Optimal Contracting with Private Knowledge of Wealth and Ability

We examine the optimal design of contracts when an agent is privately informed about his wealth, his ability, and his effort supply. We find that the agent's wealth and ability act as perfect complements in determining the power of the incentive scheme under which he operates. Only if his ability and his wealth both increase can an agent be assured of operating under a more powerful scheme. Consequently, severe under-utilization of wealth and ability arise in equilibrium.     

Trust, reputation and corporate accountability to stakeholders

This paper explores the relationship between accountability, trust and corporate reputation building. Increasing numbers of corporations are mobilising themselves to put more and more information out into the public domain as a way of communicating with stakeholders. Corporate social accounting and stakeholder engagement is happening on an unprecedented scale. Rather than welcoming such initiatives, academics have been quick to pick faults with contemporary social auditing and reporting, claiming that in its current form it is not about demonstrating accountability at all, but rather about building corporate reputation. Academics argue that 'accountability should hurt', that if accountability is an enjoyable process, then the organisation isn't doing it right. For organisations that are currently engaging with stakeholders and ostensibly becoming more transparent about their corporate social performance, this kind of critique is likely to be bewildering. This paper argues that central to the notion of accountability and to contemporary social accounting practice is the concept of trust. Accountability is based upon a distrust of corporate management, whereas corporate reputation building is about strategically seeking to establish trust in stakeholder relationships in order to negate formal accountability requirements. Using a split trust continuum, the paper seeks to explain and synthesise what seem to be two very different paradigms of organisational transparency.     

Factors Influencing Chinese Students’ Behavior in Promoting Australia as a Destination for Chinese Outbound Travel

The importance of Chinese students in Australia has been largely neglected in the tourism development and place branding of Australia. This study explores the factors that influence Chinese students’ word-of-mouth behaviors, as well as other behaviors influencing Australia as a tourism destination. Following a literature review, a taxonomy of word-of-mouth behaviours is proposed in terms of the way information is communicated. “Place attachment to Australia”, “place attachment to China”, and “place satisfaction in Australia”, are proposed as the key factors that influence such behaviors. Using structural equation modelling, the authors find that “place attachment to Australia” and “satisfaction” with Australia are positively related to different behavior outcomes including Chinese students’ word-of-mouth, intentions to recommend Australia as a tourism destination, and willingness to help Chinese tourists to create satisfying experiences in Australia. Based on these findings, the theoretical and practical implications are discussed.     

A computational approach to pricing a bank credit line

Using trended Brownian motion to characterize borrower cash needs over time, we are able to derive a probability density function for the time to depletion of a bank credit line as well as the likelihoods for the time to exhausting the sources of liquidity that fund the loan. Armed with these analytic results, we solve for the credit line mark-up rate and the configuration of stored liquidity that maximizes the bank’s intertemporal expected profits from the loan. The optimality conditions produce a system of integral differential equations whose solutions we then simulate over a host of scenarios.     

Emotional Intelligence and Venture Performance

Scholars emphasize the importance of emotion in entrepreneurship and the potential of emotional intelligence, but research is sparse in the field. We develop and test a novel partial mediation model of emotional intelligence, interpersonal processes, and venture performance. The results indicate that interpersonal emotional skills, which entail the recognition and management of emotions in others, has a direct effect on venture performance, but intrapersonal emotional skills pertaining to self‐awareness and regulation of emotions do not. Additionally, both the intrapersonal and interpersonal dimensions of emotional intelligence have an indirect influence on firm performance via interpersonal processes that entail functioning in key activities within the firm. We discuss the implications and address potential avenues for future research on this important topic.     

Reflection and professional identity development in design education

Design thinking positions designers as the drivers of the design space yet academic discourse is largely silent on the topic of professional identity development in design. Professional identity, or the dynamic narratives that individuals construct and maintain to integrate their personal qualities with professional responsibilities, has not been widely addressed in design education either. The study investigated the use of reflective writing in an introductory design course to help students explore and interpret their design beliefs, experiences, and self-awareness in support of professional identity development work. The results indicate that authorial presence, analysis, and narrative quality are common qualities in reflective responses, but emotion is notably lacking from student writing. Students were highly reflective in relation to a general experience with uncertainty and were least reflective when discussing ideation processes. Implications for design education and related research are analysed and discussed.     

Sources of agricultural productivity growth and stagnation in sub-Saharan Africa

This paper examines sources of agricultural growth in sub-Saharan Africa. Growth in the stock of traditional inputs (land, labor, livestock) remains the dominant source of output growth. Growth in modern input use was of secondary importance, but still accounted for a 0.2-0.4% annual growth rate in three of four sub-regions. Econometric results support earlier studies that suggest that land abundance may be a constraint on land productivity growth. Growth in agricultural exports and historic caloric availability had positive impacts on productivity. These latter results suggest that positive feedback effects exist between export performance and food security on one hand and agricultural productivity on the other.     

Collective Approaches to Risk in Business: An Introduction to Plural Rationality Theory

This article initiates a discussion regarding Plural Rationality Theory, which began to be used as a tool for understanding risk 40 years ago in the field of social anthropology. This theory is now widely applied and can provide a powerful paradigm to understand group behaviors. The theory has only recently been utilized in business and finance, where it provides insights into perceptions of risk and the dynamics of firms and markets. Plural Rationality Theory highlights four competing views of risk with corresponding strategies applied in four distinct risk environments. We explain how these rival perspectives are evident on all levels, from roles within organizations to macro level economics. The theory is introduced and the concepts are applied with business terms and examples such as company strategy, where the theory has a particularly strong impact on risk management patterns. The principles are also shown to have been evident in the run up to—and the reactions after—the 2008 financial crisis. Traditional “risk management” is shown to align with only one of these four views of risk, and the consequences of that singular view are discussed. Additional changes needed to make risk management more comprehensive, widely acceptable, and successful are introduced.