Mergers, Method of Payment and Returns to Manager- and Owner-Controlled Firms

Previous work provides evidence of disparate consequences for acquiring firms initiating stock and cash merger exchanges. These studies show that the choice of payment method and the subsequent consequences may be a result of dissimilar motivations. This paper addresses the role of corporate control by examining the consequences of stock, cash and mixed exchanges to manager- and owner-controlled firms. Particular attention is paid to mixed exchanges as a test of the total consequences of acquisition activity. The results indicate that the market valuation of the acquiring firm's stock is related to both the method of payment and the acquiring firm control structure.     

Explaining Insurance Policy Provisions via Adverse Selection

In this article, we show that common insurance policy provisions—namely, deductibles, coinsurance, and maximum limits–can arise as a result of adverse selection in a competitive insurance market. Research on adverse selection typically builds on the assumption that different risk types suffer the same size loss and differ only in their probability of loss. In this study, we allow the severity of the insurance loss to be random and, thus, generalize the results of Rothschild and Stiglitz [1976] and Wilson [1977]. We characterize the separating equilibrium contracts in a Rothschild-Stiglitz competitive market. By further assuming a Wilson competitive market, we show that an anticipatory equilibrium might be achieved by pooling, and we characterize the optimal pooling contract.     

Dynamic Hedging Effectiveness in South Korean Index Futures and the Impact of the Asian Financial Crisis

This paper focuses on the impact of the 1997 Asian financial market crisis upon hedging effectiveness within the KOSPI 200 stock index and index futures markets. The paper utilizes the inter-temporal relationship between the two markets to examine the characteristics of several minimum variance hedge ratios. It also examines the performances of alternative hedging strategies for dynamic portfolio management in the presence of cointegrated time-varying risks. The results show a decline in the persistence of conditional volatility within market prices after the crisis. This decline leads to the relative performance of utilizing constant hedge ratios to increase, though not significantly so to guarantee a superior performance over more sophisticated time-varying hedge ratio strategies.     

Firm-provided training and temporary contracts

This paper analyses the relationship between workers type of contract and the probability of receiving firm-provided training. In particular, we raise the following question: do workers with temporary contracts face the same probability of receiving training as workers with permanent contracts, once we account for the fact that both types of workers have different probabilities of being employed in a firm providing training? The results from our empirical analysis using data from the Spanish labour market suggest that workers with temporary contracts not only are less likely to be employed in training firms but, once they are in those firms, they also have a lower probability of being chosen to participate in firm-provided training activities.JEL Classification: J23, M53Authors gratefully acknowledge financial support from Universidad de Alcalá under research project La relación entre temporalidad y formación en la empresa: un análisis comparativo entre los países de la Unión Europea (award no. UAH2002/022) and from the Spanish Ministry of Science and Technology under research project Observatorio del mercado de trabajo (SEC2001-0061). We have also benefited from our participation in the research project Estudio sobre la situación actual de la contratación temporal e indefinida en España financed by the Spanish Employment Office (INEM). We are grateful to participants in the XXVII Simposio de Análisis Económico (Salamanca), V Jornadas de Economía Laboral (Reus-Tarragona), and a seminar in the Istituto de Ricerca Sociale (Milano), and to one anonymous referee. The usual disclaimer applies.     

Human capital,innovation and productivity in Colombian enterprises: a structural approach using instrumental variables

ABSTRACT

In this paper we explore the R&D–innovation–productivity linkage for the Colombian manufacturing industry, paying special attention to the role of human capital. Using data from two firm-level surveys, the Survey of Development and Technological Innovation (EDIT) and the Annual Manufacturing Survey (EAM), we extend the model of Crépon, Duguet, and Mairesse [1998. ‘Research, Innovation and Productivity: An Econometric Analysis at the Firm Level.’ Economics of Innovation and New Technology 7 (2): 115–158] (hereafter CDM) by including human capital at the investment decision stage. We implement an instrumental variable methodology to correct the potential endogeneity that may arise with the inclusion of human capital. Our results suggest that human capital has a causal effect on research and development (R&D) investment decisions, the innovation behavior of the firm, and increases the labor productivity of the firm. The conclusions highlight the relevance of human capital in the surrounding literature which stands in contrast to prior work that has not included this variable.     

Voices from the Field: How Exceptional Electronic Industrial Innovators Innovate

This exploratory research uses in‐depth qualitative interviews to investigate how 11 exceptional innovators in the electronics industry initiated, created, and commercialized radical innovations in their firms. From the data, two initial frameworks emerged for how radical innovations were created by these individuals. Four themes emerged associated with what these innovators bring to the organization as an underpinning for being able to radically innovate. Additional themes emerged as to the process by which they innovate. Across the literatures of innovation, psychology, and management, creativity is discussed in terms of person, product, or process. This research samples on highly creative innovations (products) and finds that it appears that both person and process need to be considered in attaining radical innovation. One may not be able to consider separately the person who achieves radical innovation from the process he or she uses to achieve it. These exceptional innovators have specific personality characteristics that support radically creative behavior, supplemented by a perspective or worldview that focuses on having a business orientation yet also a somewhat idealistic attitude. They have prepared for innovation by studying deeply, within not just one primary technology topic but also a secondary or peripheral technology topic. In addition, they have prepared broadly, across technology, business, and markets. They are both extrinsically and intrinsically motivated to innovate. People communicating what problems are urgently important to them to be solved produce external motivation for the innovator, who is then intrinsically motivated to solve these people's problems by creating new products. In terms of how they innovate, these exceptional innovators are organizationally savvy and both understand and participate in the politics necessary to gain acceptance of and resources for their project. They use an innovation process that emphasizes the up‐front aspects of finding interesting problems, planning first before executing, and understanding customer needs in great detail. This allows them to generate insights into how to solve those problems profitably for the firm. Once they have obtained and validated their insights for solving the problem, they participate in the actual implementation of the concept to a commercialized product. However, this development aspect of innovating is not much spoken of, as if it is taken for granted. Finally, they actively disseminate knowledge and acceptance of the innovation postinvention.     

Improving demand forecasting in the air cargo handling industry: a case study

Air transportation plays a crucial role in the agile and dynamic environment of contemporary supply chains. This industry is characterised by high air cargo demand uncertainty, making forecasting extremely challenging. An in-depth case study has been undertaken in order to explore and untangle the factors influencing demand forecasting and consequently to improve the operational performance of an air cargo handling company. It has been identified that in practice, the demand forecasting process does not provide the necessary level of accuracy, to effectively cope with the high demand uncertainty. This has a negative impact on a whole range of air cargo operations, but especially on the management of the workforce, which is the most expensive resource in the air cargo handling industry. Besides forecast inaccuracy, a range of additional hidden factors that affect operations management have been identified. A number of recommendations have been made to improve demand forecasting and workforce management.