit of the classical gold standard is that it reduced borrowing costs by signaling a country's commitment to financial probity. Using a new dataset, this paper tests whether gold-standard adherence was negatively correlated with the cost of capital. Conditional on UK risk factors, there is no evidence that the bonds issued by countries off gold earned systematically higher excess returns than the bonds issued by countries on gold. This conclusion is robust to allowing betas to differ across exchange-rate regimes; to including other determinants of the country risk premium; and to controlling for the British Empire effect.     

Share of wallet's role in customer profitability

Understanding the financial contribution customers make to their organisations is an initial step in customer relationship management. Set in the banking industry, this paper examines the strength of ‘share of wallet’ as a proxy variable for measuring customer profitability. Data from a study of 1,100 personal retail banking customers of a New Zealand regional bank were used in combination with the bank's own customer contribution data for each of those respondents. Results indicate that although share of wallet might be used as a proxy for customer contribution at a macro level of customer classification, details of specific financial relationships customers have with their main bank are still necessary. Nevertheless, share of wallet ought to become a standard entry in a bank's customer database.     

The Economics of the 'Arc of Instability'

Why are the Melanesian states of Fiji, Papua New Guinea, Solomon Islands and Vanuatu experiencing considerable civil unrest and, in this respect, why are they so different from the other small island states of the Pacific region? It is argued that while, like the other Pacific island countries, they have had poor economic growth and high birth rates, they do not have easy emigration to high‐income countries. Therefore, they have large pools of under‐employed people. Other distinguishing characteristics are their richness in natural resources and weak central governments relative to local‐level power structures. The civil unrest derives from competition for the natural resources in an environment of weak states and hence poorly defined and enforced property rights, and moreover, the large pool of under‐employed provides ample scope for the creation of grievances to back up the claim for the resources. One message for donor nations is that the provision of compensation to settle the grievances will likely only generate further grievances and not resolve the basic problem.     

Information, Trust and the Private Finance Initiative in Social Housing

This article considers the role of information and trust in Private Finance Initiative (PFI) 'Pathfinder' schemes in the social housing sector in England. It uses the work of Tomkins (2001) and a series of interviews with local authority PFI project managers to provide a critique of the structure of the pathfinder process. The authors conclude that the pathfinder process cannot provide information about willingness to trust and they suggest that this may be one of the reasons for the delay in the contractual signing of the first wave of these schemes.     

Ex-post Analysis of Mobile Telecom Mergers: The Case of Austria and The Netherlands

Recently there has been an increased attention towards the ex-post evaluation of competition policy enforcement decisions and in particular merger decisions. In this paper we study the effects of two mobile telecommunication mergers on prices. We apply a standard difference-in-differences approach which is widely used in the literature on ex-post evaluation of mergers. For the Austrian T-Mobile/tele.ring merger, we conclude that after the acquisition (for which remedies were imposed) prices in Austria did not increase relative to the considered control countries. For the Dutch T-Mobile/Orange merger, we observe an increase in the mobile tariff prices in the Netherlands in the analysed period, relative to the control countries. We cannot firmly establish whether this price increase was exclusively caused by the T-Mobile/Orange merger or in part by possible price effects brought about by the KPN/Telfort merger consummated two years earlier in the Netherlands. However, we believe that such price increase could be linked to the structural changes brought by both KPN/Telfort and T-Mobile/Orange mergers together.