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 glass menagerie of urban governance and social cohesion: concepts and stakes/concepts as stakes

Social goals and social action are increasingly framed by a host of ambiguously egalitarian notions. The ambiguity of notions like ‘social cohesion’ originates principally in the tentative accommodation of competition and social justice that former radical approaches considered in fundamental contradiction. The social cohesion terminology has become part of political realism and the question is whether such notions are or could be fuelling practices that promote social justice, overcoming the ambiguity/contradiction of the different/competing interpretations nebulously juxtaposed in their fluid definition. This article comments on interrelated ambiguities in the content of social cohesion, governance and tolerance starting with a reformulated goal (social cohesion) which necessitates new means of implementation (‘new governance’) that entail the dominance of non‐conflictual social relations (tolerance). Social cohesion, governance and tolerance are Janus‐faced concepts, full of restrictions and contradictions but also full of possibilities related to the mobilizing potential of their inherently positive meaning. Social cohesion and governance would become real stakes if radical discourse and politics tried to invest them with content and meaning that would effectively transgress their legitimating function of conservative social regulation, and create massive demand for more social justice both in terms of redistributive justice and of democracy. L'action et les objectifs sociaux sont de plus en plus conditionnés par une foule de notions soi‐disant égalitaires. L'ambiguîté de concepts tels que la cohésion sociale émane surtout de l'essai d'adaptation entre concurrence et justice sociale, considérées précédemment par les approches radicales comme fondamentalement contradictoires. La terminologie de la cohésion sociale s'est peu à peu intégrée au réalisme politique, mais il s'agit de savoir si de telles notions nourrissent ou pourraient nourrir des pratiques favorables à la justice sociale, en éliminant la contradiction/ambiguîté des interprétations diverses/concurrentes vaguement juxtaposées dans le flou des définitions. L'article étudie des ambiguïtés corrélatives contenues dans cohésion sociale, gouvernance et tolérance, en partant d'un objectif reformulé (cohésion sociale) nécessitant des moyens originaux de mise en uvre (‘nouvelle gouvernance’) porteurs de relations sociales non‐conflictuelles (tolérance). Ces trois notions à deux visages sont empreintes de restrictions et contradictions, mais aussi de possibilités liées au potentiel mobilisateur de leur sens intrinsèquement positif. Cohésion sociale et gouvernance deviendraient des intérêts réels si le discours radical et la politique s'efforçaient de leur donner des contenus et significations qui transgresseraient effectivement leur fonction justificative de régulation sociale conservatrice, et créeraient une demande massive pour davantage de justice sociale en termes de justice redistributive et de démocratie.     

History-based price discrimination and entry in markets with switching costs: A welfare analysis

We analyze history-based price discrimination in an asymmetric industry, where an incumbent, protected by switching costs, faces an entrant who does not have access to information about consumers’ purchase histories. We demonstrate that consumer surplus is higher with uniform pricing than with history-based price discrimination. We find that the entry decision is invariant to whether the incumbent implements history-based pricing or uniform pricing. This implies that the potential abuse of market dominance imposed by history-based price discrimination is exploitation, not exclusion. Finally, we establish that the profit gain to the incumbent from history-based pricing exceeds the associated loss to consumers.     

Minimum nurse staffing ratios for nursing homes

The authors explored minimum nurse staffing ratios for nursing homes using production function simulations. Minimum levels of registered nurse hours per resident day were 0.31, 1.83, and 3.3 at 50%, 75%, and 90% levels of quality respectively. These results suggest that efficiency-oriented minimum nurse staffing points exist, and could be used to inform policymakers and nursing home administrators on better resource allocation and health care delivery.     

Greenwash: Corporate Environmental Disclosure under Threat of Audit

We develop an economic model of “greenwash,” in which a firm strategically discloses environmental information and an activist may audit and penalize the firm for disclosing positive but not negative aspects of its environmental profile. We fully characterize the model's equilibria, and derive a variety of predictions about disclosure behavior. We rationalize conflicting results in the empirical literature, finding a nonmonotonic relationship between a firm's expected environmental performance and its environmental disclosures. Greater activist pressure deters greenwash, but induces some firms to disclose less about their environmental performance. Environmental management systems discourage firms with poor expected environmental performance from greenwashing, which may justify public policies encouraging firms to adopt them.     

Search in the product market and the real business cycle

Empirical evidence suggests that most firms operate in imperfectly competitive markets. We develop a search-matching model between wholesalers and retailers. Firms face search costs and form long-term relationships. Price bargain results in both wholesaler and retailer mark ups, which depend on firms' relative bargaining power. We simulate the general equilibrium model and explore the role of product market search frictions for business cycles. We conclude from the simulation exercise that incorporating product market search structure and shocks improve the standard real business cycle model to reproduce US business cycle fluctuations.     

Country terms of trade: trends,unit roots,over-differencing,endogeneity, time dummies,and heterogeneity

The debate about the Prebisch-Singer thesis has focused on primary commodities with some extensions to manufactures. We analyse trends in country terms-of-trade for goods and services rather than those for commodities according to the World Bank income classification. We find that the natural logarithm of the terms of trade for all groups except for the poorest has common unit roots, but none has individual unit roots. As low-income countries have no unit roots over-differencing is inefficient and biases significance levels in first differences against the fall in the terms of trade. For the low-income countries the terms of trade of goods and services are falling at a rate that is significantly negative without and with endogeneity treatment by system GMM. A comprehensive analysis of the effects of time dummies supports the result of falling terms of trade for low-income countries. When all coefficients are country-specific 50% of all low-income countries have falling terms of trade in a simultaneous equation estimation using the SUR method. Food and financial crisis have no effect on the number of countries with falling terms of trade, but (dis-)improve the terms of trade or the significance of the results for a very small number of countries.     

Understanding the value of project management: First steps on an international investigation in search of value

Organizations investing in project management need to be assured of a concrete return. Without the ability to clearly define its value, project management joins the long line of initiatives (i.e., TQM, information systems, training, human resources) struggling to prove their worth to organizations. However, demonstrating a concrete value in organizations has been illusive and even paradoxical. This paper describes the conceptual model underlying a major international research project designed to yield a broad perspective on the value of project management. This model and research design will be of interest to researchers, project managers, professional organizations, and senior executives.     

Productivity Dispersion and Measurement Error

Several reasons have been put forward to explain the high dispersion of productivity across establishments: quality of management, different input usage and market distortions, to name but a few. Although it is acknowledged that a sizable portion of productivity dispersion may also be due to measurement error, little research has been devoted to identifying how much they contribute. We outline a novel procedure for identifying the role of measurement error in explaining the empirical dispersion of productivity across establishments. The starting point of our framework is the errors-in-variable model consisting of a measurement equation and a structural equation for latent productivity. We estimate the variance of the measurement error and subsequently estimate the variance of the latent productivity variable, which is not contaminated by measurement error. Using Norwegian data on the manufacture of food products, we find that about one percent of the measured dispersion stems from measurement error.