The volatility of temperature and pricing of weather derivatives

We propose an Ornstein–Uhlenbeck process with seasonal volatility to model the time dynamics of daily average temperatures. The model is fitted to approximately 45 years of daily observations recorded in Stockholm, one of the European cities for which there is a trade in weather futures and options on the Chicago Mercantile Exchange. Explicit pricing dynamics for futures contracts written on the number of heating/cooling degree-days (so-called HDD/CDD futures) and the cumulative average daily temperature (so-called CAT futures) are calculated, along with a discussion on how to evaluate call and put options with these futures as underlying.     

The Effect of Mandatory Agro‐Environmental Policy on Farm Fertiliser and Pesticide Expenditure

EU farmers are subject to mandatory cross‐compliance measures, requiring them to meet environmental conditions to be eligible for public support. These obligations reinforce incentives for farmers to change their behaviour towards the environment. We apply quasi‐experimental methods to measure the causal relationship between cross‐compliance and some specific farm environmental performance. We find that cross‐compliance reduced farm fertiliser and pesticide expenditure. This result also holds for farmers who participated in other voluntary agro‐environmental schemes. However, the results do not support our expectations that farmers who relied on larger shares of public payments had a stronger motivation to improve their environmental performance.     

The role of work characteristics in enhancing older employees' performance: evidence from a post-Soviet country

This paper showcases the contextual development of age diversity in one post-Soviet country – Lithuania – and explores the theoretical grounding and empirical evidence of the role of work characteristics (work-scheduling autonomy (WSA), decision-making autonomy and social support) in the age–individual performance linkage. The individual performance was conceptualized in terms of task, adaptive and proactive performance. Based on empirical findings from multisource data (non-managerial employees and their direct supervisors), this study contributes to the existing literature by showing that high WSA and social support can buffer the negative age effect on performance and that the age–performance pattern depends on the performance criteria used and is not universal.     

Industry 4.0, innovation,and sustainable development: A systematic review and a roadmap to sustainable innovation

Despite the recent interest in the Industry 4.0 applications for sustainability, little is known on the processes through which digital transformation and Industry 4.0 technologies enable sustainable innovation in manufacturing. The present study addresses this knowledge gap by developing a strategic roadmap that explains how businesses can leverage Industry 4.0 technologies to introduce sustainability into innovative practices. For this purpose, the study conducts a systematic review of extant literature to identify Industry 4.0 functions for sustainable innovation and applies interpretive structural modeling to devise the promised roadmap. The results offer interesting insights into Industry 4.0 applications for sustainable innovation. The strategic roadmap developed reveals that Industry 4.0 enables sustainable innovation through 11 functions. Industry 4.0 and the underlying digital technologies and principles allow businesses to improve interfunctional collaboration and better integrate with internal and external stakeholders. Industry 4.0 further improves the knowledge base and advanced manufacturing competency and promotes organizational capabilities valuable to sustainable innovation such as green absorptive capacity, sustainable partnership, and sustainable innovation orientation. Through these functions, Industry 4.0 subsequently enhances green process innovation capacity and the ability to develop or reintroduce eco-friendly products economically and competitively. Overall, the roadmap explains the complex precedence relationships among the 11 sustainable innovation functions of Industry 4.0, offering important implications for businesses that seek to leverage Industry 4.0 sustainability implications and manage sustainable development.     

Foreign Direct Investment Policy–Friendly Business Environment in R&D Sectors: Baltic States versus Visegrad Countries

This article examines the impact of foreign direct investment (FDI) policy on inward FDI in the Visegrad and Baltic countries. The analysis of business environment highlights that the countries in both regions attempt to create a friendly business environment by means of similar methods. However, the countries in both regions focus on fiscal incentives such as taxes, which do not play a major role in attracting inward FDI in R&D. The results of attracting FDI are better in the Visegrad countries, which implement financial incentives toward inward FDI along with fiscal incentives. According to empirical analysis, it is noticed that a higher intervention level and a higher support level guarantee the volume of inward FDI. The country's introduced FDI policy enables it to orient industry and to implement economic strategic targets. FDI policy does have an impact on promoting the development of the entire country.     

Search costs,demand‐side economies,and the incentives to merge under Bertrand competition

We study the incentives to merge and the aggregate implications of mergers in a Bertrand competition model where firms sell differentiated products and consumers search sequentially for satisfactory deals. When search frictions are substantial, firms have an incentive to merge and to retail their products within a single store, which induces consumers to begin their search there. Such a merger lowers the profits of the outsiders and may benefit consumers due to more efficient search. Overall welfare may even increase. If the merged entity limits itself to coordinating the prices of the constituent firms, merging may not be profitable.     

Sustainability motives,values and communication of slow fashion business owners

Research on sustainable consumption is increasing however, it mostly focuses on commercial products. Fashion industry in general remains understudied especially small size business in sustainable fashion. Even this segment continues to be neglected in research, it creates a significant impact on sustainability. The study is carried in Lithuania. While sustainability is regarded as the business standard in neighboring countries, especially Scandinavia, Lithuania is still learning how to become more conscious and sustainable. Although the country has the capacity to lead sustainability in the region, there is inadequate education on this matter. Regardless, several local businesses and governments agree that incorporating sustainability is a single clear route to economic growth. The paper aims to understand motives and values of Lithuanian sustainable clothing business owners and explore how they communicate these motives and values. The study employs a qualitative approach of in-depth semi-structured interviews. The analysis is guided by the framework of grounded theory, which leads to the conception of four themes: (1) Initiating a Change; (2) Respectful and Responsible Approach; (3) Slowness; (4) Personal and Purposeful Communication. A possible limitation of this study is the language barrier. Participants could choose whether they wished to speak in English or Lithuanian. Three out of seven chose to speak their native language, while four agreed to speak in English. Although English-speaking participants did not show any difficulty expressing themselves, their interviews turned out to be shorter than those conducted in Lithuanian. Findings indicate that the motives, values, and communication procedures of the owners are reflected in bringing about a change in consumers' minds and actions, taking responsibility to show respect to stakeholders and the environment, slowing down in every step from design to shipping, and building a conscious and educated community. The paper has defined relevant terms and put forward the ground values of the sustainable fashion industry by giving a voice to sustainable clothing business owners, their experiences, and insights.     

Emergence of subprime lending in minority neighborhoods

Subprime lending is concentrated in minority neighborhoods. However, the literature provides little evidence for what led to this concentration. We use the endorsement of credit scores in mortgage underwriting by the Government Sponsored Enterprises (GSEs) in 1995 to answer this question. We show that prime lenders were substituted by subprime lenders in minority neighborhoods. As a result, the share of subprime lending increased by 5 percentage points in minority neighborhoods, relative to nonminority neighborhoods. Prime lenders with a stronger relationship with the GSEs reduced their lending in minority neighborhoods more, and the level of securitization by the GSEs in minority neighborhoods also decreased.