AN EMPIRICAL TEST OF THE RESOURCE-BASED THEORY: STRATEGIC REGULATION IN THE DUTCH AUDIT INDUSTRY

The resource-based view of the firm is a recent strategic management theory that seeks to identify the resources that may provide firms with a sustainable competitive advantage. This paper has two purposes. First, the paper relates strategic management arguments to parallel lines of reasoning in industrial organization theory and argues that strategic regulation is a major source of sustainable competitive advantage. The second purpose of the paper is to report the results of an empirical test of the resource-based theory on the basis of a longitudinal data set on the postwar history of the Dutch audit industry. A key determinant of this history proves to be strategic regulation, which stimulates demand for audit services and protects rent-producing resources.     

Should Investors Bet on the Jockey or the Horse? Evidence from the Evolution of Firms from Early Business Plans to Public Companies

We study how firm characteristics evolve from early business plan to initial public offering (IPO) to public company for 50 venture capital (VC)-financed companies. Firm business lines remain remarkably stable while management turnover is substantial. Management turnover is positively related to alienable asset formation. We obtain similar results using all 2004 IPOs, suggesting that our main results are not specific to VC-backed firms or the time period. The results suggest that, at the margin, investors in start-ups should place more weight on the business ("the horse") than on the management team ("the jockey"). The results also inform theories of the firm.     

Which Microfinance Institutions Are Becoming More Cost Effective with Time? Evidence from a Mixture Model

Microfinance institutions (MFIs) play a key role in many developing countries. Utilizing data from Eastern Europe and Central Asia, MFIs are found to generally operate with lower costs the longer they are in operation. Given the differences in operating environments, subsidies, and organizational form, this finding of increasing cost effectiveness may not aptly characterize all MFIs. Estimation of a mixture model reveals that roughly half of the MFIs are able to operate with reduced costs over time, while half do not. Among other things, we find that larger MFIs offering deposits and those receiving lower subsidies operate more cost effectively over time.     

VALUING EFFECTS OF CLIMATE CHANGE AND FISHERY ENHANCEMENT ON CHINOOK SALMON

This paper represents a continuing multidisciplinary analysis of species preservation and global change. It explores the economic cost of a potential regional warming's effect on the spring chinook salmon (Oncorhynchus tshcawytscha). Climate change and planned habitat improvements impact the production and economic value of spring chinook salmon in the Yakima River tributary of the Columbia River in eastern Washington. A chinook salmon's total economic value includes the summation of the existence, commercial, recreational, and capital values. The analysis here applies currently available data on these four components of value to estimated changes in chinook salmon population resulting from regional warming. Results show that the estimated change in economic value per fish associated with reducing one fish run is significant .     

Preemptive Competition in City Development

The rise of decentralization and polycentrism in cities raises questions of optimality. This paper proposes a model of two competing developers that generates new development prior to the optimal time. If demand is growing for new developments, the development built later will have potentially lower present value profitability, due to discounting, when compared to the earlier development. Both developers compete to gain the “first‐mover advantage” to build the first of the two developments, and developing sooner than what is optimal achieves this goal. This preemptive theory of competition offers a result that cities are more decentralized and polycentric than what is optimal.     

Factors Related to Employees’ Desire to Join and Leave Unions

Regression analyses based on a sample of 3372 nonunionized and unionized employees showed that, while the desire to join a union is associated with a wide range of work attitudes, perceived company performance, and facets of satisfaction, one's desire to leave one's union is associated with a narrow range of economic concerns. Implications of the findings are discussed in light of the declining unionization rate in the United States.