Political risk in private participation projects: The effects of political discretionality and corruption

This article investigates the impact of political risk on the performance of private participation infrastructure projects in emerging markets. Previous studies have shown that firms in regulated sectors are prone to employ political capabilities in their investments overseas. Our analysis of 32,257 projects in 114 emerging countries from 1997 to 2013 shows that higher political discretionality in the host country is negatively associated with project completion. In contrast, a higher level of corruption in the host country is positively associated with project completion. The study makes a contribution to the literature on political risk in foreign direct investments.     

Investment opportunities and R&D investments in family and nonfamily firms

The firm’s investment opportunity set (IOS) reflects the prospective growth opportunities related to physical and human capital investments. IOSs are largely firm specific, embedded in assets-in-place, or generated by experience curves, learning-by-doing, and other similar phenomena. However, the value of an IOS can be destroyed if a firm does not exercise the option to invest. In this study, we theorize that a firm’s ability to invest in R&D is conditional on the availability of a favorable IOS. We test our theoretical propositions in the European business environment using a sample of large publicly traded firms with concentrated ownership. Our findings support the notion that the IOS is a significant determinant of corporate R&D investments, but the magnitude of this effect depends on the identity of the ultimate owner. Specifically, the sensitivity of R&D investments of family- and state-owned corporations is higher to favorable IOS than that of widely held corporations, suggesting these firms are more responsive to favorable IOS than others. By introducing the IOS dimension, our results have interesting implications for both theory and practice.     

Factorization of European and American option prices under complete and incomplete markets

In a standard option-pricing model, with continuous-trading and diffusion processes, this paper shows that the price of one European-style option can be factorized into two intuitive components: One robust, X₀, which is priced by arbitrage, and a second, Π₀, which depends on a risk orthogonal to the traded securities. This result implies the following: (1) In an incomplete market, these parts represent the price of a hedging portfolio, which is unique, and a premium, which depends only on the risk premiums associated with the residual risk, respectively. (2) In a complete market, it allows factoring the contribution of the different sources of risk to the final option price. For example, in a stochastic volatility model, we can quantify the impact on the option price of volatility risk relative to market risk, Π₀ and X₀, respectively. Hence, certain misspricings in option markets can be directly related to the premium, Π₀. (3) Moreover, these results extend to American securities, which have a third component – an additional early-exercise premium.     

Readers of Macunaíma and Martin Fierro are like two ships passing in the night: Bad for business

This is an exploratory study about the knowledge of Brazilian managers about Argentina and vice versa. Expressing a deeper knowledge of the partner's culture corresponds to greater familiarity, which facilitates the construction of the confidence necessary to do business. We analyzed the academic literature on familiarity and trust, and suggest that the interrelationships of these countries' economies could be enhanced by encouraging greater familiarity among business actors in the countries. The empirical data comes from surveys of MBA students from both countries, carried out in 2008, 2014, and 2015. The results suggest a significant lack of knowledge of the other and a relative stability of expressions of distrust over time, in the case of Brazilians. We conclude that it is advisable to encourage a greater intercultural understanding among business executives of both nations because this could accelerate mutually beneficial business and empower the executives' careers in the region. We also suggest that the demand for this type of intercultural skills should arise at corporations because the demand by executives is not sufficiently informed as to garner the necessary change and because the pay‐as‐you‐go income model of business schools responds to clients' needs rather than to what should be done.     

Assessing the efficacy of rational budgeting approaches: fiscal recovery planning and municipal budgetary solvency

ABSTRACT

This study assesses the effects of financial recovery planning on the budgetary solvency of US cities. Budgetary solvency is the ability of governments to meet their service responsibilities and other financial obligations in a fiscal year. Financial recovery planning, which is based on rational decision-making theory, is designed to help cities recover from fiscal stress by facilitating diagnosis of fiscal problems, and the implementation of short- and long-term fiscal recovery strategies. Using data from a national survey of cities and multi-year audited financial reports, the results of the regression analyses show that planning is associated with stronger budgetary solvency, but its effectiveness varies across cities. Specifically, planning helps majority of fiscally struggling cities, but not those facing extreme fiscal decline.     

Supervisor and coworker support: a source congruence approach to buffering role conflict and physical stressors

The buffering effects of supervisor support on the stressor–strain relationship have proven elusive in prior research (Beehr, Farmer, Glazer, Gudanowski and Nair (2003), ‘The Enigma of Social Support and Occupational Stress: Source Congruence and Gender Role Effects,’ Journal of Occupational and Health Psychology, 8, 220–231). We built on emerging work on source congruence and conservation of resource theory to test a series of hypotheses intended to clarify these mixed findings. Using a sample of 768 employees from 45 organizations in North America, results from moderated regression analyses, showed that the effects of supervisor support on the stressor–strain relationship depended on source congruence. In accordance with our predictions, although we found buffering effects for the physical stressors–strain relationship, we found a reverse buffering effect for the role conflict–strain relationship. These differential buffering effects did not emerge when considering coworker support. We discuss the implications of our results for shedding light on the mixed evidence regarding buffering work stressors reported in prior research.     

Entrepreneurial by Design: How Organizational Design Affects Family and Non‐family Firms’ Opportunity Exploitation

Opportunity exploitation is a key aspect of the corporate entrepreneurship process and is particularly important to maintain a family firm through multiple generations. Drawing on an organizational design perspective, we investigate opportunity exploitation in family versus non‐family firms. The empirical analyses on survey data from a sample of 224 Italian firms reveal that family firms exploit significantly fewer opportunities than non‐family firms, and this result is fully mediated by the organization of their TMT. Our findings show that how family firms organize is crucial for opportunity exploitation, thus extending and enriching prior corporate entrepreneurship research, highlighting the importance of bringing an organizational design perspective to corporate entrepreneurship and family business studies.     

Policy impact assessment in developing countries using Social Accounting Matrices: The Kenya SAM 2014

This paper describes the structure and estimation of a Social Accounting Matrix (SAM) of Kenya for the year 2014. Among its specificities, this SAM includes a very high disaggregation of the agri‐food sector and accounts for the double role of households as producers and consumers. Accounting for these characteristics is crucial to provide robust socioeconomic analysis in the context of developing countries. Indeed, this type of database is valuable to perform ex‐ante evaluations of economic policies with various economic models and techniques. In this paper, we present an application with a linear multiplier analysis (backward linkages and value chain decomposition). The results show the capacity of the primary sector in Kenya to generate value added and employment, with this growth distributed more intensely in rural households whose main livelihood is semi‐subsistence agriculture.