The strategic strength of weak signal analysis

Foresight can be seen as a social cognition process involving a complex set of methods and interactive processes intended to assist policy in becoming more adaptive and forward-oriented in unpredictable environments. As a form of foresight raw material, “weak signals” can be thought of as gross, unstructured, fragmented, incomplete and inadvertent environmental data that may be refined into valuable information regarding context and further be articulated into strategically actionable knowledge. As advanced indicators that precede significant discrete one-off events and/or novel developments in the rate and direction of trends, their analysis has the potential to facilitate the real-time alignment between organisational decision-making and changing external circumstances. These predictors of future change pose fundamental problems of identification and interpretation and represent a challenge to established mental models. Thus, the practical significance of weak signals is that they can be transformed into meaningful insight for policy action. Such a value, however, does not materialise automatically. Realising this potential requires a degree of tolerance and fluidity of the collective cognitive frameworks by which weak signals can be apprehended, assessed and acted upon. This paper aims at covering the scope of perceptions and actions typically involved in the tracing and tracking of this shaping process.     

Can Operating Leverage Be the Cause of the Value Premium?

Recent theoretical models (Carlson, Fisher, and Giammarino, 2004) predict an association between the book-to-market equity ratio (BE/ME) and operating leverage in the cross-section. Consistent with these models, we find a positive association between BE/ME and the degree of operating leverage (DOL), between DOL and stock returns, and between DOL and systematic risk. Overall, our findings provide support for a risk-based explanation for the value premium that is consistent with existing theoretical models. The evolution of systematic risk associated with firm-level investment activity, rather than financial distress, seems to be the main determinant of the value premium.     

A conceptual framework for public-private interplay in the telecommunications sector

Public activity in the telecommunications industry has experienced important transformations in the last decade: “reinvolvement” in infrastructure deployment, “innovative” boosting measures, and decentralisation of some decisions. Conceptually, even more important than the measures themselves is the fact that private agents often participate in their realisation and execution. This paper reviews how justifications for public action that would apply to any economic activity area have modelled the public-private relationship in the telecommunications sector. Subsequently, it focuses on the analysis of the new spaces for public-private collaboration that are currently opening up.     

Valuing traceability of imported beef in Korea: an experimental auction approach*

The major objective of this study is to estimate Korean food shoppers’ willingness to pay (WTP) for imported beef with traceability. We use an experimental elicitation method, the random nth price auction, to identify consumers’ valuation for traceable imported beef. We also analyse the effect of different types of information on these valuations. Results indicate that consumers are generally willing to pay a 39 per cent premium for the traceable imported beef over similar beef without traceability. Results also suggest that in contrast to the insignificant effect of positive information, negative and two‐sided information about traceability significantly reduces WTP.     

A Comparison of EPI Sampling, Probability Sampling, and Compact Segment Sampling Methods for Micro and Small Enterprises

Finding an efficient method for sampling micro- and small-enterprises (MSEs) for research and statistical reporting purposes is a challenge in developing countries, where registries of MSEs are often nonexistent or outdated. This lack of a sampling frame creates an obstacle in finding a representative sample of MSEs. This study uses computer simulations to draw samples from a census of businesses and non-businesses in the Tshwane Municipality of South Africa, using three different sampling methods: the traditional probability sampling method, the compact segment sampling method, and the World Health Organization's Expanded Programme on Immunization (EPI) sampling method. Three mechanisms by which the methods could differ are tested, the proximity selection of respondents, the at-home selection of respondents, and the use of inaccurate probability weights. The results highlight the importance of revisits and accurate probability weights, but the lesser effect of proximity selection on the samples' statistical properties.     

EXCHANGE RATE TARGET ZONES: A SURVEY OF THE LITERATURE

This work selectively reviews the literature on exchange rate target zones and their theoretical and empirical methodologies and examines whether they can be used to clarify to what extent this type of exchange rate regime could contribute to greater exchange rate stability. We discuss the main contributions of the first and second generations of exchange rate target zone models. In an attempt to reconcile the poor empirical performance of the Krugman model with the reality of exchange rate target zone regimes, this line of research integrates target zones with alternative underlying economic models, such as imperfect credibility, intra‐marginal interventions and sticky price models. It was thus possible to understand the correlations observed between the exchange rate, its fundamentals determinants and the interest rate differential, and to explain the fact that the statistical distribution of the exchange rate is hump shaped rather than U shaped. This implies that the initial emphasis of target zone models on nonlinearities, ‘honeymoon effect’, ‘smooth pasting’ and marginal interventions has vanished. Exchange rate target zones are better described as similar to managed floating regimes with intra‐marginal interventions, with some marginal interventions when the exchange rate reaches the edges of the floating band.     

Inefficient sales delays by a durable‐good monopoly facing a finite number of buyers

This article offers a new explanation for unscheduled price cuts and slow adoption of durable goods. We study a standard durable‐good monopoly model with a finite number of buyers and show that this game can have multiple subgame perfect equilibria in addition to the Pacman outcome—including the Coase conjecture. Of particular interest is a class of equilibria where the seller first charges a high price and only lowers that price once some—but not all—high‐valuation buyers purchase. This price structure creates a war of attrition between those buyers, which delays market clearing and rationalizes unscheduled purchase and price cut dates.     

Is There an Optimal Constitution?

The optimal constitution is one that protects people from politicians' thirst of power and preserves citizens' civic virtues. This paper presents a model that blends David Hume's (1741) consideration that in politics every man ought to be supposed a knave, with John Stuart Mill's (1861) conception of self-interested politicians. The optimal constitution is proved to be feasible. However, there are two possible equilibria, the Frey and Brennan-Buchanan equilibrium. It is shown that Bruno Frey's (1997) crowding-in and crowding-out analysis is a particular case of our model. In the Brennan-Buchanan equilibrium there is a long-run neutrality of enforcement on citizens' performance. In general, a trade-off is expected between the optimal number of laws and enforcement. The comparison between the equilibria shows that the Frey equilibrium is the best option to enhance the civic virtues of citizens, while the Brennan-Buchanan equilibrium is the best way to deter the ambitions of self-interested politicians.     

Do foreign companies pay higher wages than their local counterparts in Malaysian manufacturing?

This paper shows that foreign companies pay higher wages than their local counterparts in Malaysian manufacturing. Step-wise regression analysis shows that this is due to two factors. The first, and perhaps the more important, is the greater capital intensity of the production processes used by foreign companies. The second is their tendency to pay wages that they consider, or that are considered to be, commensurate with the wages that they pay in their home countries. This may be called the demonstration effect of wage remuneration in less developed countries.