Spillovers and the competitive pressure for long-run innovation

This paper discusses the impact of oligopolistic product markets for innovation and growth, highlighting a novel, fundamental role of spillovers. We develop a model of endogenous growth with non-tournament R&D, where spillovers raise the relative R&D efficiency of laggards. A key feature is that the rate of innovation and the market configuration (i.e. the distribution of market shares) are jointly determined. Our results emphasize the role of spillovers in sustaining the competitive pressure that is fundamental for long-run innovation and economic growth.     

Deadlines and distractions

We consider a task, demanding a sequence of efforts, that must be completed by a deadline. Effort is not contractible. Agents face shocks to their opportunity cost of time and are sometimes distracted from work. We show that agents who are often distracted may outperform agents who are distracted less often. The reason is that anticipation of distractions induces agents to start earlier for precautionary reasons. Principals can increase the probability of completion, and achieve higher profits, by strategically setting “tight” deadlines, provided that the deadlines can be extended with some positive probability.     

Black Market and Official Exchange Rates: Long-run Equilibrium and Short-run Dynamics

This paper presents further empirical evidence on the relationship between black market and official exchange rates in six emerging economies (Iran, India, Indonesia, Korea, Pakistan, and Thailand). First, it applies both time series techniques and heterogeneous panel methods to test for the existence of a long-run relationship between these two types of exchange rates. Second, it tests formally the validity of the proportionality restriction implying a constant black-market premium. Third, it also analyses the short-run dynamic responses of both markets to shocks. Finally, it tries to shed some light on the determinants of the market premium. Evidence of slow reversion to the long-run equilibrium is found. Further, it appears that capital controls and expected currency devaluation are the two main factors affecting the size of the premium and determining the breakdown in the proportionality relationship.     

The Role of Infomediaries: CSR in the Business Press During 2000–2009

Given the important role that business media play in corporate life, scarce attention has been paid to the role of media in the construction and popularization of corporate social responsibility (CSR). In this article, we understand media as a key infomediary and examine how the business press has framed and presented CSR over the last 10 years. Based on a content analysis of how CSR is presented in two English-language business newspapers with an international readership, we develop a framework for understanding the role of business media setting the corporate CSR agenda. The results show that business media contribute to the construction of what CSR means in corporate practice by creating links between CSR and certain corporate activities, between CSR and arguments that strengthen the view of CSR as a business case, and between CSR and certain spokespersons. These links contribute to create a notion of what CSR stands for, what it means in practice, and why it is important that one should pay attention to.     

Drivers of Brand Extension Success: What Really Matters for Luxury Brands

The use of brand extensions has become fundamental to the business model of most luxury brands. Many traditional luxury brands such as Louis Vuitton or Chanel have expanded into traditional luxury sectors beyond their core business. Some brands such as Armani or Prada even crossed boundaries to nontraditional lifestyle segments to pursue new business opportunities. Given the high practical relevance of brand extensions for luxury brands and the importance to understand the success factors for their extendibility and potential backward effects on the parent brand, surprisingly little research has addressed these issues for luxury brands in comparison to nonluxury brands. The current research reveals extension‐related differences between luxury and nonluxury brands by simultaneously analyzing key dimensions of parent brand value, fit, and extension category involvement on the consumer's attitude toward the brand extension, which in turn influences the postextension image of the parent brand. Results of a structural equation model based on a survey among 492 participants show that the predominant driver of brand extension success for both luxury and nonluxury brands is overall extension fit, followed by the consumer's involvement in the extension category. The influence of functional value of the parent brand on the extension evaluation is more important for nonluxury brands. The hedonic value of the parent brand is found to be of relevance only in case of luxury brands. Moreover, a reciprocal spillover effect between the extension evaluation and the parent brand evaluation is observed. The degree of luxuriousness of the parent brand moderates this relationship. This effect is weaker for luxury brands.     

Reputation as Matching Identities and Images: Extending Davies and Chun's (2002) Research on Gaps between the Internal and External Perceptions of the Corporate Brand

Corporate reputation is defined as a construct representing aggregated perceptions of people in and around companies. A corporate personality scale was developed to measure identities as internal perceptions and images as external perceptions with the same instrument. We report here an application of this instrument and the replication of a previous study conducted by Davies and Chun in 2002 (Corporate reputation review 5(2/3): 144–158), by comparing two similar companies operating in the same industry. Perceptions of employees, students, journalists and professional colleagues were measured for each company. The reputations of the two companies were different in synchronization of perceptions of respondent groups for each company (one high and one low) and in their comparative scores from different respondent groups. The study discovered that two companies could be equally successful in performance while their reputations can be significantly different. The second significant theoretical implication of the study was the finding that a composite, aggregate measure of a corporate reputation can obscure as much as reveal perceptions of different valuing groups. The main practical implication of the study is that companies can achieve comparable performances despite having different personalities both in profile and in coherence. This implies that executives need to observe their organizations through various views, which should allow them more freedom of action and experimentation.     

The siting of a research centre on clean coal combustion and CO2 capture in Spain: Some notes on the relationship between trust and lack of public information

This paper aims to gain a better understanding of the role played by trust in the context of scarcity of public information, vis‐à‐vis the installation of a Centre for Investigation in Advanced Technologies (Centro de Investigación de Tecnologías Avanzadas, CITA) to be located in a coal‐rich region of Spain. Data from semi‐structured interviews (n = 15), a questionnaire survey (n = 400) and focus group sessions (2) are drawn together to reveal how the local community perceives the proposed CITA scheme, and how this relates to the level of trust placed in the project promoters. Results illustrate how a lay community gives meaning to an unknown technological project, trying to place it within its appropriate economic, social and political context, and relating it to prior knowledge and experiences. Results also show that, in contrast to certain risk communication theories, the public is able to place trust in a technological activity and their promoters despite a general lack of knowledge on either.     

Can Interest Rate Policy be Independent?

The conventional view is that interest rates are closely linked internationally and that larger countries determine monetary policy in smaller countries. In this article, Guglielmo Maria Caporale and Geoffrey Williams argue that this stylisation may not be accurate. The fundamental factors determining long-term interest rates are likely to be national rather than international. It may therefore be possible for domestic monetary authorities to pursue an independent interest rate policy indefinitely.