Policy modes,firms and the natural environment

This paper examines how different environmental policy types differentially impact firms and why firms vary in their responses to such policies. Based on the mechanisms embedded in policy instruments to create incentives for firms to comply, the characteristics of benefits/costs that policies impose on firms and the institutional context in which policy instruments were created and are sustained, the paper identifies five policy categories. These are category I (command and control), category II (market based), category III (mandatory information disclosures), category IV (business–government partnerships) and category V (private voluntary codes). Different policy types often bestow asymmetrical benefits/costs on firms. Some benefits/costs may constitute ‘private/club goods’ while others may constitute ‘public goods’. Drawing insights from public policy literature, the paper argues that firms can be expected to favor policies whose benefits have the characteristics of private/club goods but the costs of public goods. Thus, understanding the nature of benefits/costs (private/club versus public) and the magnitude of their excludability is critical in explaining the variations in firms' responses. To understand how managers perceive the nature of benefits/costs (monetary as well as non‐monetary), the paper draws on theories and perspectives in the business and public policy field. In doing so, the paper examines the ‘demand’ and the ‘supply’ sides as well as the market and non‐market environments of a given policy. Thus, the paper makes a case for a multi‐theoretic approach to understand variations in managerial assessments of benefits/costs, and consequently variations in their responses to various policy types. Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment.     

Mattel,Inc.: Global Manufacturing Principles (GMP) – A Life-Cycle Analysis of a Company-Based Code of Conduct in the Toy Industry

Over the last 20+ years, multinational corporations (MNCs) have been confronted with accusations of abuse of market power and unfair and unethical business conduct especially as it relates to their overseas operations and supply chain management. These accusations include, among others, worker exploitation in terms of unfairly low wages, excessive work hours, and unsafe work environment; pollution and contamination of air, ground water and land resources; and, undermining the ability of natural government to protect the well-being of their citizens. MNCs have responded to these accusations by creating voluntary codes of conduct which commit them to specific standards for addressing these issues. These codes are created at both the industry-wide and the individual company level. Unfortunately, these codes have generated little credibility and public trust because their compliance claims cannot be independently verified, and they lack transparency and full public disclosure. In this article, we present a case study of the voluntary code of conduct by Mattel, Inc., the world’s largest toy company. The code, called the Global Manufacturing Principles (GMP), confronts the general criticism leveled against voluntary codes of conduct by (a) creating detailed standards of compliance, (b) independent external monitoring of the company’s compliance with its code of conduct, and (c) making full, and uncensored public disclosure of the audit findings and company’s response in terms of remedial action. We present a detailed account of how Mattel’s voluntary code of conduct was created, implemented, and ultimately abandoned over 9 years. We provide an evaluative analysis of the company’s GMP compliance throughout its life span, which suggests a bell-shaped curve, where early top management commitments were met with pockets of resistance from operational groups, who were concerned about balancing GMP compliance efforts with traditional performance criteria. The early stage response from Mattel’s top management was quick and supported with the requisite resources. As a result, the compliance process accelerated, becoming increasingly more robust and effective. The success of code compliance and increased transparency in public disclosure energized field managers with a sense of professional satisfaction and publicly recognized accomplishments. The decline in GMP compliance was equally steep. When all the easily attainable targets had been reached at the company-operated plants, addressing vendor plants’ compliance presented a new set of challenges, which taxed corporate resources and management commitment. It would seem that value-based and ethics-oriented considerations, i.e., doing the right thing for the right reason, were no longer the driving force for Mattel’s management. Mattel did not see any economic benefit from its proactive stance, when competitors did not seem to suffer adverse consequences for not following suit. The final contributing factor to the code’s abandonment was a widely publicized series of product recalls which absorbed top management’s attention.     

Modeling producer responses with dynamic programming: a case for adaptive crop management

Past research found agricultural producers’ conditional responses during the growing season are important adaptations to weather and other stochastic events. Failing to recognize these responses overstates the risks confronting producers and understates their ability to respond to adverse circumstances. Dynamic programming (DP) provides a means for determining optimal long‐term crop management plans. However, most applications in the literature base their analysis on annual time steps with fixed strategies within the year, effectively ignoring conditional responses during the year. We suggest an alternative approach that captures the strategic responses within a cropping season to random weather variables as they unfold, reflecting farmers’ ability to adapt to weather realizations. We illustrate our approach by applying it to a typical cereal farm in Karak, Jordan. The results show that including conditional within‐year responses to weather reduces the frequency of fallowing by 23% and increases expected income by 9%.     

Untangling gender differentiated food security gaps in Bhutan: An application of exogenous switching treatment regression

Using nationally representative data from Bhutan, and applying an exogenous switching treatment regression model, this study assessed the food security status between male‐headed households (MHHs) and female‐headed households (FHHs). The study demonstrates that there is no significant difference between MHHs and FHHs in terms of food security, but when MHHs are compared with de jure FHHs, the food security is significantly lower among the de jure FHHs. The food security gap between MHHs and de jure FHHs is due to the differences in both observable and unobservable characteristics of the households. The food security gap between de facto and de jure FHHs can be explained by the influence of connections and wider access to off‐farm income. Most of the previous studies consider all FHHs as a homogenous entity and ignore the concept of de jure FHHs (i.e., a household run by single, widowed, or divorced woman) and de facto FHHs (i.e., a household where there is a husband, but he is not physically present because of his work off‐farm). As the present research takes this into account, the econometric findings from our study, thus have important implications in formulating special food security policies targeting the most vulnerable FHHs.     

Making Globalization Inclusive: Job Creation and Wage Inequality in Developing Economies

Open Economies Review -     

Cross‐Country Variability in Cost of Raising Equity: Evidence from Seasoned Equity Offerings

We examine how county‐level governance affects the cost of raising equity. Using data on seasoned equity offerings, we find that the underwriting spread is determined by the litigation risk of issue certifiers, and offer underpricing is largely determined by the investment risk of the equity issue. Underwriting spread increases with enhanced legal enforcement, offsetting the reduction in underpricing associated with strong legal enforcement. Our study offers insight into the effect of legal enforcement and regulatory policy on the cost of raising equity.     

Can Elected Minority Representatives Affect Health Worker Visits? Evidence from India

This paper examines the relationship between elected minority representatives, i.e. Scheduled Castes (SC) and Scheduled Tribes (ST) and health worker visits in rural India. We estimate the effect of minority representation on the frequency of visits to villages by health workers by exploiting the state variation in the share of seats reserved for the two minority groups in state legislative assemblies mandated by the Constitution of India. Using data from state and village level surveys on 15 major Indian states, we find that ST representatives increase the frequency of visits by both doctors and mobile medical units. In contrast, SC representatives have a tendency to decrease the frequency of visits by mobile medical units. Potential explanations for the differential impact of SC and ST representatives are also explored, including geographic isolation, support for the Congress Party, a shift in power, and relative population shares.     

Charisma Suffocating Creativity

Charisma is perceived as one of the most cherished and desirable qualities for organizational success. A charismatic leader inspires and motivates members to produce creative ideas. The problem with a charismatic leader is charisma itself. The current paper describes and explains the effects of charisma on charismatic leaders and followers with the hope that it may elicit introspection among organizations regarding the role charisma may play.