Dynamic Properties of Income Support Receipt in Australia

Using administrative records on Australian income support (welfare) recipients over the period July 1995 to June 2002, we examine dynamic properties of income support receipt and the personal characteristics associated with alternative patterns of receipt. We draw on three concepts: churning–the process of ending a spell on income support and subsequently commencing a new spell; transferring–moving from one payment type to another within a spell on income support; and Total Time On payments (TTO)–the proportion of time on income support in a given period. We find that churning and transferring are significant features of income support receipt in Australia. For example, over half of recipients churn within five years of commencing an income support spell, and one‐fifth make a payment transfer within the same time frame. Examination of the characteristics associated with each of five distinct patterns of receipt reveals substantial differences in patterns by age, family composition, unemployment status, health status, and recent history of income support receipt.     

U.S. Universal Health Coverage at a Crossroad

Scheduled for 2014, implementation of universal coverage in the U.S. is not proceeding smoothly. Embroiled in bitter partisan conflict and absent decisive popular support, this costly new entitlement program, The Affordable Care Act commonly referred to as ObamaCare, is vulnerable to a major overhaul or possible rejection. National interest considerations urge that reformulation center on better matching the law’s aspirations with new realities rather than abstract ideals. Constraints on government spending and the risks public indebtedness pose for the national economy compel a pragmatic reassessment of entitlement policy in the light of what is affordable. ObamaCare compounds the government’s unsustainable debt and deficit problem, promising benefits that are overly generous and lack effective cost controls. Fiscal imperatives compel that scarce government resources be targeted on the truly needy and that individuals capable of doing so assume a greater responsibility for their health care. They also necessitate a more sophisticated public-private partnership than provided in the new health law in order to capture the benefits of market competition that facilitate innovation, circumvent political stalemate, confine the inflationary effects of services perceived to be free goods, and provide incentives that reward individuals for becoming more cost-conscious users of health services. Finally, the harnessing of self-interest is presented as a superior alternative to centralized command and control methods for influencing health behavior and keeping health spending under control. In the interest of economy and efficiency, government involvement, following the subsidization of low income persons on a sliding scale basis, should concentrate on standard setting, monitoring and evaluating productivity and quality improvement practices. Ultimately, living standards contribute more to health status than do health services, and this requires investment directed at economic growth.     

The role of lean launch execution and launch timing on new product performance

There is a substantial literature on the product development process but comparatively little on the impact of lean launch execution and launch timing on new product performance. Given the costs and risks involved in product commercialization, this research gap is surprising. Delays in product launch can lead to poor channel cooperation and coordination, missed market opportunities, and lost competitive opportunities, yet timing of the launch has not been included in many reported studies. In addition, managers at many firms have prioritized supply chain activities such as integration of logistics with other functional areas in order to obtain cost efficiencies and accelerate time to market; the role of lean launch execution in improving new product performance has also received little research attention. In this study, we build a conceptual model in which lean launch, launch timing, and quality of marketing effort are modeled as precursors to new product performance; we assess the role of market orientation and cross-functional integration in lean launch execution as well as indirect and direct effects of launch timing on performance. We empirically test our model with a sample of 183 U.S.-based corporate managers actively involved in new product launch. We find evidence that execution of a lean launch and effective marketing significantly improve new product performance, and that correct launch timing positively moderates the effect of lean launch on performance. These variables therefore should be carefully considered by managers of new product processes.     

Coordination on saddle-path solutions: the eductive viewpoint—linear multivariate models

We examine local strong rationality (LSR) in multivariate models with both forward-looking expectations and predetermined variables. Given hypothetical common knowledge restrictions that the dynamics will be close to those of a specified minimal state variable solution, we obtain eductive stability conditions for the solution to be LSR. In the saddlepoint stable case the saddle-path solution is LSR provided the model is structurally homogeneous across agents. However, the eductive stability conditions are strictly more demanding when heterogeneity is present, as can be expected in multisectoral models. Heterogeneity is thus a potentially important source of instability even in the saddlepoint stable case.     

Credit Scoring and Mortgage Securitization: Implications for Mortgage Rates and Credit Availability

This article develops a model of the interactions between borrowers, originators, and a securitizer in primary and secondary mortgage markets. In the secondary market, the securitizer adds liquidity and plays a strategic game with mortgage originators. The securitizer sets the price at which it will purchase mortgages and the credit-score standard that qualifies a mortgage for purchase. We investigate two potential links between securitization and mortgage rates. First, we analyze whether a portion of the liquidity premium gets passed on to borrowers in the form of a lower mortgage rate. Somewhat surprisingly, we find very plausible conditions under which securitization fails to lower the mortgage rate. Second, and consistent with recent empirical results, we derive an inverse correlation between the volume of securitization and mortgage rates. However, the causation is reversed from the standard rendering. In our model, a decline in the mortgage rate causes increased securitization rather than the other way around.     

How successful leaders think

In search of lessons to apply in our own careers, we often try to emulate what effective leaders do. Roger Martin says this focus is misplaced, because moves that work in one context may make little sense in another. A more productive, though more difficult, approach is to look at how such leaders think. After extensive interviews with more than 50 of them, the author discovered that most are integrative thinkers -that is, they can hold in their heads two opposing ideas at once and then come up with a new idea that contains elements of each but is superior to both. Martin argues that this process of consideration and synthesis (rather than superior strategy or faultless execution) is the hallmark of exceptional businesses and the people who run them. To support his point, he examines how integrative thinkers approach the four stages of decision making to craft superior solutions. First, when determining which features of a problem are salient, they go beyond those that are obviously relevant. Second, they consider multidirectional and nonlinear relationships, not just linear ones. Third, they see the whole problem and how the parts fit together. Fourth, they creatively resolve the tensions between opposing ideas and generate new alternatives. According to the author, integrative thinking is an ability everyone can hone. He points to several examples of business leaders who have done so, such as Bob Young, cofounder and former CEO of Red Hat, the dominant distributor of Linux opensource software. Young recognized from the beginning that he didn't have to choose between the two prevailing software business models. Inspired by both, he forged an innovative third way, creating a service offering for corporate customers that placed Red Hat on a path to tremendous success.     

Performance Impact of the Elimination of Direct Labor Variance Reporting: A Field Study

Using a field study approach, we examine two competing perspectives on direct labor variance reporting: some argue that direct labor variance reporting is costly and cumbersome, and should be eliminated; whereas others contend that without direct labor variance information, managers will not be able to monitor workers effectively, causing workers to shirk and worker productivity to decline. Specifically, we investigate the productivity and quality impacts of eliminating direct labor variance reporting with panel data containing 36 months of data from seven experimental plants that eliminated direct labor variance reporting and 11 control plants that did not. The experimental plants experienced a significant decline in labor productivity compared to the control plants. Also, the experimental plants showed an improvement in product quality, indicating that workers reallocate their efforts to other tasks as a result of the change in the information set available to evaluate them.     

Are really new product development projects harder to shut down?

Just as a good houseguest knows when it's time to say good-bye, effective managers must recognize when it's time to terminate a new product development (NPD) project. As a product progresses toward commercialization, a manager's reluctance to terminate a failing project becomes increasingly expensive. Despite this growing expense, however, many managers are reluctant to shut down failing NPD projects. Jeffrey Schmidt and Roger Calantone hypothesize that this reluctance may be even more pronounced for innovative new products than for incremental NPD efforts. They suggest that perhaps the excitement that really new products engender within a company makes managers more reluctant to shut down the NPD project, even in the face of clear-cut evidence that the project is not a winner. To test these assumptions, they conducted a decision-making experiment in which managers were asked to make go/no-go decisions at each stage in a hypothetical NPD project. One project involved an innovative new product; the other project involved an incremental development—that is, a line extension that offered only marginal size and cost reductions compared to current models. At the outset of the experiment, participants were given market share and profit objectives for assessing the new product's performance. At each stage in the hypothetical NPD project, the participants then received updated performance data. The performance data provided to participants was identical for the two hypothetical projects, and fell increasingly farther below the performance objectives as the project progressed. The results of the experiment support the hypothesized relationship between product innovativeness and managers' reluctance to terminate a failing NPD project. Given identical, poor, performance forecasts, the managers who participated in this experiment were more optimistic about the likelihood of success, were more committed to the project, and were more likely to opt for continuing the project when it involved the more innovative product. In fact, the participants were more likely to allow the highly innovative NPD project to proceed all the way through commercialization, notwithstanding the progressively ominous performance feedback.