Cultural differences and shareholder value in related mergers: Linking equity and human capital

Merger literature suggests that the relationship between shareholder gains and the relatedness of merging firms is contingent upon the compatibility of the two firms' top management cultures. This hypothesis is tested by surveying the perceptions of cultural differences of top management teams of recently acquired firms, and then relating these perceptions to related stock market gains to the buying firms. The findings suggest a strong inverse relationship between perceptions of cultural differences and shareholder gains, after controlling for perceptions of the buying firm's tolerance for multiculturalism and the relative size of the merging firms.     

A stochastic dynamic model of trade and growth: Convergence and diversification

There is a growing literature that studies the properties of models that combine international trade and neoclassical growth theory, but mostly in a deterministic setting. In this paper we introduce uncertainty in a dynamic Heckscher-Ohlin model and characterize the equilibrium of a small open economy in such an environment. We show that, when trade is balanced period-by-period, the per capita output and consumption of a small open economy converge to an invariant distribution that is independent of the initial wealth. Further, at the invariant distribution, there are periods in which the small economy diversifies. Numerical simulations show that the speed of convergence increases with the size of the shocks. In the limit, when there is no uncertainty, there is no convergence and countries may specialize permanently. The paper highlights the role of market incompleteness, as a result of the period-by-period trade balance, in this setup. Through an analytical example we also illustrate the importance of country specific risk in delivering our results.     

Why money meanings matter in decisions to donate time and money

Most charitable organizations cannot accomplish their missions without asking for money. This is paradoxical because recent research suggests that mentioning money primes a self-sufficient mindset, thus undermining the very behaviors these organizations desire to elicit. We offer an important qualification to this problematic effect. We find that priming cash concepts reduces willingness to help others, while activating credit card concepts reverses these effects. To explain our findings, in three studies we show that priming cash concepts makes costs associated with donating time or money more salient in the decision context, thereby reducing willingness to give help and to receive it. However, priming credit card concepts makes the benefits of donation more salient.     

Note on positive lower bound of capital in the stochastic growth model

In the context of the classical stochastic growth model, we provide a simple proof that the optimal capital sequence is strictly bounded away from zero whenever the initial capital is strictly positive. We assume that the utility function is bounded below and the shocks affecting output are bounded. However, the proof does not require an interval shock space, thus, admitting both discrete and continuous shocks. Further, we allow for finite marginal product at zero capital. Finally, we use our result to show that any optimal capital sequence converges globally to a unique invariant distribution, which is bounded away from zero.     

Unilateral capital transfers, public investment, and economic growth

We contrast the effects of a transfer tied to investment in public infrastructure from a traditional pure transfer. The latter has no growth or dynamic consequences; it is always welfare improving, the gains increasing with the stock of government debt and the benefits of debt reduction. A tied transfer generates dynamic adjustments, as public capital is accumulated in the recipient economy. Its long-run growth and welfare effects depend upon the initial stock of infrastructure, as well as co-financing arrangements. These contrasts also apply to temporary transfers, particularly the transitional dynamics. A temporary pure transfer has only modest short-run growth effects and leads to a permanent deterioration of the current account, while a productive transfer has significant impacts on short-run growth, leading to permanent improvements in key economic variables including the current account.     

On the aggregate welfare cost of Great Depression unemployment

The potential benefit of policies that eliminate a small likelihood of economic crises is calculated. An economic crisis is defined as an increase in unemployment of the magnitude observed during the Great Depression. For the U.S., the maximum likelihood estimate of entering a depression is found to be about once every 83 years. The welfare gain from setting this small probability to zero can range between 1% and 7% of annual consumption in perpetuity. For most estimates, more than half of these large gains results from a reduction in individual consumption volatility.     

A finite-life private-information theory of unsecured consumer debt

We present a theory of unsecured consumer debt that does not rely on utility costs of default or on enforcement mechanisms that arise in repeated-interaction settings. The theory is based on private information about a person's type and on a person's incentive to signal his type to entities other than creditors. Specifically, debtors signal their low-risk status to insurers by avoiding default in credit markets. The signal is credible because in equilibrium people who repay are more likely to be the low-risk type and so receive better insurance terms. We explore two different mechanisms through which repayment behavior in the credit market can be positively correlated with low-risk status in the insurance market. Our theory is motivated in part by some facts regarding the role of credit scores in consumer credit and auto insurance markets.     

Adoption of Ubiquitous Customer Relationship Management (uCRM) in Enterprise: Leadership Support and Technological Competence as Moderators

Abstract

Ubiquitous Customer Relationship Management (uCRM) signifies the realization of special characteristics, including proactiveness, context awareness, and mobility. This uCRM helps to enhance promptness and timeliness of the traditional system, thereby creating an environment associated with a state of being everywhere in no time and covering any device and any network. uCRM provides high personalization of service. The uCRM system has opened a new area of satisfaction for customers. Context awareness computing, a uCRM characteristic, is presumed to have enhanced benefits for a firm adopting uCRM in India. In this context, this study has taken a holistic attempt to analyze how technological competence and leadership support can enhance the business performance of a firm adopting uCRM. With input from literature studies, a hypothesis and a conceptual model have been formulated. Statistically, those have been validated with survey work considering 165 usable respondents from 22 different firms situated in three metropolitan cities in India. Results show that the effect of technological competence and leadership support positively help a uCRM-dependent firm towards achieving better business benefits. The study ends with a comprehensive conclusion.     

Tax efficiency in selected Indian states

This paper attempts to measure pure tax efficiency of fifteen major Indian states (Andhra Pradesh, Assam, Bihar, Haryana, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Tamilnadu, Uttar Pradesh and West Bengal) for the period 1980–81 to 1992–93 in a manner that allows this efficiency to vary both across time as well as across states. It is discovered that there is a moral hazard problem in the design of central grants in that higher grants by the central government to the state governments reduce efficiency of tax collection by these states. The less poor states are more efficient in tax collection. The rankings of states by tax efficiency for the various years do not converge. An index of aggregate tax efficiency is calculated and it appears that this index has been stagnating. It is argued that the weight placed on tax effort in the formula determining central grants to state governments should be increased to improve tax efficiency of state governments. First version received: November 1997/final version received: November 1998     

The travel behaviour intentions of young people in the context of climate change

This article examines the factors influencing the future travel behaviour intentions of young people (aged 11–18), with specific attention given to how climate change considerations affect these. Overall it is found that the participants’ travel behaviour intentions are dominated by a desire to drive and that their values relating to identity, self-image, and social recognition (at the expense of their environmental values), as well as their affective attitudes towards transport modes, are key influences on this. Although they are aware of climate change, the participants’ understanding of the link between transport and climate change was weak. At the same time, they illustrated an apathy towards climate change – in part due to the timing and intangibility of its associated impacts and their lack of self-efficacy with respect to tackling this issue. However, despite claiming that their current environmentally friendly travel behaviours (such as walking or cycling to school) are not influenced by the issue of climate change, a number are accepting of the idea of enforced travel behaviour change – away from use of the car, towards more ‘environmentally friendly’ modes. This acceptance was in part due to their belief that such action would remove the influence of the ‘social dilemma’, where their own efforts to tackle climate change may be rendered worthless by the inaction of others.