Real options? Labor contracts in an uncertain world

Business Economics - The standard labor contract is increasingly replaced by flexible and diverse alternative work arrangements. We discuss, in the context of firm labor demand when product demand...     

Are Important Innovations Rewarded? Evidence from Pharmaceutical Markets

This paper focuses on the relationship between therapeutic value and different measures of market rewards: the number of patents, price, market share, and revenues. Using an assessment of therapeutic value that is provided by the French Haute Authorité de Santé (HAS), I find a weak relationship between most measures of rewards and this assessment of therapeutic value, which suggests that the returns to developing a “me-too” product are not very different from developing treatments with greater therapeutic effects. One interpretation is that the HAS score is a poor assessment of therapeutic value, in which case the use of similar health technology assessments by governments and other payers should be re-examined. Alternatively, if the HAS score is informative, the results suggest that countries are overspending on less innovative products, and that a re-balancing of innovation incentives may be worth considering if therapeutic value is highly related to social welfare.     

Session V: Macro Perspectives: Bigger Problems than Corporate Governance

Columbia Business School's well‐known authority on value‐based investing begins by attributing today's economic problems to a “global economic dislocation,” one that is rooted in the ongoing—and in Greenwald's view, inevitable—decline of manufacturing and displacement by services. Like the other example of dislocation in modern times, the Great Depression of the 1930s, the 2008 global financial crisis and protracted recession— still very much with us—are viewed as originating in the sharp decline of a major “sector” of the global economy. In the Depression of the ‘30s it was agriculture; in the recent financial crisis it was manufacturing. In both cases, technological advances and economy‐wide productivity increases led to huge increases in stock and financial asset prices—but also to sharp drops in the prices of farm and manufactured goods, and massive overcapacity and ruinous competition in both sectors. According to the author, the working off of overcapacity in the agricultural sector was accomplished largely by the effect of World War II in moving huge numbers off the farm and into the mainly urban industrial sector at government expense. This labor force relocation, which occurred in all developed economies, was essential to a global economic transformation that for the next 50 years provided high productivity growth and greater equality of income and wealth. More recently, however, the global economy has been confronted with the challenge of accomplishing a transition from manufacturing to services that will feature lower productivity growth and more inequality. Foreseeing a long, difficult process, Greenwald's biggest concern is that government intervention will distract businesses from making this transition effectively—which means continuing to operate as efficiently as possible, downsizing when necessary—and so make the problems worse. And while business focuses on preserving its own efficiency and value, Greenwald urges governments to look for more cost‐effective ways—for example, expanded use in the U.S. of the Earned Income Tax Credit—to cushion workers from the consequences. Nobel laureate Edmund Phelps, while agreeing with much of Greenwald's analysis, has a different explanation of the U.S. productivity dilemma. Innovation is viewed as the primary driver of the prosperity of the advanced economies. Higher income and wealth matter less than job satisfaction, participation, and an array of non‐material “modern values” that have somehow been lost and that, for Phelps, are the key to restoring economic growth and “mass flourishing.”     

The buyers’ perspective on security design: Hedge funds and convertible bond call provisions

We provide evidence that security design reflects the interplay of capital supplier and security issuer preferences. While call provisions have historically been the default option in convertible security design, only a minority of post-2005 issues are callable. Because hedge funds dominate the market for new convertibles today and because convertible arbitrage is less risky without callability, the recent diminution in the frequency of call provisions in new convertible bond issues illustrates the importance of the preferences of the suppliers of capital in security design.     

Evaluation of an intervention on socio cultural communication skills of international nurses

International nurses face a myriad of challenges in their transition, adaptation, and integration into the U.S. health care environment. This pilot intervention study examined socio-cultural competence regarding communication in a sample of international nurses working in two community hospitals in southern Nevada. Significant improvement in communication behaviors of the sampled international nurses with regard to socio-cultural skills of communication after the workshop intervention were not found. Similarly, there were no remarkable differences in standardized patient comments for most items on the checklist. However, the sampled international nurses demonstrated some highly desirable qualities such as being very personable, caring, and compassion that appeared to lay a foundation for an effective nurse-patient relationship.     

The Efficiency of Direct Public Involvement in Environmental Policymaking: An Experimental Test

In collaborative negotiation, stakeholder representatives are charged with the development of a mutually acceptable set of public policies. Although this approach has become popular in environmental negotiations, little is known about the characteristics of the outcomes that are reached. In this paper, we employ an Edgeworth box framework to investigate the nature of bargaining over public goods (environmental policies) that have multiple attributes. We then design and conduct laboratory experiments within this framework to test whether negotiated outcomes satisfy standard axiomatic bargaining predictions under a variety of conditions. Specifically, we test whether two parties with Pareto inefficient endowments of two goods will trade to Pareto improving and Pareto efficient outcomes, and to the Nash bargain in particular. We vary whether the Nash bargain coincides with or diverges from the outcome that maximizes the joint payoff, or the outcome that equalizes payoffs, and whether subjects are provided full or partial information. We find that bargainers reach Pareto improving and efficient outcomes across treatments, but withdraw support for the Nash bargain when it generates unequal payments or when payoff information is private. We conclude that this experimental framework offers a promising method for studying multi-attribute negotiations.     

Can structural small open-economy models account for the influence of foreign disturbances?

This paper demonstrates that an estimated, structural, small open-economy model of the Canadian economy cannot account for the substantial influence of foreign-sourced disturbances identified in numerous reduced-form studies. The benchmark model assumes uncorrelated shocks across countries and implies that U.S. shocks account for less than 3% of the variability observed in several Canadian series, at all forecast horizons. Accordingly, model-implied cross-correlation functions between Canada and U.S. are essentially zero. Both findings are at odds with the data. A specification that assumes correlated cross-country shocks partially resolves this discrepancy, but still falls well short of matching reduced-form evidence. One central difficulty resides in the model's inability to account for comovement without generating counter factual implications for the real exchange rate, the terms of trade and Canadian inflation.     

Three Pathways to Case Selection in International Business: A Twenty–Year Review,Analysis and Synthesis

With its focus on locational context, International Business (IB) is a prime candidate for the application of Case Study (CS) methodology. Yet many IB scholars still have doubts about CSs, possibly because strategies for their selection and disclosure procedures may lack rigor. The purpose of this article is to document and discuss CS selection in IB research, make suggestions for improvement, and thus raise the standard and status of CS research.Using qualitative content analysis, this paper examines CS selection strategies in four IB journals (1995–2014), relating them to chosen theoretical purposes and logics employed. Our results indicate that 12% of the 333 investigated CS articles lacked a section on methodology, and 41% of papers reported no indication of how CSs were selected. Drawing insights from the dataset, we propose and distinguish between theory-driven and phenomenon-driven CS selection approaches. In light of our evidence, best-practice papers are identified and apportioned to coherent pathways connecting theoretical purpose, logic and CS selection strategies. In doing so, we address the link between case selection and theorizing in CSs and advocate greater methodological sophistication and transparency of CS selection reporting in IB research.