The power and peril of board interlocks

In order to compete, firms must constantly gather and assess information that will help them identify and evaluate emerging opportunities. Their social context is instrumental in determining what information they have to work with and how they might make sense of and act upon that information. Unfortunately, many firms allow themselves to become under-connected, which isolates them from new sources of information, or over-reliant on just a few connections, creating a bottleneck for the flow of information. Herein, we describe how these problems manifest themselves among the network of interlocked directors, which is created when directors of firms sit on multiple boards. This network is so vast and complex that fully understanding the position and structure of a given firm's board interlocks remains elusive. Toward solving this problem, we offer five keys to developing a board with effective interlocks, as well as three cautions regarding how board interlocks could potentially hurt firms.     

Trade in Services and TFP: The Role of Regulation

What determines total factor productivity (TFP) growth in services: is it services trade or services–trade regulation? To respond to this question, we use four indicators of international trade in services since 1990 to 2005, namely foreign direct investment (FDI) inward stock, services imports, domestic sales of foreign affiliates (FATS) and FDI inflows, to examine what type of services trade forms a direct determinant. Subsequently, we analyse what type of sector‐specific regulation has played an inhibiting effect on services TFP growth. Such analysis contrasts with former studies in which mainly factor inputs and economy‐wide regulation are used to explain services TFP. This paper provides evidence that neither trade nor entry barriers are robust determinants to explain cross‐country differences. Instead, regulations on operational procedures affecting the variables costs structure of the firm seem to play a more important role in explaining TFP growth between countries, particularly in combination with information and communication technology (ICT) capital.     

?konomische Grundfragen der Klimaanpassung

The option of climate adaptation is becoming more and more important in climate change policy. A large number of countries has already initiated a process of adaptation by drafting strategies or catalogues of measures. Hence there is an urgent need to support this process at the scientific level. The discipline of economics has a key role to play in this context. Against this background, this paper scrutinises the fundamental economic questions challenging the adaptation policy which is broadly supported. It outlines how economics may contribute to a successful adaptation process concerning the objectives of adaptation policies, appropriate instruments, the role of both spontaneous and planned adaptation as well as possible assessment tools for evaluation of adaptation policies.     

Globalisation and union opposition to technological change

Trade unions have a rational incentive to oppose the adoption of labour-saving technology when labour demand is inelastic and unions care much for employment relative to wages. Trade liberalisation typically increases trade union technology opposition. These conclusions are reached in a model of unionised international duopoly with two-way trade. We also find that the incentive for technology opposition is stronger in the more technologically advanced country and in the country with the larger home market, complementing earlier explanations for technological catch-up and leapfrogging.     

PROPERTIES OF OPTION PRICES IN MODELS WITH JUMPS

We study convexity and monotonicity properties of option prices in a model with jumps using the fact that these prices satisfy certain parabolic integro–differential equations. Conditions are provided under which preservation of convexity holds, i.e., under which the value, calculated under a chosen martingale measure, of an option with a convex contract function is convex as a function of the underlying stock price. The preservation of convexity is then used to derive monotonicity properties of the option value with respect to the different parameters of the model, such as the volatility, the jump size, and the jump intensity.     

Service innovation as a political process

Service innovation processes are driven by stakeholders in interaction and are understood and sketched as a value negotiation process that consists of an iterative process of securing potential value in service. While previous research has focused on service innovation as a harmonious closed system, our study explores service innovation as a political process in which stakeholders negotiate to create and secure future value. Data are collected through interviews and participant observations in four different case studies. Our study contributes to the field by illuminating service innovation as a political process and explaining how this is operationalized. The findings also contribute to an understanding of how stakeholder resources impact a chosen strategy; the resulting strategy’s impact on the service concept vis-à-vis its potential value; and how several involved stakeholders formulate, negotiate, and secure future potential value, which are the activities that drive a service innovation process.     

Potential economic variables and actual economic policies in Europe

Ignoring for a moment the debate on whether balanced budget rules are a sensible idea from a macroeconomic point of view, there remains a major problem with tying one’s fiscal policy to econometric estimates of potential variables: their notorious unreliability. With every one of its biannual economic forecasts, the EC provides revised estimates of structural parameters that are crucial components of its macroeconometric models and, by extension, its economic policy advice. This article shows that the EC’s econometric estimates of potential growth variables in Europe have been subject to massive revisions since the financial crisis.     

The knowledge spillover theory of entrepreneurship

According to the knowledge spillover theory of entrepreneurship, the context in which decision-making is derived can influence one’s determination to become an entrepreneur. In particular, a context that is rich in knowledge generates entrepreneurial opportunities from those ideas. By commercializing ideas that evolved from an incumbent organization via the creation of a new firm, the entrepreneur (human capital) not only serves as a conduit for the spillover of knowledge, but also for the ensuing innovative activity and enhanced economic performance through resource allocation. The knowledge spillover theory of entrepreneurship brings together contemporary theories and thoughts of entrepreneurship with prevailing theories of economic growth, geography, and strategy and therefore explains not just why some people choose to become an entrepreneur, but also why this matters significantly for the economy and society.     

Ist der Fahrplan der Energiewende noch einzuhalten?

The German energy transition represents a policy-driven, sustainability-oriented restructuring of both supply- and demand-side components of the entire energy system by 2050. Whereas the development of renewable energies in the electricity sector is right on track, due to the feed-in tariffs of the German Renewable Energy Sources Act, many other crucial requirements for a successful transition are not, amongst others the improvement of energy effi ciency and the decarbonisation of the transport sector. Contrary to the public discussion, the primary future challenges do not consist in limiting electricity prices or abandoning feed-in support schemes, but rather in coordinating the variety of actors as well as appropriately matching the different system elements (grids, technologies, energy sectors, demand and supply side, etc.). Much remains to be done. By highlighting some examples like the need to take into account future implications of climate change for the energy sector, the consequences of the current crisis in the European Union’s emissions trading scheme and the need for a cautious adjustment of the EEG, the paper argues that the major challenges regarding the German energy transition mainly go beyond the current policy-driven and short-term discussion of energy prices. Germany’s pioneering attempt to integrate steadily increasing share of non-dispatchable electricity from renewable sources is challenging the stability of the system. Several characteristics in the current selfregulating system are identifi ed and analysed, which reveal themselves as potential weaknesses or shortcomings in the upcoming system.