Optimal Loyalty‐Based Management

We study an agency model in which an entrepreneur selects a manager from a candidate set. The selected manager's effort improves the project's potential environment, and is a hidden action. The realized project environment is the entrepreneur's private information. A manager's utility has two components—(i) loyalty, with which the manager values the organization's profit, and (ii) selfishness, with which the manager values the monetary transfer he receives from the entrepreneur. We find that if the manager's task is easy enough, it is optimal to use a purely loyal manager. Otherwise, it can be optimal to use a manager with mixture of loyalty and selfishness—the manager's mixed motivation alleviates the entrepreneur's misrepresenting incentive, and as a result, the output distortion in the optimal contract can be reduced. In addition, when it is optimal to use a manager with mixed motivations, the entrepreneur selects someone who is more selfish than loyal.     

Testing for a Debt‐Threshold Effect on Output Growth

Using the Reinhart–Rogoff dataset, we find a debt threshold not around 90 per cent but around 30 per cent, above which the median real gross domestic product (GDP) growth falls abruptly. Our work is the first to formally test for threshold effects in the relationship between public debt and median real GDP growth. The null hypothesis of no threshold effect is rejected at the 5 per cent significance level for most cases. While we find no evidence of a threshold around 90 per cent, our findings from the post‐war sample suggest that the debt threshold for economic growth may exist around a relatively small debt‐to‐GDP ratio of 30 per cent. Furthermore, countries with debt‐to‐GDP ratios above 30 per cent have GDP growth that is 1 percentage point lower at the median.     

Assessing Corporate Vulnerabilities in Indonesia: A Bottom-Up Default Analysis

Under adverse macroeconomic conditions, the potential realization of corporate sector vulnerabilities could pose major risks to the economy. This paper assesses corporate vulnerabilities in Indonesia by using a Bottom-Up Default Analysis (BuDA) approach, which allows projecting corporate probabilities of default (PDs) under different macroeconomic scenarios. In particular, a protracted recession and the ensuing currency depreciation could erode buffers on corporate balance sheets, pushing up the probabilities of default (PDs) in the corporate sector to the high levels observed during the Global Financial Crisis. While this is a low-probability scenario, the results suggest the need to closely monitor vulnerabilities and strengthen contingency plans.     

Semi-Supervised Response Modeling

Response modeling is concerned with identifying potential customers who are likely to purchase a promoted product, based on customers' demographic and behavioral data. Constructing a response model requires a preliminary campaign result database. Customers who responded to the campaign are labeled as respondents while those who did not are labeled as non-respondents. Those customers who were not chosen for the preliminary campaign do not have labels, and thus are called unlabeled. Then, using only those labeled customer data, a classification model is built in the supervised learning framework to predict all existing customers. However, often in response modeling, only a small part of customers are labeled, and thus available for model building, while a large number of unlabeled data may give valuable information. As a method to exploit the unlabeled data, we introduce semi-supervised learning to the interactive marketing community. A case study on the CoIL Challenge 2000 and the Direct Marketing Educational Foundation data sets shows that the transductive support vector machine, one of widely used semi-supervised models, can identify more respondents than conventional supervised models, especially when a small number of data are labeled. Semi-supervised learning is a viable alternative and merits further investigation.     

The changing pattern of SME's innovativeness through business model globalization

Globalization has forced small and medium enterprises to change business models with new innovative capabilities. However, it is not clear what those old and new business models are let alone capabilities. Challenging this, we suggest a way of identifying principal types of those business models, and of finding evolving paths of SME's business models with the changing pattern of innovativeness. Based on a survey result of 400 Korean SMEs, four principal types of business models are identified and characterized by distinctive innovativeness. Also, through interviews and additional surveys on 30 globalized SMEs, the four evolving paths of SME's BMs are explored. For small and medium enterprises, our research can be used not only as a strategic reference, but also as a policy tool to design government-funded supporting programs.     

Risks and returns in international currency futures

Conclusion This paper analyzed the risk/return level of international currency futures traded on International Monetary Market of Chicago during 1972–1977 period. The empirical results indicate that relative risk and returns for each currency future studied are both close to zero during the sample period. The fact that the beta value for currency futures is close to zero implies its returns are uncorrelated with the market portfolio. Therefore, investors can reduce the risk level of their total portfolio significantly by adding currency futures.     

The Treatment of Market Power in Korea

Competitive forces have been relatively weak in Korea. Control of the chaebols' diversified expansion and conglomerate power has been a primary object of government policies. Competition law and policy has been expanded to include direct controls on chaebols, but it has been rather ineffective in resolving chaebol-related problems mainly because of insufficient attention having been paid to the problems of market power. Attempts to rein in chaebols by direct controls, without enhancing competitive forces, will be in vain, insofar as chaebol problems are really symptoms of their entrenched market potions in a non-competitive environment.     

The future of development economics: a methodological agenda

This paper discusses methodological differences between universalismand particularism in development economics by focusing on the‘East Asian Miracle’ debate. It proposes to builddevelopment economics as part of hetero-economics, not mono-economics,following Max Weber's methodology of social science, and suggestsdeveloping intermediate theories by abstracting directly fromgiven comparative settings. It also discusses the limitationsthat are inherent in this method, as well as ways to employthe method in actual analyses. This paper argues that the futuretask of development economics lies in recombining existing theoriesand developing new, complementing theories that will systematicallydelineate the diversity of developing countries.     

Risk Taking as Self Discipline in Contractual Relationships

This paper considers an agency model in which the principal is privately informed of her production technology. In our model, the principal can require the agent to adopt the principal’s technology for production, or alternatively, to adopt a technology in the market. Information about the market technology’s efficiency is publicly available, and thus can be acquired. We show that, if the variation in technological efficiency is large, the principal prefers to delay acquisition of information about the market technology. The reason is that, the principal uses uncertainty as a device to provide a truth‐telling incentive to herself, which, in turn, lowers the cost of inducing the agent to accept the contract.     

Creativity,job performance and their correlates: a comparison between nonprofit and profit-driven organizations

• This study explores a research model concerning creativity, job performance, and their correlates in the nonprofit organization setting. The findings of this study suggest that a set of differences in the areas of creativity, job performance, and their correlates exists between the marketers in nonprofit organizations and the marketers in profit-driven organizations. These findings reveal the need for contingency theories in this area, with emphasis centered on environmental differences. It is hoped that this study will draw the attention of many researchers toward topics concerning organizational creativity in the nonprofit organization setting.

Copyright © 2005 John Wiley & Sons, Ltd.