Causality Rules: Performance Feedback on Hierarchically Related Goals and Capital Investment Variability

We extend March and Simon’s (1958) analysis of strategic decisions by distinguishing between two rules for allocating attention – priority versus causality. We develop theory concerning causality rules which have been largely overlooked in prior literature. Specifically, we examine how performance feedback on the intermediate productivity goal and the higher‐order profitability goal independently and jointly influence the variability of firm capital investments. Panel analysis of 2,477 Spanish manufacturing firms reveals that these goals jointly affect the variability of capital investments through both priority and causality attention rules. Our study provides new insights on how firms handle multiple goals, deconstruct performance feedback, and cope with the attentional constraints of bounded rationality.     

Social security and economic performance in Portugal: after all that has been said and done how much has actually changed?

This paper provides an empirical estimate of the macroeconomic effects of the Portuguese pay-as-you-go social security system based on data for the period 1970?C2007 and on VAR estimates using GDP, the unit cost of labor, the unemployment rate, the savings rate and social security spending. The major findings are twofold. First, growing social security spending has had detrimental effects on all of the private sector variables under consideration suggesting the existence of sizable inefficiencies. Second, these inefficiencies persist despite the successive reforms that took place over the last two decades. These results highlight the need for structural reforms of the pay-as-you-go system thereby addressing the sources of these inefficiencies, regardless of whether or not the system is financially sustainable. Furthermore, any reforms designed to address sustainability concerns cannot ignore these inefficiencies or risk making them even worse and thereby hindering the quest for sustainability itself.     

Corruption and public debt: a cross-country analysis

Using data from a large panel of countries over the period 1995–2015, this article empirically investigates the effect of corruption on public debt. Overall, the estimates reveal that corruption increases public debt. The effect, however, appears to be heterogeneous across income-related sample splits: it is stronger for advanced economies, but weaker and less statistically robust for less-developed countries, where external factors such as foreign aid may also affect public debt. The analysis suggests the inadequacy of conventional wisdom assuming that more detrimental fiscal effects of corruption arise in low-income countries.     

Trade credit and determinants of profitability in Europe. The case of the agri-food industry

The objective of this paper is to analyse the effect that trade credit has on the determinants of profitability during the crisis period in Europe. We use panel data for a total of 24,177 European agri-food companies from 2010 to 2014. Among our main contributions, we highlight that we isolate the sector effect and study the country effect by separating the different policies and customs with respect to the granting of trade credit. The results confirm, in general, that trade credit affects profitability depending on the country and the characteristics of size, specificity, market power or reputation.     

The multi-faceted role of experience dealing with policy risk: The impact of intensity and diversity of experiences

Firms learn from their previous experience, transfom routines into knowledge and thus develop capabilities. This holds for the market- and the non-market environment likewise. Experience is therefore useful to deal with policy risk arising from potential discretional and opportunistic behavior of political authorities, such as governments. We argue that firms can not only learn from the intensity of experience dealing with policy risk, but also from the exposure to a more diverse range of policy risk across different political environments. Testing a sample of 164 Spanish multinational firms, we find that the positive impact of diversity of experiences on the scope of internationalization is more important than the intensity of experience. Moreover, we also find a moderating impact between both types of experience. Overall, our findings emphasize the multi-faceted nature of experience and the need to disentangle the impact and interrelationships of its different components.     

National pro-poor spending programmes and their effect on income inequality and poverty: Evidence from Vietnam

This article examines the causal effects of the national (pro-poor) targeted programmes (NTPs) on both poverty incidence and inequality in Vietnam over the period 2002–2010. While the links between NTPs and poverty alleviation and income inequality have previously been analysed independently, this study is the first to offer a comprehensive analysis of NTPs expenditure on poverty and inequality simultaneously. Applying the system generalized method of moments estimator to a panel of Vietnamese regional data, we are unable to establish that NTPs have significantly mitigated poverty incidence. However, we estimate that NTPs have significantly increased inequality. We offer possible explanations why the NTPs have resulted in these unintended outcomes and discuss potential policies which can reduce both poverty and inequality.     

SMEs international growth: The moderating role of experience on entrepreneurial and learning orientations

New and small firms operating in the high-tech environments need strong entrepreneurial (EO) and learning (LO) orientations to enhance international growth. Yet, the relationship between these two key strategic dimensions and foreign growth can be contingent to the entrepreneur’s individual characteristics. Bringing together elements from strategic management, organization and entrepreneurship literatures, we employ a dynamic temporal perspective considering two levels of analysis, the firm and the entrepreneur, and we apply a fixed effects pooled time-series regression on a sample of 170 firms in two periods of time (2005 and 2015). Our findings indicate that SMEs that possess greater EO and LO have higher international growth. However, previous entrepreneurial and industry-specific managerial experience of the founder/CEO positively exert their effect on these relationships. Our results have important theoretical and practical implications for entrepreneurs and policy makers operating in highly innovative sectors.     

ACHIEVING SOCIAL OBJECTIVES THROUGH PRIVATE TRANSFERS: A Review

Private interhousehold cash transfers are an important sourceof income in many developing countries. Among the countrieswhose experience is reviewed in the article, the proportionof all households receiving private transfers ranges from afifth to a half. The amounts received are large, particularlywhen compared with the incomes of the poorest households. Understanding more about these transfers is important for designingpolicy because, among other things, these remittances providesocial and economic benefits similar to those of public programs,such as unemployment insurance, pension support, educationalcredit, and health assistance. As such, private transfers maysupplement or overlap with public transfers, and, if privatedonors give less as public transfers increase, the effect ofpublic programs on beneficiaries would be less than originallyintended. Or the transfers may alter the distributional effectsof public programs: for again, if private donors give less aspublic transfers increase, they share in some of the benefitsof public programs.      

Economic Freedom and the Quality of Life: An Empirical Analysis

Previous empirical research on the social and economic impact of freedom has tended to focus on the link between freedom and economic growth rates. Only a few studies have looked at freedom's effect on the quality of life, and these generally focused on the effect of political freedom. Here, we attempt to bridge this gap by analyzing the effect of economic freedom on the quality of life. Taking advantage of newly developed measures of economic freedom, we analyze the impact of economic freedom on life expectancy and literacy rates. We find that greater economic freedom enhances the quality of life both across nations and increases the improvements in the quality of life over time.