Testing time-homogeneity of rating transitions after origination of debt

When modelling rating transitions as continuous-time Markov processes, in practice, time-homogeneity is a common assumption, yet restrictive, in order to reduce the complexity of the model. This paper investigates whether rating transition probabilities change after the origination of debt. Accordingly, we develop a likelihood-ratio test for the hypothesis of time-homogeneity. The alternative is a step function of transition intensities. The test rejects time-homogeneity for rating transitions observed over 7 years in a real corporate portfolio. Especially 1-year transition probabilities increase over the first year after origination. This time effect suggests that banks should manage their credit portfolios with respect to the age of debt.      

Corporate social responsibility: attributions,loyalty, and the mediating role of trust

This study investigates whether consumers’ perceptions of motives influence their evaluation of corporate social responsibility (CSR) efforts. The study reveals the mediating role of consumer trust in CSR evaluation frameworks; managers should monitor consumer trust, which seems to be an important subprocess regulating the effect of consumer attributions on patronage and recommendation intentions. Further, managers may allay the negative effects of profit-motivated giving by doing well on service quality perceptions. On the other hand, appropriately motivated giving continues to positively affect trust regardless of the performance of the firm on service quality provision.     

On the importance of matching strategic behavior and target market selection to business strategy in high-tech markets

Business strategy is fundamentally concerned with the actions required to create superior customer value in the firm’s target markets with the ultimate goal of achieving superior performance. Marketing theory suggests that two critical marketing activities required to achieve this end are: (1) the adoption of appropriate strategic behaviors (i.e., customer-oriented, competitor-oriented, technology-oriented) and (2) targeting of the appropriate market segments (i.e., innovators, early adopters, early majority, late majority, laggards). This study builds on prior research which demonstrates that the strategic behavior—firm performance relationship is contingent on the firm’s strategy by examining this relationship in high tech markets and by considering the incremental contribution of appropriate target market selection. Responses from 160 senior marketing managers in high-tech firms reveal strong support for our framework. Thus, this study provides useful guidance to executives and managers in high-tech firms regarding the steps that they should take to increase their probability of success.

Assessing the Reliability of Self‐reported Income Information in Informal Small Business Lending through a Bogus Pipeline Experiment

Coping with asymmetric information plays a major role in successful small business lending. Our purpose is to determine if small business applicants report their income information correctly when requesting a loan. We use a randomised controlled trial bogus pipeline experiment, established during a typical cash‐flow analysis of a bank for small businesses in the Philippines. The bogus pipeline approach is commonly applied in social science and aims to increase the rate of truth telling by informing participants that answers will be verified by a lie detector. The experimental data, which include 243 observations of credit clients that are mainly from the agricultural and food value chain, served to identify asymmetric information. Additionally, debtors’ repayment behaviour for approved loans was observed by the bank. Our results indicate that loan applicants of the treatment group report lower incomes, an effect which is most pronounced in lower income quantile. Our analyses also reveal higher loan delinquencies in the control group.     

A policy analysis to promote conservation and use of small millet underutilized species in India

Despite the important role of Neglected and Underutilized Species (NUS) in diversifying agriculture, supporting traditional farming systems and improving food and nutritional security particularly in marginal lands, very little attention is being paid to their mainstreaming in national policies and institutions. Based on a detailed review of the regulatory frameworks governing the conservation, sustainable use and equitable sharing of benefits arising out of plant genetic resources and the circulation and registration of seeds and improved varieties, this paper discusses the extent to which the measures in place in India may favour or affect the conservation and use of NUS. In addition to these frameworks, in view of the major change realized by the 2013 National Food Security Act which has included coarse cereals in the country’s Public Distribution System (PDS), the paper also incorporates this latest policy in its analyses. A special focus is given to small millets, a group of species with unexploited economic and nutritional potential but extremely important for marginal communities’ food security and livelihoods. A set of policy recommendations and opportunities to explore are proposed to address the identified constraints with the purpose of creating a more supportive policy environment and enhancing the national capacity to promote NUS.     

Schadenfreude: The (not so) Secret Joy of Another’s Misfortune

Despite growing interest in emotions, organizational scholars have largely ignored the moral emotion of schadenfreude, which refers to pleasure felt in response to another’s misfortune. As a socially undesirable emotion, it might be assumed that individuals would be hesitant to share their schadenfreude. In two experimental studies involving emotional responses to unethical behaviors, we find evidence to the contrary. Study 1 revealed that subjects experiencing schadenfreude were willing to share their feelings, especially if the misfortune was perceived to be deserved (i.e., resulting from unethical behaviors). Study 2 extends this work by incorporating schadenfreude targets of different status (CEO versus employee). Consistent with the “tall poppy syndrome,” subjects were more willing to share schadenfreude concerning high status targets than low status targets when the perceived severity of the target’s misconduct was low. This status effect disappeared at higher levels of perceived deservingness, however. Reported willingness to share schadenfreude was strongest at these levels but did not differ significantly between high and low status targets. These findings build on the social functional account of emotions, suggesting that sharing schadenfreude may signal normative cues to others regarding workplace behaviors that are deemed to be unethical.