Factor supply interruption, welfare loss and shortage management

Factor supply shortage is a common problem faced by a firm. Solutions for allocating the limited supply include rationing, interruption and pricing. While previous research has examined the welfare losses generated by each solution, there is little evidence on their relative magnitudes within a common framework. The objective of this paper is to specify a model of firm behaviour under service interruption to estimate the welfare loss of service interruption. The same model is used to estimate the loss due to a price increase intended to resolve a supply shortage. Using water consumption data collected for Hong Kong, we find that relative to pricing, service interruption is inefficient for water shortage management.     

与狮同行

参与一年一度的Cannes Lions戛纳国际广告节。是每一位广告人难得的经验。今年有机会置身其中,最兴奋的,就是有幸上台亲手接过金狮子的荣誉。回顾今次行程。获益良多．能够一次观赏到来自世界各地的出色作品．感觉就像众多甜品放在面前,琳琅满目,每件作品也想慢慢解馋,慢慢消化,另一方面。却受时间所限。怕过分享受．会错过很多精彩作品。当然,观赏之余,亦提供一个与来自其他地区的广告人交流的机会。了解多一点,眼界与思维也国际化起来。所以,今次绝对是全方位大考验。挑战接收力、消化力和体力。     

A unifying approach to risk-measure-based optimal reinsurance problems with practical constraints

The design of optimal reinsurance treaties in the presence of multifarious practical constraints is a substantive but underdeveloped topic in modern risk management. To examine the influence of these constraints on the contract design systematically, this article formulates a generic constrained reinsurance problem where the objective and constraint functions take the form of Lebesgue integrals whose integrands involve the unit-valued derivative of the ceded loss function to be chosen. Such a formulation provides a unifying framework to tackle a wide body of existing and novel distortion-risk-measure-based optimal reinsurance problems with constraints that reflect diverse practical considerations. Prominent examples include insurers’ budgetary, regulatory and reinsurers’ participation constraints. An elementary and intuitive solution scheme based on an extension of the cost–benefit technique in Cheung and Lo [Cheung, K.C. & Lo, A. (2015, in press). Characterizations of optimal reinsurance treaties: a cost–benefit approach Scandinavian Actuarial Journal. doi:10.1080/03461238.2015.1054303.] is proposed and illuminated by analytically identifying the optimal risk-sharing schemes in several concrete optimal reinsurance models of practical interest. Particular emphasis is placed on the economic implications of the above constraints in terms of stimulating or curtailing the demand for reinsurance, and how these constraints serve to reconcile the possibly conflicting objectives of different parties.     

The pricing of basket-spread options

Since the pioneering paper of Black and Scholes was published in 1973, enormous research effort has been spent on finding a multi-asset variant of their closed-form option pricing formula. In this paper, we generalize the Kirk [Managing Energy Price Risk, 1995] approximate formula for pricing a two-asset spread option to the case of a multi-asset basket-spread option. All the advantageous properties of being simple, accurate and efficient are preserved. As the final formula retains the same functional form as the Black–Scholes formula, all the basket-spread option Greeks are also derived in closed form. Numerical examples demonstrate that the pricing and hedging errors are in general less than 1% relative to the benchmark results obtained by numerical integration or Monte Carlo simulation with 10 million paths. An implicit correction method is further applied to reduce the pricing errors by factors of up to 100. The correction is governed by an unknown parameter, whose optimal value is found by solving a non-linear equation. Owing to its simplicity, the computing time for simultaneous pricing and hedging of basket-spread option with 10 underlying assets or less is kept below 1 ms. When compared against the existing approximation methods, the proposed basket-spread option formula coupled with the implicit correction turns out to be one of the most robust and accurate methods.     

The strategic and cultural legitimacy of HR professionalization in Hong Kong

In Hong Kong, human resources (HR) practice has reached a point of professionalization not yet apparent in other parts of China creating opportunities for best practice diffusion across rapidly developing cities, provinces, and regions. The aim of this paper is to ascertain the strategic and cultural legitimacy of human resource management (HRM) in Hong Kong from the perspective of the occupation’s status as an emerging profession. Combining established theory on professions with documented insights from normative associational ideals, this paper derives four major sources of HR professionalization, which it entitles strategy, communication, administration, and discipline. Assuming that tasks performed by the most senior, qualified and experienced practitioners hold greatest empirical sway over the prospect of occupational association, this study finds that a combination of strategic and communication practices emerge as the two most likely routes to HR professionalization. Based on survey responses from a representative sample of 172 certified practitioners, the findings support the notion of HR as a strategic asset, raising important implications for the professional status of the occupation within an Asian management context.     

A framework of E-SCM multi-agent systems in the fashion industry

The fashion industry's supply chain is full of uncertainty and unpredictability. Thus, building an intelligent system to effectively capture the requirements of customers and help manage the supply chain is very important. Typical quick response (QR) systems have been broadly used in the fashion industry to serve as a way of maintaining an efficient supply chain management (SCM). The original functions of a QR system cannot, however, completely overcome the challenge of quickly satisfying the requirements of customers with effective customer relationship and quality of service. In this paper, we have integrated the typical management information system (MIS) development procedure with that of an e-fashion SCM multi-agent system. Some related research and reports from different countries have been thoroughly surveyed in order to find possible IT and non-IT methods for use in the SCM of fashion retailers. This paper thus provides an electronic fashion SCM system by adopting the techniques of the Semantic Web and multiple agents. The proposed system can integrate different information technologies to make its behavior more intelligent and to catch more useful information from customers. Its implementation also considers some practical issues in the fashion retailing SCM.     

The moderating effects of knowledge characteristics of firms on the financial value of innovative technology products

The development of innovative technology products is both costly and risky, and their economic value is highly uncertain. Based on a sample of 312 innovative technology products introduced between 1987 and 2006 in the U.S. and a long-horizon event study with control firms, we study the impact of innovative technology products on the long-term financial performance of a firm. In particular, we examine how the knowledge characteristics of the firm, which embrace its knowledge absorptive capacity, knowledge impact, and knowledge diversity, moderate such an impact. We find that on average an innovative technology product increases the firm's return on assets (ROA) (relative to control firms) by 2.18% in the second year after product introduction. However, the value of an innovative technology product varies with the knowledge characteristics of the firm that invented it. We find that the financial impact of technology products is stronger when firms have higher knowledge absorptive capacity, and more impactful and less diversified knowledge (as measured by patents). We classify firms into three categories based on their knowledge characteristics. We find that firms with a high knowledge fit increase their ROA by 4.55% after product introduction, while those with a low knowledge fit receive no benefit from the innovative technology products at all.     

The visual history of the Tableau Économique

This article looks at the history of the Tableau Économique from a visual point of view. It shows that Quesnay invented the Tableau to formalize visually his economic theory, and that he used different versions of the Tableau (‘Zigzag’, ‘Précis’ and ‘Formule’) for reasons of visual rhetorics. Accordingly, the visual history of the Tableau clarifies several problems identified by previous ‘ecommentors’. The paper concludes that the history of the Tableau as an image cannot be equated with that of Quesnay's abstract economic model without missing the Tableau Économique's raison d'être.     

An Open Innovation Decision Support System to Select a Biopharmaceutical R&D Portfolio

Drugs available in the market today, selected several years ago under very uncertain future scenario, have experienced a long and expensive process of research and development carried out following both a closed and an open innovation path. To support this critical selection process, we propose a Decision Support System, able to choose among different candidates the most promising drugs along their best development path. The Decision Support System, based on a real options portfolio optimization model, mapping tools, and what‐if rules as well, has been applied to a numerical example available in literature, and the research findings show interesting managerial and academic implications. Copyright © 2015 John Wiley & Sons, Ltd.