Entrepreneurs' responses to semi-formal illegitimate institutional arrangements

While prior research has discussed how entrepreneurs deal with formal institutional voids and informal institutional environments, little is known about how entrepreneurs respond to institutional arrangements involving illegitimate actors. We define such arrangements as semi-formal illegitimate institutions. Using an exploratory study, we examine one such arrangement in Guatemala City, where organized crime dominates the institutional landscape in which entrepreneurs operate. We examine the strategic responses of these entrepreneurs, and find that they vary in the extent to which they resist semi-formal illegitimate institutions; some entrepreneurs engage in defiance, others avoid the illegitimate pressures, while others simply acquiesce. Upon further investigation, we find that the differences in entrepreneurs' network strength and network proximity, combined with their individual perception of threat and resource mobility, help to predict the different strategic responses.     

Learning and skills formation in the new economy: evidence from Greece

In today’s knowledge–driven economy, education and training are considered major factors affecting a society’s level of economic attainment and growth. Lack of information–related knowledge and skills, in particular, are among the prime factors likely to delay a country’s progress towards the information society. Experience, however, has shown that an educated labour force does not automatically translate into dynamic economic development and technological innovation. The human resource potential is not a simple outcome of the education system but it is a much more complex process that involves tacit knowledge, learning by doing and on–the–job training. This means that skills and knowledge acquired depend not only on the educational system but on firm organisation and culture as well as ties between organisations. The present study examines the relationship between skill supply, firm organisation and learning by means of interviews in 23 firms in Greece. It shows that a major problem faced by SMEs in peripheral European countries is the lack of in–house capabilities and knowledge which limits the amount and type of learning that takes place. Finally, the article argues that policy–makers should institute educational policies and training programmes that will compensate for the inability of Greek firms to provide a learning environment.     

Jumping over a low hurdle: personal pension fund performance

This paper provides a comprehensive analysis of the annual and of the long-term performance of personal pension funds relative to their Primary Prospectus Benchmarks (PPBs) and T-bills. The study covers 9659 personal pension funds from across all 30 ABI investment sectors that operated in the UK in the 1980–2009 period. Of these, 4531 pension funds are compared against their PPBs. The performance measured by ordinary excess returns over the UK T-bills and over PPBs, as well as the Sharpe ratio, Sharpe ratio adjusted for skewness and kurtosis, Sortino ratio in relation to the UK T-bills and PPBs, and the Modigliani–Modigliani measure are calculated for arithmetic, geometric and log returns. We find convincing evidence that pension funds lack challenging long-term performance targets. We argue that the existing PPBs are easy to outperform given that funds are allowed to diversify in assets not included in their PPBs. We discuss policy implications of our findings.     

Enhanced policy iteration for American options via scenario selection

Kolodko and Schoenmakers (2006 Kolodko, A and Schoenmakers, J. 2006. Iterative construction of the optimal Bermudan stopping time. Finan. Stochast., 10: 27–49. [Crossref], [Web of Science ®] , [Google Scholar]) and Bender and Schoenmakers (2006 Bender, C, Kolodko, A and Schoenmakers, J. 2006. Iterating cancelable snowballs and related exotics in a many-factor Libor model. Risk, September: 126–130.  [Google Scholar]) introduced a policy iteration that allows the achievement of a tight lower approximations of the price for early exercise options via a nested Monte Carlo simulation in a Markovian setting. In this paper we enhance the algorithm by a scenario selection method. It is demonstrated by numerical examples that the scenario selection can significantly reduce the number of inner simulations actually performed, and thus can greatly speed up the method (by up to a factor of 15 in some examples). Moreover, it is shown that the modified algorithm retains the desirable properties of the original, such as the monotone improvement property, termination after a finite number of iteration steps, and numerical stability.     

Estimating the speed of adjustment of European banking efficiency under a quadratic loss function

This paper investigates the speed of adjustment of cost efficiency to equilibrium level in the European banking industry. Our analysis provides for the first time insights into the process of convergence across European banking markets as measured by the speed of adjustment of cost efficiency. In particular, we employ a quadratic loss function specification based on forward-looking rational expectations to model the underlying dynamics of efficiency scores in the banking industry of the EU-15 region over the period 1998–2005. Results show that there is considerable variation in the speed of adjustment across banking systems, while over time it appears that continuing efforts to advance financial integration have led to some improvement in the speed of adjustment to the long-run equilibrium.     

Two elementary schools’ developing potential for sustainability of engineering education

The Next Generation Science Standards present a way for engineering lessons to be formally integrated into elementary classrooms at a national level in the United States. Professional development programs are an important method for preparing teachers to enact the new engineering practices in their science classrooms. To better understand what contextual factors help a professional development program have a sustained effect on the implementation of engineering, we closely examined two elementary schools within the same school district that participated in the same professional development program but had very different outcomes in their lasting implementation of engineering. Using the case study method, we corroborate quantitative and qualitative sources of data measuring students’ learning and attitudes; teachers’ learning, attitudes, and implementation fidelity; perceived teacher community; and administrative support. Our analysis revealed that although the professional development program had district-level administrative support, there was considerable variation between schools in how teachers’ perceived school level support. In addition, teachers at the sustaining school collaborated and co-taught with one another. Our findings support previous literature on the role of administrative support and teacher learning communities. We discuss practical ways that professional development programs can seek to foster a context which is supportive of sustaining curriculum change for engineering.     

Sabotage in the financial system: Lessons from Veblen

The global financial crisis that started in the summer of 2007 has generated a wide-ranging discussion about the causes of the meltdown and the role of banking and bankers in today's economy. However, the ongoing debate rarely addresses questions of business tactics in the financial industry. Indeed, while ‘incentives,’ ‘vested interests,’ power, and—increasingly—social utility are often factored into analyses of financial regulation, the strategies and tactics of financial institutions are rarely discussed in a systematic way in academic and policy debate. Nonetheless, we believe that these two elements are key to understanding the financial system, not as a mere sector of the wider economy but as a business enterprise driven by its own logic and shaped by a variety of business tactics of its key agents. In our vision of finance as business, we draw on the concept of industrial sabotage as a business tactic (originally developed by Thorstein Veblen) to explore the roots of the financial sector's contemporary architecture. Our key premise is that the central motive driving the process often described as ‘financialization’ or financial innovation is the sabotage instinct of finance operating as business. Whereas Veblen originally understood sabotage as “conscientious withdrawal of efficiency,” today, we argue, the workings of the banking and financial sector augment the very notion of efficiency by relying on concepts, techniques, and institutions of financial innovation that are shrouded in complexity. In this article, we explore conceptual, institutional, and selected policy dimensions of this phenomenon.     

Specification tests and tests for overidentifying restrictions in panel data models with selection

Standard tests are generally not applicable in panel data models with selection. The paper shows how the Hausman specification test and the Sargan-Hansen test for overidentifying restrictions can be generalized to panel data models with unobserved heterogeneity and sample selection.     

Perceptions of economic insecurity: Evidence from Russia

Economic insecurity is an inherent characteristic of the transition from a planned economy to a market-oriented economy and workers’ assessments of their economic insecurity have direct consequences not only for their happiness/well-being, but also on consumption and saving behavior. This study utilizes data from the nationally representative Russian Longitudinal Monitoring Survey to study perceptions of economic insecurity among workers in both rural and urban settlements. Analyzing three measures of perceived economic insecurity, we find that perceptions of insecurity were higher when economic conditions were deteriorating (1995–1998), and lower when economic conditions had stabilized (2000–2004). While perceived insecurity varies substantially by worker characteristics–those with less education, women, and unskilled and semi-skilled manual workers feel most vulnerable–, differences in observed characteristics explain a relatively small part of the ruralurban perceptions gap; other factors, such as different rates of economic recovery in rural and urban locales are also important. Individual well-being and household consumption tend to be lower when concerns about economic insecurity are present.